Trusteeship Podcast Episode 34: Diversification: A Strategic Response to Enrollment Shifts

Introduction:
Welcome to the Trusteeship Podcast from AGB, the Association of Governing Boards. We cover everything higher education leaders need to know about the challenges facing our nation’s colleges and universities. More important, we provide the facts and insight you need to solve those challenges and to be the storytellers and advocates higher education needs.

Higher education is on the edge of change, with more institutional closures and consolidations, and colleges and universities must continue to think strategically. Diversification of revenue streams is one such way to plan for the future.

In this podcast, AGB’s Associate Vice President of Content Strategy, Doug Goldenberg-Hart, speaks with RNL’s Senior Vice President, Todd Abbott, and Dr. Brad Goan, senior advisor for strategic innovation at the University of Montana, and an associate consultant with RNL, about the strategic enrollment growth matrix, with a special focus on diversification and how the board of trustees can support the institution in an enrollment planning process.

Doug Goldenberg-Hart:
Welcome, Todd and Brad. As a background for our conversation today, I want to remind our listeners that AGB released a terrific book in 2020 called Understanding Enrollment Management: A Guide for College and University Board Members. The publication, which is available for free to AGB members in ebook format, or you could purchase it in print, was written by enrollment management scholars and experts, Don Hossler and Jerry Lucido. The explicit goals of this publication were twofold, to give governing board members a firm footing on the nature of enrollment management today, and show board members what they need to know to be effective strategic partners with the institution’s leadership in making choices about enrollment strategy, and secondly, to get board leaders to think through how best to organize themselves in order to perform the oversight function of this facet of the institution’s business model, and to do that strategically and constructively.

We will limit today’s conversation to the first of those goals, what do board members need to know to be effective strategic partners to enrollment managers and presidents, when choosing strategies for reaching the institution’s strategic goals and enrollment targets? Just by way of background, some of the issues that Hossler and Lucido frame as, for lack of a better word, knowledge competencies for board members, include, first, understanding the institution’s mission and what that means for deciding on enrollment goals. Secondly, understanding the college’s market position, as well as its relationships to its true peers in the market, and also its aspirational peers, those colleges or universities it wants to move up a level and compete with. And then third, understanding the trend and using institutional and financial aid to attract students. That is essentially, how reliant is the college on tuition discounting to reach its enrollment targets? This is so important since a large majority of colleges and universities today are tuition dependent for their revenue.

So with these preliminaries out there to help frame our conversation today, let me turn to Todd and Brad with a few focused questions. Todd, first you. From where you sit as an enrollment strategy consultant, what is the difference between successful and not as successful institutions today?

Todd Abbott:
Yeah. Good question, Doug. I think for me, certainly there’s a number of factors. I tend to try and boil it down to a couple, in my mind, institutions, presidents and boards that I do work with. One, institutions that have a sound institutional strategic enrollment planning process that has buy-in from all facets of the campus, it’s not just from administration, but the faculty members, staff members, and certainly boards of trustees, I think, is a must. And I think if you have a sound process in place that allows you to explore all of the avenues for enrollment growth or even sustaining enrollment, I think you have an opportunity to become much more successful than other institutions.

And I think, for me, the second one, and it’s closely related to this enrollment planning process, is institutions that tend to have a diversification of revenue streams, they tend to be a bit more successful as well. They are not solely reliant on, as an example, just traditional undergrad on-ground enrollment as the main revenue feeder for them. And I think if you have a really good planning process, and as we’ve talked about before as well, I think with boards of trustees, I think it’s important that they really understand what that process is. They don’t necessarily have to partake in it, but they have to have an understanding around it. And I think if they do, that tends to lead to better, more successful outcomes down the road as well.

Brad Goan:
I think this diversification of enrollment and revenue streams is really important, and it’s much more significant to the health of an institution than it was a decade ago. I think that it’s really important for boards to understand that we are in a very different climate than we were 10 years ago, than we were five years ago, quite frankly, but looking for opportunities to broaden the reach in terms of the students that you’re providing access to, but also those revenue streams, is critically important.

Doug Goldenberg-Hart:
Wonderful, thank you. Brad, I’m going to point this question at you first. How can the board of trustees support the institution in an enrollment planning process?

Brad Goan:
I think it starts with what we were just talking about, understanding the environment. That cuts several different ways. I think understanding, as you were saying earlier, what’s the competitive landscape for your particular institution as a board member? Also appreciating that when we talk about national trends or the enrollment context or things like the demographic cliff, that we understand that that does not impact every institution and every market in the same way. So understanding how that impacts your institution and your particular markets is really critical context to, I think, making decisions that board members need to make, and having the kinds of conversations, asking the questions they need to ask. If you’re in New England, the demographic cliff looks very different than it does if you’re in the southeast, than it does if you’re in the west. It’s there for everybody, but it has a different dimension or a different set of dimensions. So I think understanding the landscape and how that’s evolving.

I think understanding the perception of higher education in our current marketplace is critically important. Higher education is not as well regarded by the public as it was, and that’s been a fairly dramatic and quick shift that we’ve seen. I think having a holistic view of enrollment is critical for board members. It’s not just the incoming class. One of the things that I get really anxious about is when I hear board members or administrators or staff members or faculty members say, “Well, it’s enrollment and retention.” When they talk about enrollment and retention, it makes my skin crawl, because retention is enrollment. When we think about enrollment, let’s have a holistic view. It’s who we bring in, it’s who we serve and are able to keep at the institution, ultimately who we’re able to graduate or who can complete a credential of some form, and so having that holistic view, I think, is really important.

When we think about the finances, discounting is important to understand. Let’s look beyond discount rate and let’s think about net revenue, and let’s think about how net revenue varies given the enrollment stream. So as we diversify enrollment streams, we need to understand that the business models for those may function a little differently. And then, academic program portfolio is really important when we think about enrollment, and so how does that fit? Obviously, those are decisions that are made through faculty governance channels frequently, but it’s important for the board to recognize that.

It all comes back though to, what’s the mission, vision, and values of our institution? And the board obviously has a critical role in that. And that sets the direction for leadership and for enrollment leaders and those that are executing on that. And so, I think board members, as they function in this enrollment context, really being committed to clarity around that, to understanding what are we about? Who are we about as an institution?

Doug Goldenberg-Hart:

And if I could just follow up on that in terms of who’s going to be enrolling and moving forward. There are some demographic changes that are coming there. There will be more students of color, there will be more first generation people to attend college. And HB has talked about this a lot in the last 18 months, as boards need to be cognizant of what their plan is for student success. That’s the dirty word you mentioned earlier of retention in the sense that it’s not just winning over a student to enroll, but it’s also making sure that you are resourced well enough to support the students who do enroll. Because institutions have learned, and I think Don Hossler made an excellent point of this in the book I mentioned earlier—it’s expensive to find students, and it’s expensive to replace a student that you’ve lost to transfer or dropout. It’s much more cost-effective to actually support those students while they’re on campus in seeing them through to graduation.

Brad Goan:
Absolutely.

Todd Abbott:
Absolutely.

Doug Goldenberg-Hart:
You wanted to follow up on Brad’s comments?

Todd Abbott:
I think what Brad said is extremely true. If you are, as a board and the administration of institution, true to who you are, it doesn’t mean you don’t understand what the other competitors or even the aspirational types of institutions are doing, but at the end of the day, I always equate it to, “Who do we want to be when we grow up?” Or, “Who are we?” And be true to that. And if you serve a type of student, whether that’s an undergraduate student or whether it’s a graduate student or whatever, a transfer student, how do you best support that particular type of student? It’s not just about getting them to enroll, and not even to get to their sophomore year, it’s what are we doing to get them to graduate? I think it’s an all-encompassing view in terms of how and what we’re doing to support enrollment.

Doug Goldenberg-Hart:
So Todd, what strategies should schools be thinking about from a diversification of revenue perspective?

Todd Abbott:
Good question. First of all, I think boards of trustees, and again, presidents, administration of universities, they need to have an understanding that today’s learners are different. They’re different than what they were even 10 years ago, certainly 20, 30 years ago as well. I think understanding that competition for colleges and universities isn’t just colleges and universities, it’s corporate America. It’s what LinkedIn Learning provides, it’s what Google is doing, it’s what Amazon is doing. So one, I think it’s an understanding that, to understand and to begin to think about diversification of revenue as an example, “who” is in fact all of the competition, not just from colleges and universities.

And I think from there, it’s understanding how today’s learners like to learn, online as a modality. Online, in my opinion, is no longer a nice-to-have as something that you might provide for students in your particular area or even outside of your region, but it’s a need-to-have. It is a preferred method of learning for a vast majority of today’s learners. So I think something to think about is online. What are we doing to offer online? Doesn’t have to be every single program, but what are the programs that best fit, again, our mission, and how we serve students?

Certainly graduate offerings in the unique offerings that make sense for your particular market. And I think Brad talked about this as well, but understanding from market research, it’s understanding the labor market within 100 miles of your campus, or maybe it’s within 500 miles, but having a better understanding of what that labor market looks like. Who are the companies that are coming into your particular area? What are the industries that you are serving? As an institution, are you providing the necessary education for those types of students? And it might not just be your traditional semester-long graduate programs that we need to be thinking about from that diversification of revenue. It might be micro-credentials, it could be weekend programs, could be evening programs.

So I think it’s really understanding that, but through the market in the research that you do, it’s not just, and I think this is something that I tend to emphasize with institutions, is you can’t rely just on secondary research. You can’t just see what the labor market is doing. You need to have some level of primary research so that you understand, “Okay, this is a particular opportunity for us to expand our academic portfolio. The labor market or the job market suggests that this is a program we can offer, but do potential students want to take it from us?”

That’s the primary research that I think institutions need to make sure that they do. When you combine all of that, now I think you’re in a position where you have that opportunity to understand, “Okay, where can we diversify?” So that’s a long-winded answer to your question, Doug, but I think that’s something, for me, when I’m working with presidents and boards of trustees, we really, really talk long and hard about that. The diversification and how you go about the diversification.

Doug Goldenberg-Hart:
Brad, did you want to follow up on that?

Brad Goan:
I think Todd nailed that. It really is about understanding who you are so that you could think about how you deliver in this environment, and then appreciating where your students are and meeting them in that space. I think sometimes, and this isn’t limited to boards, in fact, it’s probably less so than maybe with some administrators, they confuse mission with who they have served.

Who you serve is sometimes a reflection of your mission, but not as much as some people tend to think. And expanding who we reach and how we reach them is generally something that aligns or reflects your mission, it’s not necessarily missional, if that makes sense. That’s an important distinction for boards to make.

Doug Goldenberg-Hart:
Wonderful. Brad, can you say more about the strategic enrollment planning or SEP process that RNL offers to its clients?

Brad Goan:
There are a lot of different ways you can approach strategic enrollment planning. The work that we do approaches it from a particular direction we think that has value, and it starts with an understanding that it does tie back to your mission, vision and values. Your strategic enrollment plan has to be rooted in that, it has to be a reflection of that. It also comes with the assumption that strategic enrollment planning done well is data-informed, both internal and external data, also historical data, understanding how it changed over time, so it’s data-informed. It’s continuous, you establish a process and that process has different stages, but it’s not something you start and stop. Good strategic enrollment planning is continuous, it’s dynamic and it’s iterative. We do some things, we execute on those, we may make modifications to those things, we may do new things, we may sunset some things. Understanding that as an assumption, I think, is really important.

The way that I generally encourage institutions to approach strategic planning is not to say, “Okay, here are our goals. Boom, now let’s go get to them. Let’s figure out how to get there.” But it’s rather, “What is our current context? What’s our current situation?” Understanding our current state, understanding or acknowledging what our desired future state is, and we establish that by saying, “Okay, here’s some key performance indicators that will help us monitor or mark that.” And then, if we understand our current state and we have an understanding of our desired future state, well, how do we get there? We get there by building very intentional strategies.

And one of the things I see a lot in higher ed is we do a lot of really good planning. We do a lot of really good discussion. We’re not always good at acting, and I think good strategic enrollment plans and the work that I’ve been blessed to do with institutions really is rooted in the idea that we’re going to do some really good planning, but then we’re going to execute on that. And part of the way we do that is by making sure that each of these strategies has a very clear action or business plan.

So if we say, “This is something we want to do,” and we believe that something is going to drive or positively impact these key performance indicators to help us move from our current state to our desired future state, well, what is that we’re going to do? Why are we going to do it? If we do it or when we do it, how are we going to do it? What are we going to do, by when, and who’s going to be accountable for that? How are we going to evaluate and assess that? And that’s not something we figure out six months after we start implementation, that’s something we bake in as part of the development of a strategy. It’s how do we evaluate and assess, how do we determine that this is working? And if it’s not working, what are our steps to modify?

And then, what’s it going to cost to do this? Generally, strategic enrollment plans require some investment on the front end, because the other thing we’re going to do is we’re going to take return on investment approach. If we make this investment in the initial years of strategy, we would expect an enrollment return of some form. That’s going to bring additional tuition revenue. One of the things we talked earlier about understanding the dynamic or the context in which we exist is, we’ve been on this enrollment trajectory for a long time. Some strategic enrollment plans now aren’t about growth, they’re about sustaining enrollment, and then others are about growth, and part of the planning process is to determine, where are we as an institution? Where do we fit in that? And how can we be most successful moving forward? Those are the key components, but again, they’re dynamic, they’re data-informed.

And then, they’re also broad-based. This can’t be the purview exclusively of the enrollment function at an institution. To do strategic enrollment planning well, you’ve got to have people from across the institution who are coming into that process to lend their perspectives, to contribute, and that means those places that we typically think about as enrollment functional areas, but also other places, and the academic enterprise is such a critical partner in this. Again, because as we talked about earlier, academic programs are… Well, I don’t know that we mentioned this. Let me mention it now. First thing students look at are academic programs. Do you have the program I want, and will it allow me to do what I think I want to do? Then they go to things like cost. We’ve got to include that in our perspective.

Todd Abbott:
Just to follow up, I think what Brad said is so key. I think for me, a couple of other things around all of this. When you have a good planning process, as Brad just outlined, the piece to me that I think is really important around, in particular, for boards of trustees, but to be able to create a constant regular feedback loop to the board of trustees, I think, makes a lot of sense, and it allows the board to understand what are the activities, the things that Brad talked about, that are going to be funded? How are they going to be funded? What are those different activities that are going to either grow enrollment or sustain enrollment?

And in a lot of cases as well, I think, from that feedback loop, it’s also some of the ideas and types of activities that were maybe not quite funded. As you go through a strategic enrollment planning process, you might have 40, 50, 60 different ideas that different folks around campus are going to bring to this overall enrollment planning group, and understand, “Hey, these are the things that we think can have an impact in enrollment.” Ultimately, you can’t fund 60 of them. You can hope to fund maybe five to seven, but providing that feedback loop, I think, to me, for boards of trustees, is just super, super critical, so that they are in tune with how the institution is looking at this in both from a near-term or short-term opportunity, and then the long-term perspective that the board needs to keep their eyes on as well.

Brad Goan:
That’s a great point, Todd.

Doug Goldenberg-Hart:
Thank you both. This has been a really rich conversation and I hope that our members download this podcast and learn what they need to know going into these important conversations about enrollment planning and being strategic about it. Thanks so much, guys. Have a great day.

Conclusion:
Doug, Todd, and Brad, thank you so much for your insights today on shifts and enrollment and diversifying revenue streams. AGB thanks RNL for its partnership and support of AGB. For more information on RNL’s enrollment services, please see rnl.com.