Well, another year, another CCA conference. So what was this year’s message? Simple and consistent amongst the schools … It’s time to stop relying on more and more leads and time to start performing in admissions. Schools have been so lead-volume-centric, they took their eyes off the admissions ball. Today, schools are suffering roughly 30-40% lower conversions, so they need 30-40% more leads to hit the same numbers they hit three years ago. That means they are having to spend 50-75% more money to generate leads. Why the delta? The more schools spend and the more demand against a fixed inventory of web leads, TV avails, etc., the higher the rates.
How We Got Here
Our industry has created our own problems. Why are daytime TV spot rates going up? More schools, more spending, and a supply that can’t meet the demand, allowing stations to raise rates. Why are Internet lead providers charging more? Because they can. The appetite for Internet leads is so large, some vendors are saying “to heck with your demands … I have plenty of schools to send my visitors to.”
So how do these schools fix this? Focus on admissions. If you can train your reps better, motivate them to work old leads instead of playing free-cell while they wait for the phone to ring, retain your better reps, and introduce the right technology to the process like call center support and predictive dialing, your school can have a lower appetite for leads.
Additionally, when two or three or five schools in a market figure this out, TV and Newspaper rates will come back in line and you will STILL have better rep performance so CPS will start heading south, where it should be.
When 5-10% of the schools nationwide figure this out, two things will happen on the Web. First, rates will stop increasing. Second, because the demand for leads will slow down and rates will decrease, the companies who run industry to industry sucking the life out of them and providing low-quality leads that end up being shared by 12 schools, will run like lemmings off to the next industry and leave us Career Education-Committed companies alone to help schools attain quality leads at decent prices … us vendors who plan on being part of this industry for a long time and are concerned with the health and future of Career Education, not JUST making a quick buck and saying “Ciao Baby.”
The way we are going as an industry, at best, we might be able to keep CPLs from increasing and conversions from decreasing. That does NOTHING to increase ROI … we will still be stuck having to spend more to fuel growth. However, a one to two percent tick-up in conversions can drive down your appetite for leads, cut spending, lower your CPLs, lower your CPSs, increase ROI and produce millions of dollars in additional revenue. You can grow your school spending no more than you do today.
Am I suggesting collusion? Sort of. I am not suggesting we all, as an industry, cut our spending to drive down CPL. If we did, it would work, but the chances of getting every school in the industry to do that today are less than the chances for peace in the middle east today. I am suggesting an industry-wide commitment to focus on and improve conversions.
My prediction for what the top three messages will be in 2007 at the conference in New Orleans? Retention, Retention and Retention.