An Introduction to Goals and Metrics
A recent post about analyzing the right marketing metrics opened a can of worms (in a good way). It can be easy to get distracted by metrics. Often, the focus gets turned to metrics before a business goal is even clearly defined. In the case of college admissions, let’s assume that the main goal is to meet a specific enrollment number. On the way to achieving that enrollment number, there are many actions that prospective students take (inquiring, scheduling visits, applying, being admitted, etc.). These steps along the way are key conversion points in the enrollment funnel and ones that must be measured.
As the old saying goes: if you can’t measure it, you can’t manage it. And, one thing that we all know needs managing is a budget! Understanding that there is a specified budget to meet enrollment goals, we need to know how much it costs to move prospects from inquiries to enrolled students.
Conversion Points in the Enrollment Funnel Defined
We will define the key conversion points in the enrollment funnel and costs per those conversions as follows:
- Cost per inquiry: the costs for admissions, recruiting, and marketing divided by the number of inquiries
- Cost per application: the costs for admissions, recruiting, and marketing divided by the number of applications
- Cost per admitted: the costs for admissions, recruiting, and marketing divided by the number of admitted students
- Cost per enrollment: the costs for admissions, recruiting, and marketing divided by the number of students who enroll
Higher Education Industry Conversion Cost Benchmarks
NACAC’s State of College Admissions Report from 2014 provides industry benchmarks regarding these costs for public and private institutions:
In that table above, let’s look at the costs for institutions that excluded staff salaries and benefits from the total admissions budget. The average cost per applicant for a private institution is $283. For colleges and universities with enrollments less than 3,000 students, the average cost per application increases to $337.
A Case Study Focused on Cost Per Conversion and Channel Value
One of our clients that is featured in this case study (a private institution with an enrollment of less than 3,000 students) has spent an average of $45.24 per application on website retargeting campaigns for the last six months. If an institution’s average cost per application is $337 and the average cost per application for an online advertising campaign is $45, then we can feel confident that this specific marketing channel is valuable and sustainable. If the average cost per application for the advertising campaign had exceeded $337, we would have immediately realized that this specific channel was not viable.
It is important to note in the above example that the advertising campaign metric which we are focusing on is cost per application. This is a key enrollment metric and one that must be understood when evaluating whether a specific channel should be in the recruitment marketing mix. Whether it’s a website retargeting campaign or a postcard campaign, it is critical to be able to measure the channel in terms of a cost per conversion. Even though certain marketing channels often have specific metrics that are frequently associated with them, it is essential never to lose sight of the costs per conversion no matter what channel is being used. For instance, online advertising campaign reports often include clickthrough rate as a key metric. Not that clickthrough rate is meaningless, but does it really tell the story that justifies the campaign expense? Does a 10% clickthrough rate tell us any more about how many applications were completed than a .05% clickthrough rate? No, it does not. In and of itself, this metric doesn’t enable us to determine if this campaign is worth it. Again, this is a metric that we certainly want to know about since it affects other parts of the campaign strategy. But, without knowledge of how much the campaigns are costing to generate applications (the true goal of the campaign), we don’t have anything to go on. Impressions, emails opened, website visits, Facebook Likes – these are all metrics that might feel good and feed our egos. Yet, they don’t speak to admissions goals being accomplished. They also don’t include information about costs.
Cost Per Enrollment versus Cost Per Conversion
Looking back at the table in the NACAC report, metrics include costs per applicant, costs per admitted student, and costs per enrolled student. The end goal is enrollment because that is the point at which a college actually generates revenue. Therefore, cost per enrollment is the most practical metric to identify return on investment. The costs per conversion related to applications and admittance are important indicators that are building blocks in the analysis of cost per enrollment. In other words, if your costs per application are sky high, then your cost per enrollment will be, too.
Not only are the costs per conversion crucial to track in terms of dollars, but also in terms of sheer volume. This is where it is necessary to understand your average conversions throughout the enrollment funnel from inquiry to enrolled student. Even if a college’s cost per application is low and comfortably within budget, those costs are irrelevant if the target number of applications needed to turn into X number of enrollments is not hit.
In a future post, we will explore the enrollment funnel and discuss how to backward map it from the point of enrollment all the way up to the top (the point of inquiry) to make sure that enrollment goals can be reached in terms of number of students and dollars spent to acquire them.