Last week, the University of Oklahoma announced that 50 staff positions would be eliminated to “…help resolve what President James Gallogly said is a potential $15 million operating loss.” This is in addition to cuts announced earlier this year that reportedly saved $20 million by reducing third-party services and purchasing.
Also in the news, reflecting a novel strategy, was the decision by President MaryAnn Baenninger to reduce Drew University’s operating budget deficit by focusing on “cops and sippy cups” rather than “virtually any student-facing program” to “grow and then become more efficient.”
And these are just two of many institutions searching for solutions to budgetary shortfalls.
Unfortunately, there is only so much to cut – and there does come a time when you must take the time and ask yourself “What can we do to stem the tide?” and look beyond cost cutting, as Drew appears to be doing, and develop strategies to grow revenue.
Here are some proven revenue streams to consider.
PROFITABLE ALTERNATIVE REVENUE STREAMS
Maybe this is not everyone’s definition of ‘alternative revenue’ but the truth is improving retention rates helps you reduce new student recruitment costs because you need fewer new students to achieve your enrollment/revenue goals. And research has shown that the cost to retain a student is significantly lower than the cost to recruit a new student – so improving student retention means revenue generation and expense reduction.
Improving graduation rates typically leads to more satisfied people that are more likely to refer others based on their own successful experiences. Again, maybe you do not consider referrals an alternative revenue stream, but they are new students that cost significantly less to enroll and are more likely to remain enrolled and graduate, so they generate revenue while reducing costs.
Serve New Audiences
For many, the primary target audience is traditional students that come directly from high school or via transfer from another institution. But what other audiences exist in your geographic market that want or need what you currently offer?
Yes, the first group that should come to mind is post-traditional students. But many institutions have all their available resources – human, financial and technical – focused on traditional students, which leaves little left to address new audiences.
The second group that should come to mind consists of corporations, government agencies, and non-governmental agencies because the training market is on fire. In 2017, more than $90 billion was spent in the US on training – a 32.5% increase over 2016. (That figure includes outside products and services, payroll and other expenditures such as travel – but if you can develop a unique, valuable solution, the demand is there.)
Please remember that both the post-traditional student and corporations/government agencies/non-governmental agencies will require investments, resources, and planning. Don’t try to “do more with what you have” because it just won’t work. These groups require unique expertise and technology to attract and non-traditional support services to retain.
Modifications to Existing Programs, Services, Policies
In the spirit of constant improvement to ensure the student experience is uniquely valuable, change is going to be critical to your ability to improve student success with existing and new audiences.
Your existing audience will want new and different programs and services over time – how do you plan to stay ahead of that curve, so you are ready to serve it rather than rushing to catch up?
And new audiences mean new wants, needs, and expectations – how will you identify those audiences that offer you the greatest opportunity with the least cost?
A commitment to life-long learning means you must be effective at serving traditional students and post-traditional students over a 20+ year time frame. And that will require retention, win-back, modifying programs, services, and policies…as well as an efficient process for proactively identifying opportunities and taking appropriate action.
Speaking of change in the market – Ruffalo Noel Levitz recently surveyed 600 fundraising professionals and more than 80% of the respondents reported that fundraisers are perpetually in campaign mode. Gone are the days of capital campaigns that had end dates and welcome to the days of current-use campaigns.
From renting vacant dorm rooms to leasing roof space for cell towers, allowing television, commercial and/or film shoots on campus to renting meeting space and providing catering services to corporations, government agencies, and non-government agencies for meetings – your institution has certain assets, probably under-utilized, that others value.
An interesting example can be found at Arizona State University. Campus leaders reached out to local residents and asked what type of events they would like to see held at the newly renovated Sun Devil Stadium and ASU is now in the early stages of bringing yoga classes, Shakespeare plays and more.
Hats, shirts, t-shirts, keychains, license plate frames – the list goes on and on. And as that list grows, so does the size of the university trademark licensing which has been estimated to be a billion-dollar industry.
Yes, it helps if your institution has a Division 1 athletic program that is featured on national television every Saturday afternoon during football and basketball season – but institutions with a strong reputation and identifiable marks can generate revenue thanks to alumni, current students, and others.
Better yet, licensing offers your institution the opportunity to build awareness and interest that helps with student recruitment.
All that aside, licensing requires expertise that might not exist within your institution at this time, so it would be wise to speak with those that have the experience and can offer you the data and insight you need to make the best decision possible. (You also might want to check out this information provided by the World Intellectual Property Organization.)
From Metropolitan State University and Sage Hospitality coming together to open and manage a SpringHill Suites by Marriott back in 2012, to the University of Central Florida partnering with Hospital Corporation of America to operate a teaching hospital and beyond, to the Arizona State University – Starbucks Partnership that projects 25,000 graduates by 2025 – partnerships come in many different shapes and sizes.
In just these three examples, there is one that focuses on revenue generation, one focused on improving the educational experience of the student (with potential revenue growth based on hospital profitability), and another that is focused on increasing access to education (which also increases enrollments/revenue).
The key to success with partnerships is to know what it is you want and need – then put together the plan with the resources to make it happen. Unfortunately, most institutions lack the needed expertise internally, so the strategy fails to make it into the strategic plan which leaves the institution reacting to whatever comes to their front door rather than proactively identifying and pursuing opportunities that bring them closer to achieving the institution’s mission.
WHERE TO START – NEXT STEPS FOR YOUR INSTITUTION
The opportunities are endless, resources are not. Fortunately, some of these opportunities can be achieved quickly, utilizing existing resources – and others will require time and additional resources. The key to your success will come from planning and executing that plan, so make sure that’s part of your strategic planning discussions with your board and leadership team.