Retention vs Aquisition

The cost of attracting new customers in most sectors has been steadily rising for many years. The increasing Customer Acquisition Cost (CAC) has been mirrored in the HE sector and significantly for online courses. This acquisition cost includes direct marketing such as digital advertising, staff salaries, marketing software, and other associated marketing and recruitment costs. 

Customer Acquisition Cost (CAC) is the cost of winning a customer to purchase a product/service.

Wikipedia

A Guardian article in April 2019 lists the total marketing spends of several UK universities. The University of Central Lancashire spent £3.4 million on marketing in the 2017/18 academic year, the University of the West of England spent £3 million, and Middlesex spent 2.6 million. These figures only represent around 1.5-2% of total revenue but equivalent to between 370-280 students’ tuition fees. I could not find specific numbers for online courses but have observed in conference presentations that the marketing spend can be as high as 20% of the student fee, mainly due to a lack of scale.

Any rising cost in running a university has a significant effect. The student loan has been fixed since 2017 and does not rise with inflation. All things being equal, a fixed tuition fee loan means that each year universities need to grow or make cuts similar to inflation (1.6%) to break even. HESA data states that staffing costs represent 54.7% of university expenditure and has decreased by 6.54% over the last seven years. The Institute for Fiscal Studies estimated before the pandemic that at least thirteen of the one hundred and sixty-seven institutions were financially at risk, and several high profile universities, including the University of Leicester, have announced large scale redundancies. 

Universities can start to address this freeze in tuition fee loans and increasing marketing costs by first focusing on customer retention and then on customer lifetime value.  

Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer.

Shopify

Customer lifetime value (CLV, or CLTV) is the metric that indicates the total revenue a business can reasonably expect from a single customer account throughout the business relationship.

Hubspot

The Guardian article calculated that the University of Bedfordshire spends £432 per enrolled student; if that student stays for a three-year undergraduate degree, it will provide a £27,750 return if the student drops out the first year, this return reduces to just £9,250. HESA data states that 6.3% (20,295) of first-year, full-time UK-based students in the 15/16 academic year did not continue to their second year. That 20,295 students not continuing their course represents almost £190 million lost in the sector for just year two of a degree and double that for losses going into the third year.

“Evaluating who your customers are and dedicating time and effort toward re-engaging them is not only essential, but often comes at the fraction of the cost of sourcing entirely new ones.”

Dynamic Yield

Student retention is not a simple thing, and some drop-outs may be unavoidable due to life circumstances. Still, this number can be reduced, especially for institutions with rates of 10% and above. The first step to retention is to collect data on why students are dropping out through exit interviews and use this to build an intervention process that can identify students before they pass the point of no return. A solid intervention process should set clear and high expectations, monitor against those expectations, and intervene when they are not met.

After addressing the most significant issues and with a solid tracking and intervention process, institutions can focus on personalising the student experience. Dynamic Yield, experts in online personalisation, suggest that loyalty and retention efforts should be data-driven and deliver captivating, tailored experiences. Retention efforts should be iterative to build on what works and lose what doesn’t.

The final piece of the puzzle is to focus on the lifetime relationship the student has with the institution. Most graduating students have loyalty to where they studied and will probably require significant upskilling throughout their careers. Universities should build on this relationship, and learning needs to provide ongoing qualifications for their alumni at critical stages of their working lives. Cross-selling comes at a significantly lower cost than acquiring new students allowing the courses to be more affordable or will enable more of the tuition fees to be spent on making the experience better.

Narrowing the digital divide

To learn online, you need a stable internet connection and an internet-enabled device such as laptops or smartphones. However, when the March 2020 lockdown hit in the UK and universities and schools moved online, 11% of households did not have access to the internet, according to the Office of Communications (OFCOM). One year later and that number was down to 6%.

A new OFCOM report on Adults’ Media Use and Attitudes published on the 28th of April states that “The pandemic had been the catalyst for a step-change in digital skills…” but warned that 1.5 million UK homes still do not have access to the internet. The research showed that 10% of users access the internet via a smartphone only, and 20% of children did not have constant access to a device for online learning during the lockdowns.

The recent Office for Students guidance paper found that around 30% of university students surveyed lacked good internet access, and 30% lacked a suitable study space. If the 30% from the survey translates to the whole 2.38 million UK student population, that is roughly 300,000 students with digital access issues. 

During a regular year, this would have been covered by on-campus facilities. The University I work at provides computers in study spaces across its campuses, includes a computer finder tool in the student app, and high-speed internet in all its accommodation. But with social distancing and full lockdowns, these facilities were in limited supply, halls become the primary social spaces as external spaces were forced to close, and many students found themselves returning home to shared devices, bandwidth, and workspaces with parents and siblings. 

The Gravity assist paper recommends that university providers make digital access a priority:

  • Appropriate hardware for students to access course content with parity of experience. 
  • Appropriate software for students to access course content
  • Robust technical infrastructure that works seamlessly and repaired promptly
  • Reliable access to the internet with sufficient bandwidth
  • A trained teacher or instructor equipt to deliver high-quality digital learning and teaching 
  • An appropriate study place that is quiet and consistently avalible

Most universities have adapted to the challenge, providing year-long laptop loans, broadband dongles, and technical support to those students that need it. Academics have rapidly upskilled with digital teaching practices and redesigning courses to adapt to the changing access to students. Software vendors like Microsoft and Virtual Learning Environment vendors like D2L have adapted too, rapidly releasing new tools and dramatically increasing infrastructure to handle the shift to online. 

Many of these fixes were put in place as short-term solutions, and universities, academics, and tech companies must now find long-term solutions that do not disadvantage this 30% of students. The Office for students suggests that institutions start to engage with students individually before their courses start. Universities should offer solutions where needed, such as loaning laptops, financial support, and creative study space solutions, in the same way other additional needs are currently handled.

Flexible learning should hold an advantage for students from the most deprived areas of the UK, allowing them to study around their many additional commitments caring responsibilities, part-time work, and commutes. Significant progress has been made over the last twelve months to provide equal access to higher education; we need to put the same level of planning into maintaining digital access for all.  

UK Food Banks

My parents are members of a growing group of forty thousand volunteers that collectively give over four million hours per year at food banks set up and run by their church, community, or a charity to support those struggling to buy food. The Black Country Food Bank is one of over 2,200 food banks in the UK that give out emergency food parcels at least once per week. 

A food bank is a charitable resource which distributes food to those in need of it at least once a week.

Commons Library
Source Trussell Trust

Food banks began appearing in the UK around 2000 when the Trussell Trust opened its first in Salisbury. As of February 2021, the independent charity Trussell Trust runs over 1300 of the nation’s food banks, with a further 900 independent food banks registered with the Independent Food Aid Network (IFAN). Food backs were started in the US in the 1960s and are now present in many healthy countries. According to the food aid network, over half of the registered food banks in the UK are run by Christian groups, 43% by secular groups, with the remaining run by other religious groups such as Sikhs and Muslims.  

According to the Trussell Trust, “people use food banks only when they really have to“, with referrals to these services living on an average of £50 per week after housing costs and 20% saying they have had no income at all in the month before they receive a food parcel. These people often have to choose between paying to keep their home, gas and electricity, and food. 75% of households that use food banks have at least one member with a health issue, and 54% are somehow affected by mental health problems. Problems with the introduction of Universal Credit and cuts to public services have increased the use of Food Banks by 73% over the last five years, and 75% of the existing food banks have opened since the banking crisis in 2008.

Stats on usage increases over the last year vary and use a variety of time frames. According to the Government’s Food banks in the UK report, the number of emergency food parcels provided by Trussell Trust during the pandemic has increased by 47% to over two and a half million, and 88% from independent providers according to IFAN. Pre-pandemic, the Trussell Trust State of hunger report estimated that up to 2% of UK households had used a food bank in 2018/19. Since the pandemic, the number has risen to 7% and 13% of those with children, according to Government COVID-9 consumer research. 

The food that makes up the emergency parcels is provided primarily by individual donations but is supported by the UK Government, supermarket chains, and local businesses. The public gives up to 90% of the food handed out by the Trussel Trust; you can find out how to donate to your local bank on their website.

You can read the governments full research briefing on Food Banks in the UK on the House of Commons Library website. 

Running to Explore

Photo by Ben Mack on Pexels.com

For many of us, running is the best way to explore a new location. We take running shoes with us on holidays and business trips and make sure we pop out on our first day to navigate the local area. But how many people truly explore the roads and trails where they live?

In 2020 I set myself an ambitious annual mileage goal that significantly increased the frequency and distance I ran each week. When the first UK lockdown came in March 2020, we were stuck inside with only a single outside exercise session per day for liberation. Conveniently lockdown coincided with the release of the Routes function on Strava.

For Strava Premium members, the Routes function allows you to enter the distance you want to run, whether you want a flat or hilly route, and choose between a trail or road surface. An algorithm then calculates three routes from your starting point based on the most run paths by local runners. You can choose one of the routes or rerun the algorithm to get additional options. 

Once you have selected a route, save and star it to upload it to your Garmin GPS watch, and it will appear the next time you sync. You can load the course on your device and follow the audio instructions and map prompts for your run.

I used the Routes function for my runs each morning and discovered all the hidden trails in and around my local town. As the year went on and my routes got longer and longer, including a few 25-mile off-road test events, I began to rely on the Explore function to provide new exciting trails. During the summer, I got away for a break to the English south coast and another to Burgen, Norway and discovered some fantastic trails with the added benefit of not needing to carry a map. 

I use the Fenix 6X Pro Solar, and Strava Premium is around £70 per year, so it is not a cheap solution, but I bought the watch before the tool existed and signed up to Strava for other features, so it works for me. I have been told that Garmin has a similar function built into Garmin Connect, and there are much cheaper watches on the market if you need a more affordable option. 

Exploring the trails around my local area and running a different route most days allowed me to keep excited about running during the lockdowns and cancelled races. I guess a better option would be to join a club and learn the local trails and roads from other runnings in your area, but if you travel a lot and run at strange times (Strava had my average time at 7 am), this might be the perfect option.

Fundamentals of accounting

I have been working on the fundamentals of accounting for my first MBA exam today. Like most employees or a large organisation, I have not had to deal with balance sheets in my work before, so the practice application of double-entry bookkeeping is new to me.

You may be aware that businesses, companies, and organisations (entities in accounting speak) must follow a set of financial reporting standards called the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) in the US. An entities finances are kept separate from its owner’s finances (Entity concept) even when the entity is a proprietorship, where the entity has a sole owner/investor.

The reporting centres around the balance sheet that displays the health and composition of an organisation. The balance sheet has three main elements, assets, liabilities, and equity, all recorded in monetary amounts in a single currency.

Balance Sheet equation: assets = liabilities + equity

Assets are items owned and controlled by the company and acquired at a measurable financial cost and are split into current assets and noncurrent assets. Current assets are short term items that are likely to be used or converted to cash within the financial year; these include cash, accounts receivable (money owed for goods/services), inventory, and prepaid expenses like insurance. Noncurrent assets are long term items that are unlikely to be used or converted to cash within the financial year; these include property, plant and equipment such as factories, equipment and land.

Liabilities are debts owed to creditors in return for goods and services and are similarly slit into current and long-term categories based on the current financial year. Current liabilities include bank loans, accounts payable (money owed for goods and services) and estimated tax liabilities (estimate before filing reports at the end of the year). Equity is the capital supplied by investors (Paid-In Capital) and profits from the business that are then reinvested into the company (Retained Earnings).

The balance sheet displays all assets, liabilities, and equity of a company, with assets on the left and liabilities and equity on the right. The Double-entry bookkeeping principle requires that any transaction, such as a purchase of inventory or equipment, results in two entries, an increase in PP&E or inventory, could mean a reduction in cash or increase in accounts payable if they are purchased on credit, for example.

I hope you enjoyed a brief introduction to accounting and the balance sheet.

September 2021: Back to what normal?

Today I attended AulaCon, the annual conference of the UK based Virtual Learning Environment provider. The title of the event was ‘September 2021: Back to what normal?’ and hosted a range of expert speakers giving views on the future of higher education in the UK. the underlying theme for the day was that returning to campus is an opportunity to refocus on designing and delivering outstanding learning.  

My three key takeaways:

  • Lecturers must focus on doing what works best
  • Returning to campus should be designed to build better learning communities
  • Learning should be structured to spark curiosity

John Hattie opened to conference with a conversation about evidence-based teaching. He suggested the most lectures find a way to teach that works but do not then spend the time investigating the best ways to teach. Hattie, who has spent his career studying teaching methods that have the highest impact on student outcomes, recommends looking at the most successful practice in your institution and scaling that up as a starting point. Hatti also stressed the importance of monitoring student conversations and feedback and the impact of your teaching rather than being overly worried about the exact method. A final piece of advice that Hattie has picked up from working with athletes, a theme of this blog, is to start each teaching session by setting an expectation of what success in that session looks like and then trying to stick to that, 

One of the common themes in student feedback this year has been the loss of community. The social elements of learning and being a part of the university community are essential to keep students engaged and feel belonging, helping them stay and succeed. Multiple speakers also pointed out that these communities should move beyond the classroom and individual modules; they should start in the transition period before students begin the course, build while studying, and continue after they graduate. Recommendations for building community came from several presenters; most said to start small, make it inviting for students to talk and take the time to build up trust within groups. Students need to feel comfortable interacting with each other and are not afraid to ask questions and make mistakes. Get students to start talking using breakout rooms and chat functions, and let them know it is there thinking you want to influence, not just taking in information. Conversations are also to keep students engaged in their learning. The critical point was that academics must be a part of the community to make them impactful and lasting.

Ramsey Musallam presented his take on how lessons should begin by sparking curiosity in students before delivering all the content. He suggested that story narrative such as the heroes journey could be used as a model for providing lessons where the students are moved into uncertainty through open questions and missing information. Only when curiosity is teased in students that the teacher can then reveal the complete picture. The narrative approach allows students to make connections between ideas and engage with the learning process. Musallam provides a lesson planning template lecturers can use to structure a session using the hero’s journey following the 5E inquiry learning cycle. 

Aula has a fresh take on what a VLE should be and has built its platform on internet technology without the difficulties existing providers face with bloated, sometimes over-complicated software that has evolved over decades of updates to serve multiple industries across the globe. The co-founder and CEO, Anders Krohn’s focus on learning design is also refreshing. It is not yet clear how much of the market Aula will capture in the next few years, but the new kid on the block is set to disrupt the now established Virtual Learning Environment market currently dominated by three companies. The incumbents need to take note of Aula’s approach if they want to stay competitive. 

Phylagen Origin: track and trace using microbial DNA

I started my MBA with Quantic school of business and technology last week. My favourite part of studying at a university is the lecture series, and this evening I attended (virtually) my first guest lecture delivered by Jessica Green from Phylageny. 

All geographic locations have a unique microbial DNA signature. These genetic codes can be used to identify where a product or material has come from in the same way as DNA testing is used in criminology. The company uses the blockchain to store critical information for companies so that checks can be carried out along a supply chain and authenticate that the genetic markers such as the origin factory are as expected.

Phylagen Origin is a startup service that collects genetic material from locations worldwide and uses these to provide traceability. Examples include:

  • Verifying a ships log from dust particles on that boat.
  • Checking T-shirts come from a specific factory and not from outsourced factories with lower labour standards.
  • Checking medicines come from authorised materials. 
  • Tracing the origin or raw materials such as cotton, the product journey, and growing practices.

Phylagen collects DNA samples, generates the microbiome features, and then uses machine learning to distinguish features. Tracking cotton involves collecting cotton samples from around the world, logging their features, and then allowing machine learning to create a model of these features to use against future samples. When an unknown sample is tested, its genetic fingerprint is then crossreferenced to the model and a probability generated for its origin and any other characteristics modelled. 

The talk was fascinating and showed a glimpse of how new technologies such as microbiome testing, the blockchain, and machine learning can be used to solve genuine issues. It will be possible in the future to ensure a product you buy has not used slave labour at any stage of the supply chain, track pollution back to offending companies, or follow the spread of infectious diseases back to the source.  

I am happy to be back at University.

The English Indices of Deprivation 2019

The Indices of deprivation (IoD) is a collection of seven measures of deprivation used to relatively rank areas of England. The aim is to order the 32,844 small areas, with an average population of 1,500 or 650 households, from the least deprived to the least, and monitor changes in these ranks over time. The indices were introduced in the 1970s by the Ministry of Housing, Communities & Local Government to measure local deprivation across England. These neighbourhoods are officially called Lower-layer Super Output Areas (LSOAs).

Poverty is a lack of financial resources, whereas deprivation includes multiple aspects of individuals living conditions to measure a lack of resources. There are 39 indicators organised into seven domains combined using weightings that value income and employment more heavily than other forms of deprivation such as health or risk of crime. As a relative measure, there is no threshold where an area is considered deprived, but rather it is used to measure the relative deprivation between local areas.

The seven measures that make up the IoD are:

  • Income (22.5%)*: Measures the proportion of the population experiencing deprivation relating to low income
  • Employment (22.5): Measures the proportion of the working-age population in an area involuntarily excluded from the labour market
  • Education (13.5%): Measures the lack of attainment and skills in the local population
  • Health (13.5%): Measures the risk of premature death and the impairment of quality of life through poor physical or mental health
  • Crime (9.3%): Measures the risk of personal and material victimisation at local level
  • Barriers to housing and services (9.3%): Measures the physical and financial accessibility of housing and local services
  • Living environment (9.3%): Measures the quality of both the ‘indoor’ and ‘outdoor’ local environment

*Percentages represent weighting used when combining the domains

The latest data was collected in 2015 and 2019. Deprivation is distributed across England, with 61% of local authorities having at least one of the highest deprivation areas. The most deprived areas of the country tend to be concentrated in cities, particularly those that used to have heavy industry, including Birmingham, Nottingham, and Hartlepool, coastal towns, and parts of east London. Blackpool is considered the most deprived area of England, with eight of the ten most deprived neighbourhoods in the indices.

The indices can be used to compare neighbourhoods across England, identify the most deprived small areas, and compare larger regions based on the relative deprivation within the LSOAs, such as the number of areas in the bottom 20% of the indices. The data can also be used to explore individual domains such as levels of education, health, or crime in particular areas. Movements in the relative rank of a given area can be used as evidence of the effectiveness of development programmes or targeted interventions. 

The Indices of Deprivation is becoming more critical for Universities. The Office for Students puts pressure on higher education institutions to narrow gaps in access, progression, attainment, and outcomes between different groups of students. Gaps in the four areas existing between those that come from regions ranking lower than those that rank higher. Universities must make sure they are narrowing the gaps by seeking to recruit students from areas of high deprivation, putting in place interventions to help these students stay at university and achieve a good degree, and support them to find a graduate-level job once they leave.

Being aware of the indices is essential, first to understand that deprivation is not just about income, and secondly that you can use it over time to measure the impact of your work. You can read the complete reports and access the data on the UK Government website. 

The four points of a good start up pitch

This morning the following tweet was trending globally. Paras Chopra is a Delhi based tech entrepreneur and founder of Wingify, a web platform. Although I work in an established institution, I have created my learning design team from scratch. We are currently working on expanding our impact at the university, so it caught my interest.

The four points of a good start up pitch

According to Investopedia, an intrapreneur is “an employee who is tasked with developing an innovative idea or project within a company.” As an intrapreneur, you can borrow much of the behaviours and tools of an entrepreneur, such as risk-taking and innovative approaches to build and launch your internal project. The idea of a startup pitch for a new business function set up to target a new market, such as non-traditional students, can help to justify funding from the company in the same way a startup seeks funding from venture capital.

Paras’ four elements of a startup pitch are:

  • How is the product 10x better than alternatives (with proof)
  • What’s their moat
  • How they can acquire users profitably at scale (with evidence)
  • Hustles that the team has done in their careers

The first point, how is the product significantly better than alternatives, should be easy to answer and forms the basis of what your business function does. Once you have a hypothesis, it needs testing. Testing the product to get proof of its superiority over alternatives needs to be done with prototypes and prospective customer interviews in the early stages. Once up and running, the next job is to gain as much data as possible from early customers that the product is 10x better or continue to iterate until this is true.

A startups moat is how the new business can protect its product, gain and retain market share. A startup pitch must suggest how the company can avoid or create barriers to entry that stop other companies from taking over their business. Moats might include brand loyalty, economies of scale, geographical barriers, being first, integration with other parts of a supply chain and legal obstacles such as a patent. As an internal project, it is likely that fully integrating into the organisation, geographic access, and brand loyalty are likely moats to pursue.

Shareholders don’t pay for the castle, they pay for the moat.

Warren Buffet

The prototype testing should provide some data for acquiring users as, without a solid plan to build customers, the rest of the plan is not important. Word of mouth is the most reliable user acquisition method, but some form of advertising will be needed for this to scale. Popular user acquisition methods include building a social media following, paid search ads and search optimisation, and ad agencies and networks. Internal project teams can use cross-promotion with existing users from other business areas.

The pitch is about getting much-needed funding to support growth. To get people to part with money, they need to trust the team can deliver on the other three points. Many venture capital firms and large companies may be more interested in backing people than the idea. Good people will adapt and change an idea till they find something that works. It is essential to leverage what the team had done before joining the startup in the early stages. This currency will only last so long before the people expect to see what the team members have been able to do since joining the startup. Spend time developing the narrative around the people in the team to build trust that you can deliver what you say you can in the other three points.

Paras Chopra list of four points for a startup pitch provides an excellent framework for either an entrepreneur or intrapreneur starting or building a new project. By focusing on how the product is better, how it will stay better, how it will grow, and evidencing that the team can deliver this, you will build trust from internal or external investors. Can you answer these questions convincingly for where you currently work? If you can, then great; if not, you know what you have to do.

Metacognition: thinking about thinking

Metacognition is the process of actively seeking to understand and improve your thinking. Metacognition includes planning how to think, monitoring your thoughts, and then reflecting on how you think in certain situations—choosing models or strategies to help you think about and solve problems. By seeking to understand the way you think, you can change it to produce improved outcomes.

Metacognition is an awareness of one’s own thought processes and an understanding of the patterns behind them.

Wikipedia

There are two components of metacognition:

  1. Knowledge about cognition
  2. Regulation of cognition

Knowledge about cognition refers to what you know about yourself and how you and others think. Through monitoring and reflection, you might notice that you perform better in one type of situation than another, or you could develop an awareness of common cognitive biases like ‘loss aversion’ to help you understand how and why you and others make decisions. Regulation of cognition is the act of controlling the way you think. Standard regulation methods include developing habits through repetition to reprogram your mind to new presets or arranging your environment to encourage a particular form of thinking. 

A simple cycle to improve metacognition: 

  • Plan
  • Change
  • Monitor
  • Evaluate