Topic featured in Ep 6 of the Private School Marketing Minute
Have you heard? There is this thing called inflation that’s been running wild in nearly every country on the face of the planet. Food costs are higher, energy prices are up, and in general it’s just more expensive to live. What’s worse is that wages are not outpacing inflation, forcing families to take a hard look at their budget and cut back wherever necessary.
Americans in particular are spending less on dining out, skipping vacations, and driving less in order to save. Fun fact: American credit card debt is about to hit an all-time high.
So, all of this paints the perfect picture of private school tuition on the chopping block. Families are making tough choices about what they are willing to spend their money on right now. Is your school strong enough to be a necessity in their minds?
In this post, we’re covering how to use student retention strategies to ensure your student retention rates don’t drop during shaky economic times.
Student Retention Services
It's No Secret...
Okay so, it’s no secret that private school comes at an expense. Is that expense worth it to your families? That is the ultimate question you need to ask yourself.
The fear I’ve been hearing most often from people in the industry is that parents will pull their students out of school to save money OR that the waitlist that schools have been enjoying since 2020 will start to dry out.
These are relevant worries. There are all sorts of sats and polls about how people are being more conservative with their spending right now. There’s no doubt that an $8,000 or more yearly expense is NOT on the minds of parents looking at their budget. So, what does that mean for your private school?
It means you need to invert your spending. You need to focus on student retention rather than student enrollment.
Student Retention Programs
Most schools start to think about running student retention programs when their renewal rates start to decline. This is far too late. We all know that an ounce of prevention is with a pound of cure right? But, still, in life and in business too often we find ourselves in the later part of that saying. Don’t let that be your school again this year.
We believe student retention programs should be running year-round regardless of the size of your waiting list, re-enrollment rates, and overall sentiment.
Why? Because it is far cheaper to keep your students than it is to get new ones. Businesses have known this for so long but schools still haven’t picked up on this vital practice.
Markin blog rounded up some stats about customer retention. Now, this is for businesses, not for private schools but from what I know these numbers will translate pretty evenly.
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.
- It costs up to 7x more to acquire a new customer than to retain an old one.
- Increasing customer retention by 5% increases profits by 25-95%.
- 44% of companies have a greater focus on acquisition vs. 16% that focus on retention.
- 65% of a company’s business comes from existing customers.
- Loyal customers spend 67% more than new ones.
- 82% of companies agree that customer retention is cheaper than acquisition
These numbers make an undoubted case for student retention programs. Yes, they’re not sexy. No, they’re not going to be some ground-breaking hack that you can get published on NAIS about. But, they’re fundamental and the fundamentals always deliver.
So what do you do with this information? Aside from the few months at the beginning of COVID in 2020 the economy has been rocking and rolling for 12 years. There’s a bigger risk than there has been in a LONG time that parents will make the decision to choose public schools over private schools – or a lower tuition option. Now is the time to start your retention programs. And do me a favor, once you start them keep them running from this point on.
Sign up for the Private School Boom Email Series where I teach you how to keep the good times rolling no matter the state of the economy.
Until next time,
Nick
