Decision Making in the Board Room: The Data Connection

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Decision Making in the Board Room The Data
Connection

• Donna Orem, orem_at_nais.org

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Agenda

• Part I The Value of Market Research
• Part II Gathering Trend and Consumer Research to
  Drive Marketing and Strategic Planning
• Part III Conducting your Own Research
• Part IV Case StudyUsing Research to Assess
  Market Potential

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Part I

• The Value of Market Research

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Why Conduct Market Research?

• Market research
• Provides a systematic and objective method for
  collecting, analyzing, and using information for
  strategic planning and marketing
• Enables you to know your constituents (parents,
  students, alumni)
• Ensures that you are data-driven rather than
  anecdote-driven

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Market Research Keeps a School Strategically
Focused

• What are our priorities?
• How well are we doing?
• What global, national, and local trends do we
  need to be aware of that might affect our school?
• Will local demographics sustain our school in the
  next 5-10 years?
• How do our constituents and the general
  marketplace view us?
• Where should we apply our financial resources?

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Market Research Informs

• Parent Surveys help to clarify
• Why families choose a school
• How to best market a school to prospective
  families
• Where a school is succeeding and where it needs
  to improve from the parent perspective
• What differentiates parents views of a school
• How families experience a schools culture
• What is the profile of your typical family
• How price sensitive are your families

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Market Research Tells a Story

• Alumni Surveys aid in understanding
• The long-term benefits students gain from
  attending a school
• Potential for alumni fund raising
• How to best serve alumni today
• How to connect with alums from different
  generations

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Market Research Provides Data to make Informed
Decisions

• Demographic Research provides hard data on
• The numbers of school-age children in the area
  from which you recruit and their familys income,
  race, and ethnicity
• Other useful data such as trends in housing
  prices, consumer spending, etc

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Sample Market Research Agenda

• Environmental Scanning (global, national, and
  local trends) Annually
• Parent Research (satisfaction, why students
  enroll, priorities) Annually
• Admissions Research (students who enroll and who
  do not enroll, attrition studies) Annually
• Demographic Research (school-age population,
  family incomes) Annually
• Alumni Research (alumni planning and fund
  raising, alumni stats for marketing) Every few
  years
• Image Assessment (community, current and
  prospective families, colleges) Every few years
• (From The Value of Market Research by Kathleen
  Hanson, Marketing Independent Schools in the 21st
  Century, NAIS, 2001.

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Part II

• Gathering Trend and Consumer Research to Drive
  Marketing and Strategic Planning

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What We See from Trend Research

• Current families are looking for specific data on
  value-added of independent education
• More choice in educational environment public,
  charter, parochial, magnet, home-schooling
• Tuition is rising more quickly than disposable
  income in some parts of the country
• Generational differences are driving different
  choices in education

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NAIS Economy Research 2009

• The goal of this research is to try to understand
  how the economy might impact enrollment and
  giving to independent schools. The research
  encompasses four studies
• Education consultant survey
• Prospective family survey
• Current family survey
• School pulse surveys

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Prospective Families Are You Considering An IS
Education?
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Prospective Families Is the Economy Affecting
Your Choices?
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Who are Your Families?

• Slam on the BrakesVulnerable and hardest hit
  financially
• Pained-but PatientResilient and optimistic about
  the long-term, but less confident about recovery
  in the near term
• Comfortably Well offFeel secure about their
  ability to ride out current and future bumps
  (mostly top 5 income bracket)
• Live for TodayCarries on as usual (typically
  urban and younger)
• Excerpted from How to Market in a Downturn,
  Harvard Business Review

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Prospective Families Ranking Of Educational
Choices
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Why Prospective Families Are NOT Considering IS?

• Past experience with private schools BAD
• I do not like the elitist perspective with which
  children are imbued in private schools
• They went to private from K-8th, time for the
  real world
• Need for ethnic diversity in their environment
• Believe in a public school education
• FISD public schools are the best in the country
• No private schools within our area
• Services required not offered by independent
  schools
• Saving money for college versus private school
  education
• Haven't found a school to suit our daughter's
  special needs
• Not desired

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Prospective Families Of those answering YES to
IS
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Prospective Families How Will You Finance Your
Childs Education?
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Current Family Enrollment Plans

• Parents Enrollment Plans
• 80 plan to continue sending their children to
  the same independent school next year. (with
  conditions)
• 4 will switch to another private school
• 3 will move out of private independent schools
• 6 are unsure
• Drivers for leaving Cost, competitive cheaper
  private schools or free public schools,
  diversity, desire for real-world experiences

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We will hold on for as long as we can

• For many families, continued enrollment over the
  long-term is conditional and somewhat uncertain
  due to economic factors
• Overall loss of wealth/savings
• Rising cost of tuition greatly outpaces yearly
  salary increases
• Job loss and/or new job at a much lower income
• Retired or near retirement
• Business owner and business is very slow
• College costs are a major concernespecially for
  families with more than one child
• Total tuition costs if more than one child in
  independent school

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Current Parents on Financial Aid

• 22 of respondents currently receive financial
  aid
• 11 who do not currently receive financial aid
  plan to apply for financial aid during the
  current or next school year
• Some who need aid will not apply

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We will do anything

• Parents are considering deferring or sacrificing
  elements of their lifestyle to keep their
  children in independent schools
• Vacations (73)
• Eating out (59)
• Buying new clothes or personal items (54)
• Putting money into savings/retirement plans (50)
• Home renovations (49)
• Purchasing an automobile (41)

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Giving Plans

• More than 80 of parents made a charitable
  contribution to their childrens school in the
  past and plan on making contributions to these
  schools in the future
• 49 will give at the same level as before
• 7 will give at a higher level than before
• 18 will give at a lower level than before
• 50 gave under 1,000 21 gave between 1,000
  and 2,499
• 24 of parents reporting incomes greater than
  300,000 plan to give at a lower level

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From the Center on Philanthropy

• Most households continue giving even through lean
  times, although some do so at decreased amounts
• Donors earning under 50,000 are more likely to
  become non-donors than are those earning more
  than 50,000
• The number of contributions of 1 million or
  more made by individuals which, during the
  first half of 2008, had been on track to exceed
  the tally for 2007 fell sharply in the second
  half of 2008, down 33 percent versus the same
  period for 2007. This constituted the largest
  drop since the attacks of September 11, 2001.

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The Effects of the Economic Downturn on the
District of Columbia Metropolitan Area

• The DC metro area has seen a steady decline in
  employment numbers, from 1.01 in April 2008 to
  -3 in April 2009
• A considerable decline in investment and new
  housing starts, down 50.42 in April 2009
• A sustained decline in industrial production,
  down from 2.49 in April 2008 to -12.38 in
  April 2009
• Retrieved from Moodys Economy.com and
  MSNBC.coms Adversity Index, http//www.msnbc.msn.
  com/id/29976394.

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District of Columbia Economic OutlookStrengths
Highly educated workforce High per capita
income Status as the nations capitol stabilizes
economy and ensures tourism Strong growth in
suburbs maintains demand for DC workers From
Moodys State Précis District of Columbia
Economic Outlook, www.economy.com
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District of Columbia Economic OutlookWeaknesses
High business costs Weak population
growth Security and crime risks Weak school
system From Moodys State Précis District of
Columbia Economic Outlook, www.economy.com
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How does Moodys rank the District of Columbia?

• Employment Growth Rank for 2008-2010 (1best,
  54worst)
• 2 (1st quintile)
• Cost of Doing Business (composed of labor costs,
  tax burdens, energy costs, and office costs)
• 115 (15 above national average)
• Per Capita Income
• 163 (63 above national average)
• From Moodys State Précis District of Columbia
  Economic Outlook, www.economy.com

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Part III

• Conducting your Own Research

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Options for Conducting Your Own Research

• In-house research expertise
• Market research expert local or national
• NAIS SurveyBuilder
• NAIS Demographic Center

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NAIS SurveyBuilder

• Standard Surveys w/customizable questions
• Parent Satisfaction
• Young Alumni Outcomes
• Board Assessment
• Head Evaluation

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Conduct Demographic Research

• NAIS Demographic Center
• Run reports on demographic changes by zip
  code/census track/block group
• Study Metropolitan Area Reports for a summary of
  overall changes
• Use Profile Analysis tool to pinpoint target
  recruitment areas

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The NAIS Demographic Center
In November 2006, NAIS partnered with Easy
Analytic Software, Inc. (EASI) to create the NAIS
Demographic Center
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DEMOGRAPHIC CENTERBasic Reports

• They include variables such as school population,
  families with children by income, race/ethnicity,
  and educational attainment
• Types of reports
• Summary Reports
• Detailed Reports
• Multiple Area Reports

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DEMOGRAPHIC CENTERAdditional Reports for
Advanced Use

• They include variables such as population,
  households, families, housing, income,
  employment, education, sales, cost of living,
  and/or consumer expenditures.
• Five types of reports
• Quick Reports
• Ring Studies
• Quick Maps
• Rank Analysis
• Profile Analysis

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Study the Changes in School-age Pop by Income
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Changes in the District of Columbia School-age
Population
The District of Columbia recorded 3.04 decline
between 2000-2009 and is forecasted to record
3.58 decline between 2009-2014.
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Growth in School-age Families w/ Income Of
350K in the District of Columbia
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Growth in Hispanic and Asian Populations in the
District of Columbia
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Part IV

• Case Study Using Research to Assess Market
  Potential

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What the School Sought Current Position in
Marketplace

• What are the schools five- and ten-year
  admission trends? Yield trends?
• How do they compare with independent schools in
  the area?
• What is the image of the school among the
  regions families? How could that be improved?
• Given the educational needs of Gen X families,
  what are the schools competitive strengths and
  weaknesses?
• Who are the schools parents today (e.g., by
  income range, race/ethnicity, public/private
  school orientation, financial aid history)?
• How price-sensitive are parents today?
• Does the school have waiting lists today? If so,
  where?

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What the School Sought Affordability

• How are income demographics changing in the
  region?
• What is the elasticity of the schools tuition in
  the current marketat what price will the school
  begin to lose families? At what price will the
  school become unaffordable in the market?
• How does increasing tuition at the current rate
  affect the schools mission (i.e., how important
  is affordability)?
• Is the current financial aid model the correct
  one or should it look more like the college model
  in which most tuition is discounted?

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The Research Agenda

• Study the admissions funnel (inquiries,
  applications, acceptances, enrollment) for this
  school and similar schools in the marketplace to
  understand five- and ten-year trends for demand
  and yield.
• Conduct a parent satisfaction survey and review
  past parent satisfaction studies to assess
  satisfaction levels and to determine a profile of
  the schools families.
• Collect and analyze demographic data on growth of
  school-age children by zip code (those zips from
  which the school currently draws students as well
  as those zips where there is the greatest growth
  in numbers).
• Collect and analyze demographic data on income
  growth for families with school-age children by
  zip code (those zips from which the school
  currently draws students as well as those zips
  where there is the greatest growth in higher
  income families).
• Conduct a survey with area education consultants
  to identify changing trends overall and trends
  specific to the school.

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Parent Satisfaction Study

• Key Areas of Inquiry
• What is most important to parents and how
  satisfied are they with how the school delivers?
• What attracted them to the school?
• To what other schools did they apply?
• What is the profile of the schools families?
• What is the elasticity of the schools tuition?

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The Power of Filtering Data

• Understand the nuances of the market by filtering
  data by
• Age
• Income
• Gender
• Satisfaction w/school
• Grade of entry

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The Demographic Trends

• Although the school-age population in the zip
  codes from which the school attracts students is
  declining, the number of children from high
  income families is increasing.
• There is great potential in adjacent zip codes
  that is, zips from which the school currently
  gets few students, but are adjacent to zips from
  which the school gets many.
• There is great potential in farther out zip codes
  if the school could find a means to attract those
  students.

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Survey of Area Education Consultants

• What the School Sought
• Are consultants aware of the school?
• How would they describe it? To what kinds of
  students would they suggest the school?
• Are families aware of the school?
• How do they view the school, its strengths and
  weaknesses?
• What trends are they seeing?
• What suggestions do they have for the school?

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Survey of Education Consultants

• What the school found
• School is well known in surrounding area, but not
  at distances past 3-5 miles
• Consultants are confused about the schools
  stance on students with learning differences
• Consultants are seeing different entry patterns
  for schools in the region

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Conclusions

• The results of this study enabled the school to
• Pinpoint where to target marketing
• Understand what resources are needed to
  effectively market the school in this economy
• Be clear about tuition elasticity at the
  schooli.e., which families is the school likely
  to lose at what increase levels
• Gain a fairly clear picture on how the school is
  perceived in the marketplace
• Get a sense of changing trends and what the
  school needs to do to accommodate those

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Conclusions (cont.)

• Understand parents satisfaction level overall
  and target those areas in need of improvement
• Gain a clear picture of how likely current
  parents are to recommend the schools to others
• Gather ideas for non-tuition revenue streams

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SoWhat does this All Mean for a Trustee

• Comprehensive market research can help you to
• Forecast tuition revenues
• Forecast financial aid need
• Forecast giving
• Budget dollars for those programs that attract
  and retain students
• Identify non-tuition revenue opportunities
• Plan for future school development

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Some Closing Thoughts about The Economy Steps
for Boards to Take

• Identify the key metrics that really reveal how
  you are performing in key areas.
• Reprioritize initiatives. Focus on those
  initiatives that will have the most immediate
  impact on recruiting and fundraising.
• Budget for a smaller class. It is much better to
  budget for a smaller class now than to cut
  budgets later.
• If you need to cut or trim a budget, dont be
  fairbe strategic. Use the recouped dollars to
  invest in other programs with greater market
  interest.
• Work hard to address families concerns and
  issues. Position yourself as a resource and a
  partner.
• Excerpted from Wise Moves in Tough Times, Dr.
  Robert Sevier, Stamats

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Some Closing Thoughts (cont.)

• Conduct a tuition pricing elasticity study. These
  studies can pinpoint how planned increases in
  tuition will impact market share.
• Focus on recruiting and marketing activities that
  you know work. Do not invest in new initiatives
  that will drag resources away from proven
  strategies.
• Hire and deeply train the best recruiting,
  marketing, and fundraising staff you can. There
  is nothing more helpful than talent.
• Identify your top four or five competitors and
  gather competitive intelligence.
• Excerpted from Wise Moves in Tough Times, Dr.
  Robert Sevier, Stamats

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And some final thoughts on the value of acquiring
new information

• Every creative act involves
• a new innocence of perception
• liberated from the cataract
• of accepted belief.
• -Arthur Koestler

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Thank You!

• Donna Orem
• Chief Operating Officer
• NAIS
• orem_at_nais.org