In higher education, marketing is increasingly becoming a zero-sum game. It’s no longer enough to simply spend to recruit and communicate with students, and hope for the best. Instead, leadership and boards will require a thorough accounting of the impact of marketing costs, and whether these costs—from advertising to communications platforms—are justified in providing a positive return on investment. In other words, student acquisition costs are a top priority.
According to RNL’s Cost of Recruiting an Undergraduate Student Report, the average public institution spends just under $500 to recruit a student. For four-year private institutions, that cost rises to nearly $2,800—and those costs are rising. Understanding exactly how much your institution spends for each student it records is a crucial first step to building intentional strategies designed to reduce your student acquisition costs.
As budgets tighten amidst enrollment cliff worries and FAFSA uncertainties, a clear picture of your recruitment spend and how you can optimize your funds will only rise in importance. Learn how you can calculate these core metrics, and what steps you can take to minimize that number without compromising enrollment and recruitment effectiveness.
The Importance of Measuring Your Student Acquisition Costs
On the broadest level, understanding how much you are investing to recruit your average student provides a clear picture to inform your marketing and recruitment strategy. It’s simple: if you know how much you’re spending, you can compare that cost with the revenue per student and understand whether your enrollment efforts actually provide a positive return on your investment.
Calculating your student acquisition costs, also known as cost per enrollment, can further provide an analysis of how much each of your efforts is contributing to your efforts. Once you know the overall cost, you can break down what percentage of that cost comes from printed admissions materials, digital ads, etc. That metric, in turn, allows you to compare exactly how the impact of each of these tactics compares to its proportional cost.
Finally, breaking down your student acquisition cost can uncover natural avenues to optimize the cost. You’ll be able to find ‘waste’, ineffective tactics that can be reduced in spend or eliminated without seeing a major negative impact. While the acquisition cost is only part of the larger ROI equation, it’s crucial to start conversations and begin optimizing your efforts.
How To Calculate Your Acquisition Costs for New Students
At its core, customer acquisition cost is simple to calculate:
Customer Acquisition Cost = (Total Marketing Expenditures + Total Sales Expenditures) / Total Customers Gained
For higher education, where students replace customers, the equation becomes a bit more complicated. Sure, admissions costs can naturally slot into the sales piece of the puzzle above. But the individual costs fitting under the two larger umbrella terms can range widely, including:
- Digital ad recruitment campaigns
- Institutional branding ad campaigns
- Admissions travel expenditures
- Costs to host open houses and other admissions events
- Purchasing student search names
- Printed and mailed admissions materials
- Digital platforms such as CRM, texting, etc.
The key is keeping your calculation to only costs that directly impact student recruitment. Website hosting fees, for example, may indirectly affect recruitment but are general marketing expenditures for the entire institution. In addition, given the length of a recruitment cycle it’s vital to calculate your student acquisition cost on a yearly cycle, avoiding too-frequent monthly breakdowns.
7 Tips To Reduce Student Acquisition Costs for Your Institution
Given the above formula, calculating your student acquisition cost becomes relatively straightforward. More complicated is the next step: finding the right steps to reduce it without negatively affecting your enrollment. These 10 tips can help.
1. Shift Your Budget to Trackable Tactics
First, and perhaps most comprehensively, it’s vital to focus your recruitment efforts on tactics you can clearly track. The better you can understand which of your tactics actively contribute to new student enrollment, the more you can shift your budget toward these tactics over time.
This is a major reason why increasingly, colleges and universities rely on digital advertising rather than traditional tactics like TV and billboards to recruit incoming classes. But the same holds true for other parts of the recruitment funnel. QR codes on printed materials, applications tracked after visits, and email and text engagement rates are some of the many examples of trackable tactics that can prove their worth over time.
2. Act on Your Data
Of course, focusing on trackable tactics can only lead to improvement if you’re ready to act on the data. This step, deceptively, is among the most difficult for many enrollment marketing professionals. Too often, legacy tactics like print and TV continue to be part of the mix simply because ‘we’ve always done things this way’ or they’ll be seen by faculty, who are not a primary audience.
Crucially, your student acquisition cost can actually be a key tool to move away from these legacy tactics. Being able to show the significant investment without a clearly provable return will convince most stakeholders that a move to different opportunities may make more sense, which will in turn bring down your recruitment costs over time.
3. Integrate Marketing and Admissions
Too often, marketing and sales are disconnected from each other. One focuses largely on building brand and institutional awareness, while the other procures leads through travel, search buys, and other means and then seeks to convert those leads into applications and students.
However, the two areas are at their best when they work closely together. Marketing efforts should drive directly toward lead generation. Targeting should be closely aligned, ensuring digital ad coverage of any area where admissions have “boots on the ground.” The flow from ad to website to admissions email flow and other communication, in the eyes of students, should be as close to seamless as possible.
That’s not easy to accomplish, especially at institutions where marketing and admissions don’t “live” in the same division or organizational unit. But it’s absolutely crucial to work toward, ensuring that money and time are spent more effectively in pooling resources to gain new students.
4. Focus on Funnel Weak Spots
Naturally, marketing and recruitment has to occur across the enrollment funnel—from first outreach all the way to preventing summer melt. But at every institution, the areas in need of most help may deserve further attention. Prioritizing these areas can go a long way toward spending your recruitment budget more efficiently and with an eye on more students.
Public institutions, for instance, tend to have fewer issues with brand awareness than their smaller private counterparts. But they also have more trouble differentiating themselves from other schools students may apply to in the middle of the funnel. Pushing more resources into differentiating messaging can attract more students without increasing overall costs.
5. Prioritize Authenticity
Some of the best recruitment communications are the ones that don’t obviously appear to be promotional. Better yet, they can also be less expensive to produce, bringing down your student acquisition cost in the process. And, because Gen Z prioritizes authenticity more than any before them, this priority only becomes more successful.
User-generated content, especially when it comes from your current students, can be a massive advantage. Allow your students to share their own, authentic thoughts about your school. Then, share that information with prospective students through your owned channels like social media, email, and your website.
6. Optimize Your Website
A college’s website is consistently the most significant source of information for prospective students and their families. Therefore, optimizing your website for your prospective students has to be a major priority.
Entire guides have been written about the different steps institutions can take to optimize their website for prospective students. This guide is especially relevant for its focus on lead generation; the more naturally you can flow web visitors into your database, the more you can save having to buy search names or spending on ads to generate a recruitment audience for follow-ups.
7. Leverage AI Automation
Finally, artificial intelligence can play a massive role in reducing student acquisition costs. Its automation capabilities can drive down your recruitment costs without sacrificing (and, in some cases, even enhancing) the quality of your efforts.
For example, AI-enabled CRM systems can dynamically segment audiences and deliver custom follow-up content. Predictive modeling enables enrollment management offices to better understand which tactics are most effective beyond last-touch attribution.
And of course, AI-enabled digital assistants can play a major role in engaging interested students, generating leads, and answering core questions without requiring massive time-investment from your admissions staff.
These digital assistants, through channels like your website and SMS texting, automatically address common questions your students have. Every interaction is an opportunity to learn and improve the quality of responses in the future. Students feel engaged and cared for, without requiring admissions counselors to spend their time answering the same questions again and again.
With tightening enrollment budgets amid an uncertain environment, reducing and optimizing your student acquisition cost is more important than ever. Request a demo for AtlasRTX to learn how the right digital assistant and AI automation can help in that comprehensive endeavor.
