Approximately 1.5 years ago, I left the innovative company I had helped build, Education Connection. I had found a new innovative company whose mission I loved, and I wanted the experience of working with the “state university” side of the online higher education industry; so I left my comfort zone and moved across the country to Dallas, Texas. I also wanted to “prove” to myself that I could be successful without my two mentors; I felt it was time for me to “grow” on my own.
This turned out to be a necessary part of my ‘journey’ as I was able to grow, learn how to interact with a different group of executives, board members, and cultures and also afforded me to opportunity to see how different working with state universities was vs. for profit universities. I was able to ‘prove to myself’ that I could be successful without my mentors, which was good and bad. Good because it made me more confident…bad because I certainly didn’t need anymore “ego feed”.
By adding this new subset of an industry and connecting with myriads of new individuals, I was able to see one thing: I had been working for (Education Connection) the most innovative and forward thinking group in the education space.
Based on the number of consulting and job inquiries I was recieving while at the second company (post working at Education Connection), I chose to start my own company. I believed this was a way for me to work with multiple companies, multiple executives, and would provide me with an unbelievable learning experience; the ability to interact and learn from the top executives in the higher education industry.
At this juncture, I’ve worked with about ten different higher education service companies, ranging from lead generation to call centers to enrollment management companies; and multiple schools. I have learned a lot, but my biggest learning was this: The only companies that will survive the new for profit education regulations would be the ones that invested heavily and believed in their innovators. In speaking with one of the executives I enjoy working with the most, a brilliant man named John Goodwin, he made a comment I use all the time now. He said, “The companies that come out of this education congressional hearings successful will be the companies that not only listen to their innovators, but more so will be the companies that have the ability to adapt the most quickly to a changing environment.” We were going back to Darwinism.
Having worked with all of these schools and companies, there is only one company that has come forth and displayed a pro-active understanding as well as comprehensive product offering to aid the for profit schools in their quest for higher graduation rates and higher re-payback rates on their loan; that company was Education Connection.
About 5 years ago, my prior CEO and mentor Richard Capezzalli said to me, “What will happen to the for profit education industry in the next several years is going to be cataclysmic.” I vividly remember this as 1) I didn’t know the exact meaning of cataclysmic and had to run and look it up. 2) We had recently started a lead generation company, Education Connection. I thought to myself, ‘why would we have started a lead generation company if the for profit industry is going to be shaken up so badly?’
In the subsequent four years and and 11 months, I learned the reasoning behind our ‘lead generation’ company; we were building a lead gen ‘model’ to learn the best ways to market to students, but the end goal was different. We were looking for students that yielded the highest graduation rates, or net tuition revenue; not solely the lowest cost per acquisition or cost per enrollment.
So after about two years of introducing ‘innovative break through’ #1 (we were the first lead generation company) that had employed prior admissions advisors and were warm transferring leads to the for profit schools at over 10% lead to start conversions; Richard, the innovator, introduced the true reason he was confident that EdConnect could take over the industry; at first, he called it “Future Scholars” (It is now called Test Drive College).
With the goal of advising and working with students who would yield the highest graduation rate, Richard quickly went back to his days of owning and running schools. He explained to his EC management team that 2 of the main reasons students did not stay in school were 1) They were not prepared for the rigors and discipline needed for online learning and 2) Across the entirety of the ‘edu lead generation industry’, we were marketing to people who were not “academically ready”. So, logically – if we were able to find a way to ensure that the students were 1) Academically ready 2) Had the ability to experience online learning (and not just a demo, a true class), the retention and graduation rates would rise dramatically. This would not only effect graduation rates in a positive manner, but would also positively effect loan re-payback rates and minimize loan default rates. There is a direct correlation between students graduating and having a higher payback rate.
The model went live with a large test utilizing two of the large for profit universities as ‘partners’ and while it took a year to get the student retention rates back, the test was wildly successful. “What is the model?” you ask. In it’s simplest form, students take an online accredited course (they can transfer into a school) for free; hence the word, “TEST DRIVE”. In order to be one of the chosen for this free course, the student first must pass a short test (SAT questions – I believe there are 20 of them), which demonstrates the student can sustain the academic climate in a college. Once the test has been passed, the student speaks with an advisor or “gatekeeper” as we liked to call them during the testing phase; whose job is to ensure that IF the student does “adapt” and is a “fit for online learning”, they will enroll in a school post taking the free online course. The goal was to ‘weed’ students out in this free course that did not like online learning. We only worked with students who were serious and who understood the value of the degree, the financial aid process, etc.
The tests were wildly successful. The hypothesis that these students would retain and have higher graduation rates was proven (patience was certainly a virtue as it took over a year for these retention numbers to come back). The company that had been the first to see these regulations would be coming (about five years before they came), the company that quickly executed on their innovative plan, the company whose tests were successful prior to any regulatory discussion taking place – this is the company that is positioned to aid the for profits in their quest to continue to help the students who have nowhere else to go. The company that was the first to embrace their innovator was Education Connection. Will you be next?
At the recent Technonomy Conference, Bill Gates talks about the need for more online education. He states there “will be” five times more college courses online and that this is the only way for the schools to provide education to everyone who wants and needs it. The first minute of the video speaks more to the younger scholar; K-9, however the other 2 minutes of the video show his support for bringing our traditional schools online.
While very short, what I like about what Bill Gates stated, is that he obviously knows that online education is NOT for everyone and makes this clear. He states that college courses online are for the ‘self motivated’ learner.’ This is an important point that many of those outside of the online higher education industry miss; in order to succeed online, students must be self motivated and certainly disciplined.
Bill Gates said what everyone is saying and only a handful of state schools are acting on: We need to take tuition that’s $50,000 / year and figure out how to provide it to everyone who wants it at a lesser price – even stating that placed based activity will be five times less important than it is today.
Not only do I agree with Mr. Gates in his projection, but also in his open admittance that online education is not for everyone.
Am I one of the only people who want to say “thank you” to the for profit schools? To the online higher education market? Thank you University of Phoenix and Kaplan University and all of the other universities who had the courage almost a decade ago to take a risk. A risk that has not only provided individuals the opportunity to get their degrees even while working and taking care of families, but also paved the way and built the models that now allows state universities to offer these degrees online as well.
As congressional talks surrounding the negative impact online education has had on graduation rates and specifically loan default rates; what we are not hearing are long term solutions. We are hearing suggestions of band aids. Do I like the idea of the gainful employment laws? Yes! That said, if we are going to implement them, it should be done across the board and it needs government support to get started. What these lawmakers are failing to recognize is that it took guts, innovation, large investments; and a lot of time NOT being profitable for these for profit online education companies to get where they are today…and the model is less than TEN YEARS OLD. How can the for profit schools be expected to figure out HOW to raise their graduation rates and how to lower their default rates when most of them just recently figured out how to get students to graduate?
The disservice that has been committed in the higher education industry is not from the for profits; but rather – I blame the state universities; specifically, the marketing departments at these state universities. There are hundreds of state universities offering online programs at low to medium prices. We have seen everything from $7,000 M.Ed Programs all the way through $13,000 nursing programs. Not only are these programs far less expensive, but their graduation rates are higher. Again, as these state universities online degrees have only been around for about five years; perhaps there is not enough statistically significant data here, but it does look promising.
So instead of attempting to shut down an industry that has opened the doors for people to better their lives; why not work with the state universities to offer more of these programs that have displayed high graduation rates, low cohort default rates, and other positive statistics. The marketing teams at these schools are to blame; they are the ones not fighting for the budget or not taking the risks. If all of the for profits can run television, why can’t the state schools? It’s relatively inexpensive to run remnant television and these days, television can be run on a cost per inquiry basis. If the state universities and enrollment management companies are too “fearful” to go into the red for a couple years – maybe the government should be forcing them to hand over a portion of their revenue and allow the marketing geniuses at the for profit schools take a stab at branding and developing them.
It’s not the for profit schools that are the problem; it’s the state schools lack of motivation and understanding of how online education will better the lives of millions. The disservice is that of our state schools poor marketing, slow admissions, and fear of investment. The online for profits gave you a model to follow and then MAKE BETTER. Do it already.
I’ve spent the past eight years promoting higher education, specifically higher education online; during which time I had gotten certified in project management and taken a few graduate level business courses. I had originally taken online courses so I would “know what I was selling and marketing”. I’ve been vacillating for the past few years about going back to school online to get certified in six sigma, but never “just did it”….until last week.
Last week I enrolled for Villanova’s Online Six Sigma program through University Alliance (some of you may know as Bisk Education). Having worked in this industry for years, I liked the quality of their program, their delivery method, LMS, and they had a great admissions representative; Pricing was definitely fair, books included, etc.
I received my books on Monday and almost had a heart attack. I’ve spent my career ensuring students do not only enroll. but more importantly START and GRADUATE from their online university…Students have always called or emailed the first day of classes or after they receive their books wanting to DROP and I have always calmed them down. Well, it was time for ME to calm down. I went back to my first year in “admissions” and pulled out an old email I used to send students that said, “Don’t freak out! You’re going to be nervous to go back to school; you’re supposed to be. Everyone is feeling the same thing”. I didn’t 100% feel better, but a little bit.
Now that I’ve taken the time to peruse the six sigma book(s), it’s actually not bad…and the ‘words’ and ‘language’ that had intimidated me on my first day were all abbreviations for something I already knew (or knew how to do). It was interesting though – having the same feeling I’ve been talking students out of having for years.
Everything comes full circle, right?
After writing my last post I had several great comments showing me that 1) I did not delve into the actual performance model, but more so the overall business model 2) I didn’t give any helpful examples 3) I didn’t speak about the variables that are needed for success 4) I didn’t say why this pricing model would work; so to continue on my past posting.
I contend that consultants that utilize a ‘pay for performance’ model are more likely to get and retain clients as well as make more money.
Reasons this model works:
1. Client is taking on little of the risk – more likely to give you the business
2. You can charge more money on the backend of a consulting ‘gig’ than you can if you charge up front as you are taking all of the risk.
3. Long Term, there is a higher likelihood of people coming back to you for jobs as they like the model of taking minimal risk. You also may be able to get signed on a retainer because businesses like people who are confident and have made them money in the past.
4. You can also set up pay for performance deals ‘long term’. So, instead of getting paid 1 lump sum, you can get paid a percentage of revenue from your project or product every month for a year, 2 years, etc.
4. By taking on the risk, you are showing the client you are confident in your abilities.
In my experience, the variable(s) critical to success are 1) Knowing what you know and knowing what you don’t know; this model alleviates you taking on projects you cannot complete successfully, however it also affords you the opportunity to refer the ‘right’ person. Instead of taking a commission or money for your referral, you can go through the process or project with the person you have referred it to – therefore expanding your skill set and learning. 2) Knowing your industry 3) Experience. If you know your industry, have had numerous experiences, and have a stand out skill set, this will likely be a good pricing model for you.
As noted from other comments, there will inevitably be variables that impact your success. These variables change dependent on the business, however this is where experience comes into play. If you have done similar projects, you know what obstacles may come your way and can account for those obstacles when building out your contract, pricing model, and / or plan.
Examples of “Pay For Performance” consulting:
Business Development Consultant (easiest):
A company brings you on to consult in bringing them more partnerships, vendors, or clients. You can structure your payment plan so that you only get paid “if” you bring on a partner. This is analogous to a broker’s fee and can be set up in a few different ways depending on the situation. The easiest way is to get a ‘finders fee’. In my arena, I typically set up larger deals by which partner companies are purchasing from the client. I get paid 10% of total revenue for a year post the deal going live.
Training / Performance Improvement Consultant:
When you first speak with a company, you will need to see their metrics. For example, if you are wanting to work in ‘sales training’, when you go in – the current metrics are at 5% lead to close. Before you put together your proposal, you will need an assessment day (possibly more) where you listen to the current sales pitches, review any content / scripts, etc. You can then assess (based on your experience) how much you can increase the sales conversion rate as well as how that will affect the business overall. This is how you arrive at your pricing. So, if you are working in higher education online and you go to a company that has a 2% conversion rate – and you assess that you can bring it to 2.2%. This doesn’t sound like a lot, but if you look at the average lead cost ($30), your cost per acquisition on 2% is $1500; while your cost per acquisition on 2.2% is about $1360. If a higher education institution enrolls (sells) 10,000 students per month and you are able to raise that 2% to 2.2%, you have saved the company $1.4 million dollars in just 1 month or about $17 million per year. The way I would be paid in this situation, I would ask for $50 for each enrollment (or sale) that closes at over 2.1%. You could also just give a flat price / tiered pricing like…If conversion for the month = 2.1%, you get $15,000. If 2.2%, $30,000, etc.
To Be Continued Later This EVE
When I stopped working FT a few months ago, I wasn’t sure what direction I was going. Three schools of thought: 1) Start my own company. 2) Be a consultant 3) Get another job.
I knew I didn’t want another FT job (at least not right away) as I’m a ‘start up ‘ junkie. I like to build businesses, departments, strategies, and ideas…and then take from conception to “LIVE”; and make them profitable. So that left me with either my own business or consulting. I realized, the two did not need be mutually exclusive. So, while building a business plan, I’ve been consulting and contracting. As higher education, specifically online higher education, is an incestuous industry; as soon as word got out, the phone calls and requests came in. It seemed that this would be easier than I thought – at first.
I quickly realized that to be successful in consulting, to be referred, and to work with numerous clients, it would take a lot more than a great past track record. It would take patience (something I don’t have much of), discipline to NOT take every job offered, and more so, this was yet another great experience where I was learning to ‘check my ego at the door’. In return, and the reason I love consulting, I was learning just as much from clients as they were learning from me. I quickly took the revenue driving sales and marketing strategies I had employed in higher ed and took them across numerous verticals.
So, why do some consultants make it? Why are there some of us that get repeat business while others may spend weeks or months marketing themselves and get nothing? Very simple answer: PAY PER PERFORMANCE CONSULTING.
So how does that work? Well, it depends on what you’re consulting on. However – there is one thing we can agree on: companies would rather YOU take the risk than them. We can also agree that if a consultant came to me and said, “I’m so confident in the strategy I lay out for you that you only have to pay me if I execute on it and execute well enough to hit the revenue goals you have set forth”. Why would a company EVER say NO? I know I wouldn’t. There are, however, many of us, that do need that “month to month” paycheck. You can look at this in 2 ways: 1) You can map out your beginning projects as if you are in a start up company. So, you map out your consulting KNOWING you will be “in the red” for 3 months; or until your projects start ‘making you money’. Who better to make an investment in than yourself? 2) You can charge a ‘small’ up front fee…maybe “min. wage” per hour…and get most of your money on the back end while still having money to live on the front end. Every project or consulting assignment is different, however by being paid on performance, you are not only showing your confidence, you are also ensuring yourself you will not take on anything you cannot handle OR if you do choose to take on something you cannot handle, you will make certain that you partner up with one of the best in the industry to learn.
It’s very simple in sales / marketing to set goals and only be paid if the goals are obtained, but what about other industries that have a large number of consultants or companies vying for the same business. Broken down below are 5 areas where I see a lot of consulting and how you can structure your pay on a performance basis.
1. Web Design / Development
- May be held accountable for a) web stats b) number of sales on site c) stickiness of site
2. Free lance copyrighting
- May be held accountable for a) Amount of time user spends on page b) Drop off rate c) CTR
3. Career Coaching
- May be held accountable to getting someone the job they can succeed and prosper in
4. SEO mapping / content development
- May be held accountable to page rank in “x” amount of time
I know there are many more, but these are ones I see the most often on the networks that I am on. As with anything else; if you need work, you need to take some risk. If you’re good, you’ll be rewarded. Consulting models such as this are good ol’ capitalism at its finest.
Two things I look for in every company I work with:
1. Do they executives believe in continuous learning as well as personal / professional growth AND will they aide you in your journey…
2. Is their business model, or product, something new, innovative, and / or something that the market has not seen before.
If the answer to these two questions is not “YES”, than I know this start up business is not for me. However, if the answer IS “yes”, I know that I will do anything in my power to work with, and learn from, these individuals. Even if it means working for free for a while; just to prove myself.
When I was 22 yrs old, I began working at Kaplan University, online higher education giant. However when I entered the working world, Kaplan University was called “Kaplan College”; they only offered 4 degree programs (now offer over 100 if we include specializations); and more importantly, only had 60 admissions advisors or ‘sales reps’. While it wasn’t a “pure” start up in the sense of the word, it did grow immensely over the next two years and when I moved to a ‘real’ start up, had over 1500 admissions advisors, and had grown the student base over 1000%. It was a rush to be a part of. We purchased new buildings, there was a lot of room for advancement and learning. We had access to the C level business executives, ideas were listened to; and while sure – there were bumps along the road, it was still fun to come to work everyday. Not only were we doing jobs we believed in, but there was always something “new” and “innovative” to look forward to.
About five years ago, original owner and SVP of Sales and Marketing for Kaplan University, Richard Capezzali, developed a business concept with a young man named Todd Zipper. They wanted to prove that they could execute on numerous strategies that had never been ‘done’ before. The two innovators founded Education Connection, which was at first a lead generation company, and became the first lead generation company to 1) Be agnostic 2) Develop commercials – not school specific, for themselves, 3) Develop a lead that converts at over 10% 4) Build out an advising call center. I basically stalked Richard and Todd until they brought me on as their ‘first’ employee. I was in heaven. I was working with two men; one – an expert in education sales and marketing and the other – an Ivy league MBA who taught me operations, finance, etc. and both believed that it was POSSIBLE to make the impossible possible. I learned more over the four years with these men than I could have in any MBA program.
After four years with Education Connection, my husband and I were recruited to another start up higher education company out in Dallas. While the answers to the questions above were “Yes” and the interviews were fantastic, there was a difference in this company, yet I couldn’t put my finger on it. As soon as I came aboard, I was back in the “start up” mode; building and executing quickly, driving revenue, and having fun doing what I love to do: build businesses. What I realized while I was working for this company was that although they were a ‘start up’ company in that the idea was new, we were just reaching profitability, etc. all of the C level executives or business partners had worked together for 15 years. And in that 15 years, they had already developed a culture; one that was unlike a “typical” start up business; it was more like a 10 year old corporation. Not for me. That being said, because I believed (and still do) strongly believe in the mission, I stayed onboard and did what I do best: drive revenue and cut costs…
Until a few months ago.
For the past few months, I’ve been consulting with numerous marketing and education companies. Some are start ups, some are trying to devise new revenue streams, some I’m working with to build out new products…but here is what I know. I love consulting. Every ‘project’ is basically a small start up company AND I get to choose who I work with. If I don’t like a project, I “just say no” and move to the next. I’m only working with companies I believe in, working with people who are innovators and allow me to be innovative, and I’m building my skill set with every project I take on.
The first three companies I worked for, while only over a seven year time span, all played integral parts in allowing me to do what I’m doing now.
So, for those of you who are going to be out of college soon, looking for internships, a career path, a job, etc. my advice to you is to look for a start up company. You will learn and blossom quickly and it will give you the skills you need to go anywhere. You will be adaptable, wear many different hats, and know what a true “team” environment is. There are several solid sites you can check out, a great one being Start Up Digest, that will send you jobs from all over the world with start ups.
Be innovative. Work for a start up.
I am reposting this entry as I received interesting feedback the last time it was posted. Making a slight tweak here and there, but content remains the same.
Higher education companies – I plead you to listen; When you hire anyone who will make decisions regarding marketing and sales, anyone who can effect the revenue of your business – get them on the phones! Every manager needs to go through admissions or enrollment services (sales) training! To be a great marketer is to KNOW your audience. To be a great marketer or businessman in the higher education industry, you first must be able to SELL education. Selling education is not the same thing as selling a stock or selling a credit card. It’s not an impulse buy or a quick sale. Selling education is selling a prospect on graduating and finishing their degree. Selling education is finding a person’s dream and then helping the potential student come to the conclusion that the only way to achieve their dream is through education. How on earth can someone manage, train, or market this if they’ve never done it? It’s a process, a long sale; sometimes a 45 minute conversation; but it’s the psychology behind the sale that every manager needs to learn. Mark my words; a “good” marketer can get away with not having been on the phones and not knowing their consumers…a great marketer – one whose goal is not only to have a low CPE, but more importantly, a high graduation rate and high net tuition revenue – will understand the psychology behind the student and will know their consumer. The best marketers in the higher education industry are those who have a thorough understanding of the sales pitch and process as well as the retention model. The more a marketer knows about every aspect of the business, the more successful they will be. AND if the marketer does not want to get on the phones, get down in the ditches, and “get their hands dirty”, they likely have too big of an ego to be successful regardless!
If you are sales and marketing in any business, there is a large chance that you have either spoken with an education advisor who has reported to me or I have collected your information at some time. As the online higher education industry is booming, student information is coming from millions of sources and likelihood is you have filled something out at one time or another over the last 7 years that has gone back to a school. If you are in sales and marketing and have not spoken with an education advisor in the higher education arena, please do so. The sales pitches of the advisors who are ‘decent’ will certainly make you think about going back to school.
My question then; WHY are people who sell education – from advisors all the way to the CEO’s – not back in school? We know they don’t all have their Ph.D.s, many don’t have Masters, and about half don’t even have a bachelors degree. In my opinion, selling education without a degree is analogous to me walking into the Gap and the saleswoman saying, “I don’t wear clothes from the Gap; I only shop at Ann Taylor”. If someone is pitching themselves all day on teh reason to go back to school and not going back; why not?
The average online student calling in works full time and has children. They all have ‘something’ going on in their lives, and yet admissions advisors tell them, “No excuses. Life happens. If this is something you want to do, you need to do it.” People engage in higher education for numerous reasons; need more money, job security, career change, career promotion, to feel significant, to be a role model to their children, etc. If you were talking about this all day and marketing or selling this all day, do you think you would talk yourself into going back to school? I know I did.
I’ve been in the higher education sector since graduating from college, specifically – the online education sector and have marketed and sold everything from high school diplomas to Ph.D.s . During my time at these organizations, I was offered full tuition assistance and capitalized on the opportunity by getting a project management certificate as well as taking numerous business courses (my degrees are in psychology and education). Now, I can tell you I learned far more in the ‘real world’, working with some of the most brilliant minds in the higher education space – but we have all seen the job postings that say, “Masters preferred” or “MBA Preferred”. While I’d like to go back and get my MBA, I’m in the “bucket” of students who genuinely believe that through connections and / or experience, I don’t “need” to right now; but I still market and sell the idea to others.
I’ve started asking myself; who am I to encourage others to go back to school if I don’t practice what I preach?