Decision Making in the Board Room: The Data Connection

Donna Orem, orem@nais.org

AgendaPart I: The Value of Market ResearchPart II: Gathering Trend and Consumer Research to Drive Marketing and Strategic PlanningPart III: Conducting your Own ResearchPart IV: Case StudyUsing Research to Assess Market Potential

Part IThe Value of Market Research

Why Conduct Market Research?Market research:Provides a systematic and objective method for collecting, analyzing, and using information for strategic planning and marketingEnables you to know your constituents (parents, students, alumni)Ensures that you are data-driven rather than anecdote-driven

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?

Market Research InformsParent Surveys help to clarify:Why families choose a school How to best market a school to prospective familiesWhere a school is succeeding and where it needs to improve from the parent perspectiveWhat differentiates parents views of a schoolHow families experience a schools cultureWhat is the profile of your typical familyHow price sensitive are your families

Market Research Tells a StoryAlumni Surveys aid in understanding:The long-term benefits students gain from attending a schoolPotential for alumni fund raisingHow to best serve alumni todayHow to connect with alums from different generations

Market Research Provides Data to make Informed DecisionsDemographic Research provides hard data onThe numbers of school-age children in the area from which you recruit and their familys income, race, and ethnicityOther useful data such as trends in housing prices, consumer spending, etc

Sample Market Research Agenda

Environmental Scanning (global, national, and local trends): AnnuallyParent Research (satisfaction, why students enroll, priorities): AnnuallyAdmissions Research (students who enroll and who do not enroll, attrition studies): AnnuallyDemographic Research (school-age population, family incomes): AnnuallyAlumni Research (alumni planning and fund raising, alumni stats for marketing): Every few yearsImage 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.

Part IIGathering Trend and Consumer Research to Drive Marketing and Strategic Planning

What We See from Trend ResearchCurrent families are looking for specific data on value-added of independent educationMore choice in educational environment: public, charter, parochial, magnet, home-schoolingTuition is rising more quickly than disposable income in some parts of the countryGenerational differences are driving different choices in education

NAIS Economy Research 2009The 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 surveyProspective family surveyCurrent family surveySchool pulse surveys

Prospective Families: Are You Considering An IS Education?

Prospective Families :Is the Economy Affecting Your Choices?

Who are Your Families?Slam on the BrakesVulnerable and hardest hit financiallyPained-but PatientResilient and optimistic about the long-term, but less confident about recovery in the near termComfortably 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

Prospective Families: Ranking Of Educational Choices

Why Prospective Families Are NOT Considering IS?Past experience with private schools BADI do not like the elitist perspective with which children are imbued in private schoolsThey went to private from K-8th, time for the real worldNeed for ethnic diversity in their environmentBelieve in a public school educationFISD public schools are the best in the countryNo private schools within our areaServices required not offered by independent schoolsSaving money for college versus private school educationHaven't found a school to suit our daughter's special needsNot desired

Prospective Families: Of those answering YES to IS

Prospective Families: How Will You Finance Your Childs Education?

Current Family Enrollment Plans

Parents Enrollment Plans80% plan to continue sending their children to the same independent school next year. (with conditions)4% will switch to another private school3% will move out of private independent schools6% are unsureDrivers for leaving: Cost, competitive cheaper private schools or free public schools, diversity, desire for real-world experiences

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 factorsOverall loss of wealth/savingsRising cost of tuition greatly outpaces yearly salary increasesJob loss and/or new job at a much lower incomeRetired or near retirementBusiness owner and business is very slowCollege costs are a major concernespecially for families with more than one childTotal tuition costs if more than one child in independent school

Current Parents on Financial Aid

22% of respondents currently receive financial aid11% who do not currently receive financial aid plan to apply for financial aid during the current or next school yearSome who need aid will not apply

We will do anythingParents are considering deferring or sacrificing elements of their lifestyle to keep their children in independent schoolsVacations (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%)

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 future49% will give at the same level as before7% will give at a higher level than before18% will give at a lower level than before50% gave under $1,000; 21% gave between $1,000 and $2,49924% of parents reporting incomes greater than $300,000 plan to give at a lower level

From the Center on PhilanthropyMost 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.

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 2009A considerable decline in investment and new housing starts, down 50.42% in April 2009A sustained decline in industrial production, down from +2.49% in April 2008 to -12.38% in April 2009Retrieved from Moodys Economy.com and MSNBC.coms Adversity Index, http://www.msnbc.msn.com/id/29976394.

District of Columbia Economic Outlook: StrengthsHighly educated workforceHigh per capita incomeStatus as the nations capitol stabilizes economy and ensures tourismStrong growth in suburbs maintains demand for DC workersFrom Moodys State Prcis District of Columbia Economic Outlook, www.economy.com

District of Columbia Economic Outlook: WeaknessesHigh business costsWeak population growthSecurity and crime risksWeak school systemFrom Moodys State Prcis District of Columbia Economic Outlook, www.economy.com

How does Moodys rank the District of Columbia?Employment Growth Rank for 2008-2010 (1=best, 54=worst): 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 Prcis District of Columbia Economic Outlook, www.economy.com

Part IIIConducting your Own Research

Options for Conducting Your Own ResearchIn-house research expertiseMarket research expert: local or nationalNAIS SurveyBuilderNAIS Demographic Center

NAIS SurveyBuilder

Standard Surveys w/customizable questionsParent SatisfactionYoung Alumni OutcomesBoard AssessmentHead Evaluation

Conduct Demographic ResearchNAIS Demographic CenterRun reports on demographic changes by zip code/census track/block groupStudy Metropolitan Area Reports for a summary of overall changesUse Profile Analysis tool to pinpoint target recruitment areas

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

They include variables such as school population, families with children by income, race/ethnicity, and educational attainmentTypes of reports:Summary ReportsDetailed ReportsMultiple Area ReportsDEMOGRAPHIC CENTER Basic Reports

DEMOGRAPHIC CENTER Additional Reports for Advanced UseThey include variables such as population, households, families, housing, income, employment, education, sales, cost of living, and/or consumer expenditures.Five types of reports:Quick ReportsRing StudiesQuick MapsRank AnalysisProfile Analysis

Study the Changes in School-age Pop by Income

The District of Columbia recorded 3.04% decline between 2000-2009 and is forecasted to record 3.58% decline between 2009-2014.

Changes in the District of Columbia School-age Population

Growth in School-age Families w/ Income Of $350K+ in the District of Columbia

Growth in Hispanic and AsianPopulations in the District of Columbia

Part IVCase Study: Using Research to Assess Market Potential

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?

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?

The Research AgendaStudy 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.

Parent Satisfaction StudyKey Areas of InquiryWhat 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?

The Power of Filtering DataUnderstand the nuances of the market by filtering data by:AgeIncomeGenderSatisfaction w/schoolGrade of entry

The Demographic TrendsAlthough 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.

Survey of Area Education ConsultantsWhat the School SoughtAre 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?

Survey of Education ConsultantsWhat the school foundSchool is well known in surrounding area, but not at distances past 3-5 milesConsultants are confused about the schools stance on students with learning differencesConsultants are seeing different entry patterns for schools in the region

ConclusionsThe results of this study enabled the school to:Pinpoint where to target marketingUnderstand what resources are needed to effectively market the school in this economyBe clear about tuition elasticity at the schooli.e., which families is the school likely to lose at what increase levelsGain a fairly clear picture on how the school is perceived in the marketplaceGet a sense of changing trends and what the school needs to do to accommodate those

Conclusions (cont.)Understand parents satisfaction level overall and target those areas in need of improvementGain a clear picture of how likely current parents are to recommend the schools to othersGather ideas for non-tuition revenue streams

SoWhat does this All Mean for a TrusteeComprehensive market research can help you to:Forecast tuition revenuesForecast financial aid needForecast givingBudget dollars for those programs that attract and retain studentsIdentify non-tuition revenue opportunitiesPlan for future school development

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

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

And some final thoughts on the value of acquiring new informationEvery creative act involvesa new innocence of perceptionliberated from the cataractof accepted belief.-Arthur Koestler

Thank You!Donna OremChief Operating OfficerNAISorem@nais.org

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