Thursday, March 03, 2011

3/100: Choices for For-Profit Education - Agency versus The Brand

Higher Education in Britain is currently in the middle of what can be called - after Karl Poliyani - a Great Transformation, where a historically developed, social (and not socialist necessarily) education system being replaced by a system of open markets. I am indeed enjoying being an involved observer, not just as I study the phenomena, but also at work - as I explore, progressively, building a market-led college to offer courses and collaborate with universities in transition. A conscious exposition of this work, I concluded, should be at the core of my 100 day agenda, and therefore, I have started writing about it.

In Higher Education, this is an 'All Change' time. The universities are in serious disarray, and it indeed seems that the government is also indecisive about what they are going to do. The hidden Tory agenda has finally come up in the open and is now head to head with the Lib-Dem muddle, and suddenly, the university administrators across Britain are left in an uncertain state not seen in a lifetime. They are not just unsure how the new fee system will work: They are also pushed to uncertain areas where there is little government intervention - like the International student recruitment - where fees and policies were traditionally left to the universities. Suddenly, it seems that the universities are facing the 'bite of the market', which was a nice concept while it resided within conference papers, but not so when it has become a hard reality.

If my recent discussions are any indication, the universities have started seeing a competitor in the British For-Profit education sector. This is good news: The British For-Profit education is usually reviled, seen as a 'visa factory' or 'diploma mill', as it used to be in America before the expansion of higher education there. And, just as in the US, we are possibly at the threshold of emergence of world class higher education companies in Britain, which, almost certainly, will compete with the public universities, most of which may be completely incapable of competing in the real world. The fact that the universities are already seeing red and envisioning the world in zero sum terms is indicative of how unprepared they are to handle this new scenario: The cozy arrangements of past times are all threatened and suddenly there are new, unheard of factors, like Student Experience and Employability, in the mix.
Indeed, British For-Profit education, as it stands today, leaves much to be desired. Having to survive within a social market for Higher Education, the For-Profit colleges form an education underclass of some sort. Corruption is rife, and most of the colleges are indeed visa factories or diploma mills. But there are indeed serious players with serious intent, and they are ready to break free of the mould. They are handicapped by the overall impression of the sector, and it will take some time for them to emerge as brands. But, again referring back to the American experience, this has happened before and one can see how the British education market may evolve in the context.

So, the For-Profit education industry is at a crucial juncture where they have to make hard choices. This is particularly true for the top 10 companies in the industry, which must now redefine how they approach the markets, and somehow start breaking free from the universities. In my perspective, one area they must look at closely is how they recruit students from overseas.

The British For Profit industry, in this regard, copy the British universities and use agents, in different countries of the world. The model is simple and economical: The agent gets the students and gets a commission. The college is usually happy because this model has the least amount of risk - commission is paid after the student is recruited - and the agent, who usually runs different allied businesses, like travel or English language training, is usually happy to have an additional revenue stream.

However, despite its simplicity and apparent effectiveness, British education industry as a whole, and particularly the High Quality players in the For-Profit part of this, must start moving away from the agency model and start exploring alternative formats. This is because the agency model is usually counter-productive after the company has achieved a certain scale. In fact, the agency, usually a small business, can not really satisfy a larger college. Besides, agents' and the college's interests usually diverge at a certain stage of development of the college, and the agents usually become a drag, rather than of assistance, when this moment is reached. The agents usually try to push below par candidates, and stop the colleges from pursuing any other form of partnerships, and even from taking basic commercial decisions, like raising prices or defining new campaigns. The agents become the gatekeepers of the college, and using their access to recruitment markets, often unduly influence the business decisions of the college.

College owners usually feel helpless in front of agents, as the latter is seen as the source of revenue. However, they should not be so, if they start thinking ahead and a bit more strategically. What makes a 'genuine' student come to a college is the quality and relevance of programmes offered and the learning environment. And, nothing else, not the agents' sales skills, because that does not matter in the most occasions. The colleges can still get the students with or without an agent, provided they are willing to invest in building a reputation for quality and value in their own domains.

One can call this exercise 'branding', which is all about communicating effectively the customer value proposition. The agents usually keep the colleges from branding themselves, as they mercilessly flaunt their little agendas ahead of the broad strategic goals of the college. Besides, the agent gets nothing if the college tries to become a top quality provider, which invariably means making some sacrifices in the short term. The agent, who will usually be not interested in a long term capability, wants to go ahead and recruit as many students as they can, but this may run directly counter to any effort the college is trying to make to control intake quality (which, some researches show, is pre-dominantly correlated with the student success).

I have come across owners of education companies who thinks branding will cost a lot of money and there is no guarantee it will work, though I shall argue that the probability of this working is possibly higher than an agent failing to send appropriate students in adequate numbers. And, to the question how many countries can you do this in, I shall say that any agent based in a country which you don't know of or focus upon, does not deliver in any way.

In summary, my view is that the top For Profit colleges should get serious about branding and marketing, rather than leaving their cherished brands in agents hands: There will be nothing much left in a few years when these college administrators wake up to the damage.

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