Published on 2015/10/23

Navigating the CBE Frontier: Managing Enrollment and Revenue Targets

The EvoLLLution | Navigating the CBE Frontier: Managing Enrollment and Revenue Targets
Given that the UW Flex model is built on a cost recovery model, hitting annual targets for enrollment and revenue generation is critical to its long-term viability.

We met this summer with the program leads, academic deans, and business officers managing each of our existing UW Flexible Option programs to set enrollment and revenue targets for the coming year. UW Flex has now been in operation for about 22 months, and I think of our first year as establishing “proof of concept.” Flex does, in fact, work pretty much as we had hoped it would. In addition, our enrollments over the first 22 months have exceeded by about double the projections estimated in our business model.

UW Flex is a 100 percent cost-recovery program, meaning all our ongoing revenue will come from enrollments. We secured one-time funds as start-up capital, enough to sustain us for five years, after which we projected we would break even. We built our business plan on each program breaking even within 5 years, and then sharing revenue with our partners as individual programs grow beyond break even.

We have two enrollment options at two different price points:

  1. An “all you can learn” enrollment period for three months that allows students to take as many assessments as they can, receiving all the support they need.
  2. A “one competency at a time” three-month enrollment period, where students work on just one competency set within their three months, also receiving all the support they need.

As the first year was a proof-of-concept year this coming year is critical because programs are either on track to break even or they’re not. Since revenue is based entirely on enrollments, you can see why enrollment targets become so important.

The meetings we had this summer went very well, and what I wanted to share was the kind of data that we used to establish targets and set expectations about faculty and operational workloads.

First, we looked at enrollment trends over the first 18 months for each program, and used those trends to create straight-line projections for the first five years of each program. (Technically, these aren’t straight-line projections because we did adjust growth rates slightly downward after three years of growth. We based that curve on our experience with other collaborative degrees with which UW-Extension is involved. So these are more accurately straight-line projections with slight adjustments.) We estimated the proportion of students, per program, who will enroll in “all you can learn” or “one at a time”—based on the enrollments in that program within the first 18 months.

We then looked at the actual program expenses: faculty time for grading and “refreshing” competencies and assessments (the curriculum), numbers of Academic Success Coaches required to support enrollments, and operational expenses of marketing, recruitment, admissions, registrar functions, bursar functions and financial aid administration.

Some of these expenses are fixed—the development and “refresh” of curriculum is based on a fixed schedule. Some of the costs escalate as enrollment grows—the amount of faculty grading, the number of ASCs required to support students, etc. We also made assumptions about retention rates, based on our 18 months of experience. As we all know, the expense to retain a student is lower than enrolling a new one. All these expenses were likewise projected forward based on the yearly enrollment projections.

Finally, we charted the projected enrollment growth (representing revenue) against the yearly and escalating expenses, and saw where the revenue and expense lines crossed. This represented the break-even point.

We laid all these charts and tables in front of institutional partners: the program leads, the deans, and the business officers. We took some time to make sure everyone understood the models—and in fact, made adjustments to the models based on some detailed information that our partners shared with us about how students were performing. Then the conversations turned to what we all needed to do to maintain educational and operational growth in our programs, establishing expectations for the year about faculty assignments, marketing and recruiting, and other aspects of the program. We engaged in very productive conversations, for example about how an academic department will handle workload, scaling from a few “pioneering” faculty to having Flex work become an established part of departmental educational activity.

Enrollments for two of our programs—the Bachelor’s of Nursing and the Bachelor’s of Information Science and Technology—are strong enough that they should break even in another two years, which is ahead of schedule. That’s assuming, of course, that their enrollments continue to grow at the rates estimated. One other program will need to ramp up very slightly to break even in the right amount of time, and two programs will need significantly different marketing strategies to succeed. One of those, the Associates Degree from UW Colleges, will soon be marketed both to degree-seekers and to students who wish to “fill in” general education courses for other Flex programs and for brick-and-mortar programs. The Business and Technical Communications Certificate will also be marketed as a supplemental certification to other UW Flex students, and we’re also beginning to explore how to market it directly to businesses with large numbers of employees who desire this professional development.

The main point of this blog post, however, is not to focus on the strengths of the programs, but to highlight the data and process we used to do our planning, and the process we used to establish expectations in this coming, seminal year of UW Flex’s growth.

To learn more about the work UW-Extension is doing to grow UW-Flex, please click here.

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Readers Comments

Steve Collins 2015/10/23 at 9:34 am

This is great. So many of us hoping to initiate innovative programs, especially those of us facing a tougher sell than others, really need to have all this data at our fingertips and to show that the research has been done thoroughly, and the plan is both accurate and realistic. We should be sharing more of this info.

    Aaron Brower 2015/10/29 at 2:34 pm

    Thanks and I’m glad this information is helpful, and I’m planning to post about once a month on other issues that I’m frequently asked about. If you have specific questions, send them my way and I’ll add them to the list.

Mark Cook 2015/10/23 at 1:43 pm

It’s amazing what you can do with a little bit of data mining. For example knowing that it costs more to attract new students than it does to keep current ones has a huge impact on your marketing and student support plans, as well as your enrollment targets. Every new piece of info makes the overall picture a little brighter.

    Aaron Brower 2015/10/29 at 2:37 pm

    Yes, I couldn’t agree more. First, having a solid business plan has been invaluable to our initial planning and subsequent decision making. Second, we’ve been committed to making decisions based on data. Having both as a solid foundation has made our internal and external discussions easier. Not always easy, but definitely easier.

Louise Sanders 2015/10/23 at 3:41 pm

Having that longer-term vision is also important. Being able to project accurately enough that you can then match your predictions and results to get more accurate over time is crucial to keeping a handle on that break-even point and inspire the confidence the keep investing resources.

    Aaron Brower 2015/10/29 at 2:38 pm

    Yes, that’s exactly right. This program is novel in so many ways, and what will be fascinating going forward is how our predictions match reality. We’ll of course be modifying our predictions as we have more and more experience and data.

Anthony Scheffler 2015/10/23 at 4:13 pm

Thanks Aaron for sharing. This last post is of particular interest as we have just completed a series of meetings with our fiscal office addressing some of these very issues. Developing a defensible business model that incorporates a strong cost recovery metric has been a challenge, to say the least.

    Aaron Brower 2015/10/29 at 2:41 pm

    Thanks, Anthony. And like you and I have talked, building that solid business plan has been invaluable to us, too. We did modify it after about 6 months in (modifying some of the expectations on workload and length to develop new programs), but it was the initial work to develop the plan that made a huge difference. In an upcoming post, I’ll describe all that went into our business plan.

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