CFO to CFO: Evaluating ROI on Growth Initiatives for Graduate and Online Programs

This post was co-authored by Clay Callicoat.

We recently spoke with a university CFO who said, “Everyone has a good idea on how to grow enrollment, I’m looking for the best idea.” Anyone familiar with the business of graduate and online enrollment as well as tuition revenue understands just how true that statement is in the higher ed space.

So how do you evaluate ideas and increase your likelihood of selecting the best idea? From a CFO’s perspective, we’d offer three qualifying questions to consider as you evaluate ideas, initiatives, and potential partners for true ROI.

1) What is the long-term benefit?

It is important to select an initiative or partner with a proven track record of evolution. Student expectations, delivery modalities, and external factors all change over time. The best idea is often one that has staying power through deep commitments to bring you new and next solutions. A student today compares the experiences they have with your institution to the experiences they have with an Amazon or Starbucks—does this idea, initiative, or partner have what it takes to continue to evolve and keep you relevant? If not, your investment could be marginalized as soon as the next big thing comes along.

This question is particularly significant if you are considering a long-term initiative such as an Online Program Management (OPM) platform. In many cases, OPM’s will generate revenue. However, the hidden problem for many institutions is the opportunity costs that accrue over time. When paying 40-60 percent of your tuition revenue to an outside firm, you significantly limit your ability to realize large financial gains. Beyond the long-term financial benefits, you must also consider the long-term tradeoffs.

2) What campus requirements and capabilities are required to implement the idea, initiative, or partnership?

Although some revenue projections might initially look healthy, it’s important to flush out any potential additional hidden costs that might negatively impact ROI. For example, campuses should evaluate potential capacity restrictions, instructional costs (lab space, accreditation guidelines, etc.), faculty teaching loads, and the ability of the admissions office to leverage new assets that are generated from a potential new initiative or partnership.

Findings from a review of campus capabilities and needs should be factored into the true investment costs when evaluating any idea, initiative, or partnership. For example, there might be great demand for a nursing program, but if you don’t have lab space, equipment, and faculty available for standing up the program, your investment costs might be much higher than what is demonstrated on a simple P&L

3) What will the campus gain over time?

Obviously, the financial ROI needs to make sense, but we would suggest looking for an idea or partner that will also help build up your own internal strengths over time. How does this initiative or partnership go beyond delivering services to help you learn, evolve and build up our internal capabilities, expertise, and intelligence? What will happen if the institution ceases to partner with the provider in three or four years? Will your institution be better than it was prior to the partnership or do you lose all momentum forcing you to start over?

There are countless good ideas out there. We hope this blog helps frame your thinking around challenging the concept of good while finding a position of greatness through a thorough review of true ROI for ideas, initiatives and partnerships that come across your desk.

Many campuses are investing in recruitment activities given our unusual and unprecedented current state. We’d welcome the opportunity to discuss how RNL can help provide a great ROI for graduate and online revenue growth in partnership with you. Contact us today and we’ll schedule a quick 20 minute initial conversation.