Dynamic Market Planning: A strategic tool for global student recruitment

Dynamic Student Headcount Planning: A strategic tool to supercharge decision making at universities.

University student recruitment is a complex game. Knowing where to focus is a key strategic asset.

In a competitive environment to win the graduates of tomorrow, universities have their work cut out. A lot of work goes into attracting the top students. And for those tasked with building plans and forecasts, it is becoming increasingly important to:

• Have a clear understanding of target markets for recruitment.
• How the university will earn its income; and
• Have strong insight into the Return on Investment from different marketing initiatives.

Together, these factors can play a huge role in what the future financial performance of the university could look like.

This article will explore some key planning headaches that come with student headcount planning, as well as how a dynamic approach to student headcount planning can help universities optimise their global student recruitment strategy in a way that helps them achieve long-term success.

How universities make their money, and the importance of the mix between domestic and international students.

Universities generate income from various sources, such as tuition fees, research grants, donations, and other commercial activities, to name a few.

However, it is tuition fees that provide the largest and most stable source of income for many universities. And it is a complex game, not least when considering the mix of students in terms of whether they are domestic or international. Because in the UK at least, fees for international students are significantly higher than those for domestic students. And then of course there are non-fee related costs that come with studying abroad, such as needs for accommodation as one simple example.

Therefore, attracting and retaining international students is crucial for universities to maximise their revenue and diversify their income sources. But it is a fine balance – domestic students account for the highest volume, and are less expensive to recruit, but the international market is very lucrative, though of course more investment is needed to make the university an attractive proposition. So, knowing where you should focus can play a critical role in the financial success of the institution.

The international recruitment market can be extremely lucrative, but right now, it is extremely volatile.

The international student market is of course very attractive. But here at the start of 2024, it is extremely unstable. One recent survey shows that many UK universities have experienced significant falls in international recruitment. Overall, numbers are down 3%, but for certain institutions, the numbers are much more severe, with some experiencing declines way in excess of 50%. More information on this can be found in this insightful summary here.

These types of fluctuations are just so difficult to plan for, even if you have an indication of what might lie ahead. And then to take it further, to actually act on changes to protect the financial performance of the university are even more difficult. Salary costs of employees, both in teaching and support services, are largely fixed in nature. Capital expenditure for accommodation of international students is often committed up front over a period of years. The implications of short-term fluctuations can have long-term financial consequences.

So with these types of financial challenges, never has it been more important to really have better visibility of what the future might look like.

When it comes to recruitment and student headcount planning, there are several key challenges.

Planning in universities, like in many types of businesses, is very difficult, with many moving parts and uncertainties attached. To outline just a few points:

1. Managing the balance of homegrown students vs international students to maximise revenue.

We touched on this challenge in the previous section. And it plays a critical role in how the future fee income and also profitability of a university will look. Universities need to find the optimal mix of domestic and international students that will generate the highest income while maintaining quality standards and reputation.

And it is a fine juggling act. It requires careful analysis of the demand and supply factors in different markets, as well as understanding of the costs of doing business and recruiting from those countries. And let’s of course not ignore other factors like the reputation of the university in a particular country, or even other external factors such as political changes (think about the war in Ukraine and the sudden decrease of potential students from Russia) or economic conditions (the financial conditions in certain countries making higher international fees less feasible to pay).

The ability to understand and act on these types of factors can be the difference between success and failure.

2. Understanding where to invest marketing spend in different markets.

Universities need to allocate their marketing budget effectively across different regions and channels to reach their target potential student audience (and parents who may be paying!) and ensure that they increase their rate of success in recruiting.

To do this effectively of course requires the right tools. From data-driven insights into the preferences, behaviours, and needs of prospective students in different markets, to the potential return on investment that they can achieve by recruiting x, y, or z number of students from each market, having visibility to guide decision making is a critical piece of the puzzle.

You might be able to recruit 100 students from one country, but only 75 from another. However, if you spend significantly less to recruit in the second country, and they attend courses that pay higher fees, it may indeed be the more lucrative market to focus on. These are the kinds of insights that market planners need to have at their fingertips.

3. Understanding how to model revenue and related costs, based on the projected student headcount.

The point above was focused on understanding the insights needed on marketing spend vs revenue that you can generate from different markets. However, in financial planning, this is of course only one piece of the puzzle. You need to have a view also on the full financial performance of the institution.

And of course, the two are heavily intertwined. Understanding your potential headcount will drive key factors like the required number of academic staff, teaching facilities, or even other support staff and functions. These also represent costs to the business, which need to be planned and managed effectively.

And in many universities, these different financial planning activities are done separately, in different spreadsheets or other systems. By dynamically connecting these pieces of the puzzle, you can arm yourself with a holistic view of what the overall financial performance of the business could look like. It can become one place that can guide decision making in a dynamic and collaborative way. More on this later on…

4. Lack of visibility into what is ultimately a huge range of different potential outcomes

When you are trying to recruit from around the world, there can be a huge range of potential outcomes. And that can be a huge challenge to those who are responsible for making decisions on where to invest. When you can’t dynamically model and review scenarios quickly, you are simply holding yourself back.

So having this capability to model scenarios dynamically can completely transform the way you make decisions. Both for where you recruit, but also in how you plan the cost base for the rest of the institution. And in many universities, the numbers are significant. When you need to invest a lot of money, you want to feel like you have a good insight in to what you hope to get back.

This was a whistlestop tour of a few key headaches faced by universities as they build their future plans. And they are by no means easy to manage. Things are changing fast, and often.

As I have alluded to in some of the points above, it is becoming increasingly critical to have the right tools in place. What maybe has worked for many years, is not necessarily what will work in the future. And modern planning platforms, used in the right way, can arm you with superpowers to make decisions in ways not previously possible. I dive into some of the benefits that can come from making this step below.

Giving yourself planning ‘superpowers’ by taking the step to start using modern planning technology.

Getting it right with the tools you use to build market and broader financial plans in universities can give you a strategic edge. Here are just a few key benefits:

1. One source of central planning truth.

A modern planning solution provides a single platform that integrates data from multiple sources and systems across the university. No more planning in different spreadsheets. And as well as this, you can improve the quality, accuracy, and availability of the data you need to build your plans.

And you don’t only use internal data systems. You can integrate external data sets, be it census data to understand different countries and markets in more detail, or other economic sources, such as interest rate and inflationary data. If you find available data to help with your plans, you can integrate it, all in one system.

2. Real-time scenario planning to drive decision-making.

Real-time scenario planning is a superpower for decision-making. Being able to make changes to a plan and immediately see the numbers update through all your plans is a transformational capability.

And as discussed above, there are so many different outcomes. With the right technology you can now build new scenarios, update a range of inputs, and immediately compare them with other scenarios in a dynamic way. All in real-time. Being able to do that in the meeting room can be one of the most impactful ways to drive decision making in any organisation.

3. Dynamically understand the impact of projected student headcount on the full financial performance of the university.

A modern planning solution allows universities to automatically calculate their revenue and related costs for different scenarios of student headcount in different markets. You can build in all the key sets of rules and inputs to automatically build out projections of what the full P&L (and Balance Sheet and Cashflow…) could look like.

And when you can do this, you can start to think about other key decisions in the university:

• The impact of recruitment on required teaching staff, and the investment needed to keep in line with target KPI’s.
• The expected demand for student accommodation, and the investment required to make sure that this is attainable.
• The projected costs needed for running teaching facilities.
• The additional costs for support staff around the university.
• Understanding and managing and debt targets or requirements if there is external financing.
• Having one central place to model and plan these things can completely transform the way you work with your numbers.

4. More visibility into developing the right-sized workforce to run the university.

Building on the above point on optimising investment in staff to match student numbers, you can dynamically use this software to look at things from a headcount perspective. We are talking about people after all, not just numbers!

A modern planning solution allows universities to link their student headcount projections to their workforce plans and help ensure that the university develops a right-sized workforce over the longer term, so that the institution can thrive.

Takeaway – When universities can connect their global recruitment plans to their wider financial plans, it can completely transform the way in which decisions are made. It can be a truly value-add activity!

The current environment for universities is extremely challenging, with many market dynamics that simply cannot be controlled. So, in that sense, the value of having improved visibility into the future performance of the university has never been higher!

But if there can be a silver lining, there has never been a better time or opportunity to look at how modern planning software can help you navigate these current headwinds! And if you get it right, the return on investment can be hugely significant!

By Iain Main

Iain has been working at Bedford since 2021, and partners with customers around Europe to help them get the most out of Anaplan by utilising it in new ways across their organisations. He has also implemented Anaplan with a number of customers.

Prior to joining Bedford, Iain worked in various roles across finance in both large multinationals as well as start-ups and is passionate about the role that finance teams can play in driving organisational performance.