The Right Approach
Limit your scholarships
Are you giving out too many scholarships? Scholarships are good. It’s a way of encouraging the bright students, helping the less fortunate and giving back to the community. However, when done in excess, this can have a negative effect on the school’s cash flow. Scholarships, when not properly managed, can roll out of control. As such, you must implement a fixed termly/yearly quota and stick to it. This can be further reduced during economic down turns. Limiting your scholarship would mean more control over your profits, which means adequate available funds. This also means good school management which improves the school’s image thereby making it attractive to both prospective staff and parents.
So, the question is, how many is too many? My recommended scholarship quota is between 5 – 10% of your total student count. For example, if you have 200 students, maximum number of students on scholarship should be at most 20.
Strict 1-Month Grace Period
Grace periods gives parents a little breathing space to enable them make payments. However, one of the dangers of excessive grace periods is that it leads to piled up debts. Recourses are now stretched so as to meet up the shortage in school income. Procurements, salaries and bills are now delayed due to insufficient income. These all lowers the quality of the school and can lead to unhappy staff who are now more likely to leave.
As some parents are salary earners, it is only fair to stretch the grace periods towards the end of the current month of school resumption as most pay days are at the end of the month. However, you must be strict with your grace periods and also inform parents that there will be no extensions on the grace period. This will force the parents to work towards payments before the grace period expires. Part payments should be accepted only with a signed undertaking which should be tracked. You should also make the parents aware that the dates they have stated in the undertaking will be strictly adhered to and their child/children will not be allowed into the school upon failure to meet up.
Regardless of the current economic situation, parents, just like any other individuals, are capable of applying opportunity costs in desperate situations. This will only show how important their children’s education is to them.
Another point to take note is that most average earning parents are now devising new approaches to out-smart the school system to their advantage in order to save costs. The new trend is to take advantage of the school’s generous grace periods (and even ask for extensions), then once their debts reach a considerably high amount, they transfer their children to a different school and do the same. The circle continues. So in essence, a parent can successfully get away with up to 3 years’ worth of school fees debt throughout their ward’s school life using this technique.
It is expected that all schools ask incoming parents transferring their children to provide a Transfer letter which would indicate if they have pending debt with the school there are transferring from. However, as desperate as most schools are, they tend to ignore these and accept these students regardless. “It’s all business” – they say.
Focus on getting new Students
It is true that customer retention is just as important as customer attraction. However, more attention should be given toward customer attraction. You should put in more effort in attracting more students than keeping existing ones. This is because, existing parents are more likely to keep their children when they see the school flourishing with new intakes. This gives a sense of growth and good quality. If however, the school neglects attracting new students by putting more effort in retaining old ones, the opposite could be the case. With little or no new students coming in, the school’s income reduces and the school is deemed low quality. Parents will be more likely to leave. You find yourself being too desperate, giving in to the demands of the parents because you don’t want them to leave. You will also find it difficult to impose new rules or change existing ones. On the other hand, if you have a healthy flow of new students, you wouldn’t be too bothered about the parents who decide to leave because you can replace them. And as mentioned, parents using the trend stated in the previous section will constantly be moving from schools to schools to circumvent paying their debts. So, why not be that school that parents transfer their children to, but only smarter?
You can prevent being out-smarted when you impose your strictly 1-month grace period. This means that at any point in time, there would be no student owing more than a term’s school fees. You will be surprised to know that there are a number of schools who have allowed parents with debts of over 3 terms’ worth of school fees. A typical example of trying to “retain students instead of focusing on getting new students”. I’m hoping you are not one of them. And if you are, it is time to try a different approach.
Other points include:
Show off your accomplishments
Effective Marketing strategies
Organise your Marketing Department, Plans & Budgets
The above listed points are explain in more details in the free e-Book version.