The recent changes in VAT on fees have significantly impacted UK schools, leading to a 1.7% drop in enrolment in 2024, according to the ISC. With a declining birthrate over the past two decades, UK private schools are now competing over a smaller pool of students. This situation necessitates a strategic shift in how schools allocate their resources, particularly in terms of student numbers.
While it is essential for schools to invest in standing out in a crowded market to attract new students, focusing on student retention can be equally, if not more, effective. Schools globally have responded to similar market disruptions by prioritising retention over recruitment, and UK schools can learn valuable lessons from these experiences.
During the 2008 global financial crisis, many US private schools realised they were overly focused on attracting new students and lacked data on retaining existing ones. They discovered that families remained committed to schools where students felt a sense of belonging and were suitably challenged. This insight led to a strategic shift towards fostering a strong sense of community and belonging among students.
How can UK Schools apply these lessons?
- Start by identifying total student retention rates for each academic year over the last 5-10 years. Tracking retention rates for each year group, analysing trends, and identifying reasons for these trends can provide valuable insights. Schools should also look at data on students who withdrew and, if data is unavailable, reach out to families to understand their reasons.
- Recording reasons for student withdrawals is crucial. Schools should investigate whether involvement in sports, drama, or other clubs affects retention and determine if financial reasons are a significant factor in student withdrawals. By understanding these factors, schools can develop targeted strategies to address them.
- Financially, schools should calculate their annual spending on marketing for new student recruitment and divide this by total enrolment to find the cost of new student acquisition. Creating a retention budget by allocating a portion of the marketing budget to retention efforts can be a wise investment. For example, for every £200 per student spent on marketing, assigning £25 to retention can help balance efforts between attracting new students and retaining current ones.
- Forming an enrolment management team that includes admissions staff, deputy heads, the bursar’s office, and other relevant members can ensure a coordinated approach to retention. Additionally, building an alumni network by creating an alumni advisory group can leverage the support of former students who feel a strong connection to their school. Alumni can mentor students, visit classrooms, help with recruitment, and even provide financial support.
The changes in VAT on fees mean that schools must reassess their spending strategies, particularly regarding student numbers. The cost of acquiring a new student is always higher than retaining an existing one, and a healthy roll is beneficial for marketing. The year ahead may be challenging, but by taking the right steps now, independent schools can secure their future and that of their community.
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