Enrollment Blog

'You can't spend yield'

by Peter Farrell

Yield rate is an ongoing source of anxiety and confusion for many schools. But this need not be the case. By incorporating yield into more comprehensive assessments of performance, forward-looking enrollment leaders are getting a clearer read on this problematic metric. At the same time, they’re identifying the enrollment strategies most likely to produce the greatest net benefit for their institutions.

Market disruption is changing the meaning of yield

Once upon a time, yield rate could legitimately be considered a reliable summary measure of performance—especially where a school’s prestige and the efficiency of its enrollment processes were concerned. Yield rate “worked” in this sense as long as students’ school-search and application behaviors didn’t change meaningfully from year to year.

The problem is that we are, in fact, in a period of profound and rapid market disruption. Students, spurred on by simplified application processes and financial pressure to comparison shop, are applying to more schools. Meanwhile schools, facing flat demographic growth and increased competition, are looking further afield for new students.

As a result, students are receiving—and turning down—more admission offers. This explains the industry-wide free fall in yield rate, a phenomenon that has taken on the inevitability of a law of nature.

The question for enrollment leaders is how to respond to this “new normal.”

3 things you can do to impact yield

The first thing to realize is that yield rate is something schools can manage, and not only through their admissions policies and reputations (which, in any case, are difficult to inflect). Here are three of the most impactful things you can do:

  1. Maintain the intensity of your contact with students post-offer. 
  2. Help your admitted students secure financial aid.
  3. Ensure that your pricing models are working like they’re supposed to.

Lead with the metrics that matter most

But I don’t want to lose sight of the more important lesson here: namely, that yield is only meaningful insofar as you’re viewing it alongside other core enrollment-performance metrics. For most of us, these will include net tuition revenue and class-shaping targets (socioeconomic mix, academic ability, etc.)

The reason this lesson is so critical is that hitting enrollment targets will increasingly mean engaging students from outside of your legacy prospect pools—a group that invariably yields at lower rates, no matter how strong your reputation or sophisticated your outreach.

The right question to be asking in this context is not “is my yield too low?” It’s “does my yield make sense in the context of our broader enrollment performance and strategy?” Are your net tuition revenue and average SAT score significantly higher than last year? Is your enrollment growth higher than average for your region? If so, you probably don’t need to be losing much sleep over yield.

Be mindful of your audience

Which brings me to a last and very important point—namely, that you’ll still need to be mindful of the various “audiences” for your yield rate. It would be naïve to think that yield simply doesn’t matter anymore; it does matter, a lot, to university boards, credit rating agencies, and rankings-compilers.

The good news is that the most important judges of your performance will understand tradeoffs between yield and other, more directly impactful goals—increased net tuition revenue, for example. I’ve seen this time and time again with both credit agencies and university boards. The logic here is aptly captured by a saying one of the university presidents I work with likes to use: “You can’t spend yield...”

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