September 17, 2019
Central College, a private institution in Pella, Iowa, has launched a first-in-the-state tuition price reset strategy, trading the high tuition/high discount model for one transparent price point.
In this week’s podcast, Eric Sickler and Mariah Obiedzinski discuss how six years of strategic planning—led by Central College president Mark Putnam and in collaboration with Stamats and Thorburn—culminated in this bold, innovative strategy. Listen now.
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You can also read the transcript below:
Mariah Obiedzinski: I’m Mariah Obiedzinski, director of content services at Stamats. Joining me today on the Higher Ed Voices podcast is Eric Sickler, vice president for client services at the Thorburn Group, the brand engagement division of Stamats. Welcome, Eric.
Eric Sickler: Thank you for having me on.
Mariah: Of course. Thanks for joining us.
Today, we’re discussing big news out of the small Iowa community of Pella, which is home to Central College. The institution is getting substantial press from their announcement of a new, transparent tuition pricing standard.
Central’s annual tuition, starting in Fall 2020, will be $18,600—a price point far less than their former published price and one that more accurately reflects what students previously paid after scholarships and high financial aid.
Eric, this is the first of its kind, affordable pricing initiative in the state of Iowa. Why is this transparency a big deal for students and parents?
Eric: Well, I think it’s interesting to point out that we’re talking now two days after the announcement on the Central College campus. But this is really the result of about six years of study and preparation and brand building in advance of making this decision and this announcement.
And I think it’s particularly important now because the research that Stamats has done in recent years really indicates the jig is up in terms of the high tuition, high discount model of pricing tuition for private colleges and universities.
Families, consumers, really recognize that the scholarships and grants, it’s a bit of a game. And there’s an old philosophy, the Chivas Regal effect falls into place—when you price a product higher, the perceived value of the product is higher. It’s not the case anymore.
I think families recognize that colleges and universities are overpriced. Many of them have brand values that are low. And families are saying, ‘Look. I know this price is way too high for the value attached to this brand.’
Central took a remarkably bright approach, as I said, doing a lot of market research in advance and discovered that while their brand value was fairly strong, it could be a lot stronger.
So, they really invested a lot of time over the last six years of bolstering the institutional brand, doing retesting, identifying that the brand strength now is very strong, literally doubling the brand strength from one test to the next over a period of three or four years.
They found themselves in a real enviable position of saying, ‘Our current business model, our current pricing strategy is going to strangle us over time. We can’t sustain this. And we want to be more authentic, true and transparent to the people who matter most to us—our students—and price ourselves in a way that’s commensurate with the perceived value that they’re getting. But we’re going to be the first in the market to just kind of call a halt to it.’
Mariah: And Central College partners with Stamats and the Thorburn Group for market research and branding initiatives. Could you talk to us a little bit about the story behind that announcement? What really happened behind the scenes to spur this bold move?
Eric: I guess it’s been about nine years ago. Mark Putnam took over the presidency at Central. Mark came on board with a tall order, recognizing that as a private institution in Iowa where competition for students is fierce and there are lots of private colleges and universities to compete with, Central needed to bolster its position in the marketplace.
And before we could bolster, he needed to understand what the position in the marketplace was for Central College.
So, Mark and Carol Williamson, who’s the VP for admission at the time—she’s now the VP for admission and student life—got together and engaged Stamats to do some market research. We studied non-matriculating students. We did pricing elasticity studies over time. And they discovered really what the position was within the marketplace, what Central’s perceived strengths and weaknesses were.
They really did a fine job of retooling their messaging strategy to appeal to the expectations and the hot buttons of college searching students and their families, changed the messaging up, saw immediate response to that.
Thorburn Group came in and working on the heels of that market research, developed a new resonant, relevant brand platform for the college that really fired on all cylinders, did a lot of redesign creatively and gave Central a compelling and memorable brand foundation to build upon.
And it was only after that, recognizing the demographics were not working in Central’s favor, the Board said we’re in a good position to take a hard look at our pricing strategy because we’re losing students, even inquiries wouldn’t look at Central because the price tag was too high at $38,000 a year for tuition alone. Add $10,000 to that, it’s at $50,000 a year. And families who were just starting to look for colleges said, ‘No way is my kid going to look at a college in the middle of Iowa that charges $50,000 a year.’
So, even students and families who would be really well served by this institution ruled it out because of a sticker price. That effectively didn’t give Central the chance to recruit them, to sort of show the love by showering them with scholarships and grants, which are also known as discounts. And Central just basically was walking away for a lot of money on the table frankly.
But more importantly I think, Central was not able to share the Central word with as many students and the kinds of students that would really benefit from a Central education.
So, with this move, lowering the sticker price, our tuition pricing elasticity studies that we’ve done with them two times over the last six years indicate that families will include Central in their considerations now because the price point is much more agreeable and approachable. They won’t rule Central out on sticker price alone.
And Central has built up a very strong recruitment and marketing operation that’s geared up and had frankly, one of the best years in five years this year recruiting a freshman class. The largest class in five years came in this past fall.
So, they’re really going into this in a position of great brand strength, in a position of great fiscal strength, in a position of great visibility strength. And that’s the work of six years of planning before this announcement.
I think a lot of institutions kind of fall in love with the notion of rethinking or resetting their pricing strategies, lowering their tuition or whatever. But they don’t do the work that’s necessary. And I think Central is an extraordinarily good case study for higher education across the nation to observe.
Schools are changing their tuition, their pricing models across the country at this point in different ways. But I have not seen a situation where a school has done more upfront work and was on any firmer ground to make a decision and an announcement like this.
Mariah: So, branding on its own can be very politically charged and then combining that with pricing can get even more heated. Could you talk to me a little bit about how your team helped work with Central College to manage those emotions that might arise out of such a project?
Eric: Sure. And I think it’s really important, Mariah, for listeners to understand that the master mind and the master committee behind making all of this work really was President Putnam and his cabinet. We’ve been providing counsel to Central along the way in official and unofficial ways because we’re very interested in their success.
And in the name of transparency, I will admit that I’m a Central College alumnus and I live in the town where Central College is located. So, it was kind of convenient to stay connected with this particular institution.
But the in-house team really did, as I said, master mind all of this in managing, negotiating the political waters with the Board, really was successful and is a testament to a strong relationship that the president and the cabinet have with the Board, with the faculty community at Central.
And it was a true team effort. Our market research provided insights, our analysis provided counsel and confidence for the in-house team to go to the Board with these considerations and recommendations. And frankly, we attended a lot of board meetings and did a lot of presentations about the market research that we’ve done.
Board members, faculty, students, alumni were all involved in the brand foundation building process. We did a lot of listening. So, the insights that we gathered there and the foundation that together we built for Central with Central was informed by a lot of listening.
And I think that the ownership of the decision and the announcement this week is broad across the Central College community.
I will also really tip my hat to the internal team at Central for orchestrating an amazing amount of granular detail that had to be kept frankly top secret for many, many months. I’ve seen the master plan that was guiding the announcement strategy.
I know the work that went behind it that the internal team at Central did. And in my mind, is a best-in-show demonstration of how a college’s leadership team comes together with data—data-driven findings and recommendations and decisions—and then a strong brand foundation to pull off. Not even to pull off—to execute on a very significant milestone certainly in the history of this institution. And frankly, I think for the higher education landscape in Iowa as well.
Mariah: Eric, how can such a move like publishing a lower tuition rate starting next year affect students that are enrolled right now that might have paid at a higher price point, or even alumni who might have paid at a higher price point?
Eric: Well, great question, and certainly was on the minds of the team at Central as they were developing and then ultimately executing on this roll out this week.
Interestingly and wisely, Central did a great job particularly with currently enrolled students of demonstrating to each student on an individual basis that their out-of-pocket costs will not be any different next year than they are this year. Central locked in tuition pricing this year and next.
[Related: Fell Short of Enrollment Goals? You Need a Tuition Pricing Study Now]
So, every student immediately upon conclusion of the announcement on campus, in their mailboxes received a worksheet that showed exactly what the price is they’re paying this year and what the price is that they will be paying next year. And no student is paying any more out of pocket.
So, the bottom line, you have to kind of help students and families understand that it’s really the out of pocket cost or price that you’re paying that really matters. It’s less about the size of a scholarship and more about what you’re writing the check for.
Interestingly, I think even some alumni, we were concerned that some alumni might be sort of saying, ‘Hey. All of a sudden my college degree is worth less because I graduated from Central.’
I think the language that Central crafted for alumni populations and donor populations and employee populations was really masterful in how they addressed exactly the same issue.
So, it took a lot of planning. And Central learned from a number of case studies that other institutions who’ve executed this over the past couple of years, and the number’s growing by the way, they learned from their mistakes. And the schools that Central talked with and studied were very forthcoming and very honest.
At the end of the day, higher education, we’re all kind of in it as a community to make sure that we get good education delivered to the right students at the right places.
So, if your institution is considering this, study those who have gone before you. Learn from their mistakes. Capitalize and leverage their successes. Central certainly did that and it seems to have paid off just in great ways.
Mariah: Well, clearly the team there is very passionate about their students, they’re very passionate about their community and being transparent.
If other organizations happen to be listening and they’re interested in doing something similar and following Central’s footsteps, what would be your recommendations for them to kick-start such a project at their own organization?
Eric: Well, do with this what you will, but I really do believe that even with our connection to Central College, my own role as an alumnus and living in town with the school, I think that the objectivity that a third party brings to the conversation is really important.
So, find a trusted advisor who can help you with market research. Find a trusted advisor who can provide bone-honest counsel, perhaps to help your campus hear and see things that you wouldn’t otherwise hear and see on your own.
I do know institutions can and do market research on their own, but I really do believe that the objectivity, the fact that a third party doesn’t come in with baggage or politicized or have any expectations is really valuable.
Because that voice that we were able to lend to the discussions at Central, at the Board level, at the Cabinet level, and frankly, even at town hall meeting levels when we’re presenting the research data and rolling out new brand foundation work, is really essential. How much you use that counsel, entirely up to you. No two schools do it the same way.
Obviously, Stamats is well positioned to execute the market research. The Thorburn Group is extraordinarily well equipped and experienced in developing those brand foundations and platforms that lend and give greater value to an institution’s perceptions in the marketplace.
So, we’re happy to help with that. I think a good first step is to identify a trusted advisor outside of the institution who you can work with comfortably who has the trust and faith of the Board, of the Cabinet and use that body in as effective and efficient way as you possibly can. I think that’s really the first, best start.
Mariah: Absolutely. And of course, all of us are extremely excited to see how this story evolves and how Central’s campaign and initiatives continue to play out for their students in the community.
We anticipate more colleges will follow in this footstep over the next year to two years as they see the effects of this transparency and how wonderful it can be on their bottom line and on their relationships with their students.
Eric, thank you so much for joining us today and sharing your insights.
Eric: My pleasure. Thank you so much, Mariah.