[Transcript] How To Optimize Enrollment Revenue With Lean Management

Aug 2, 2019 | Uncategorized

Enrollment Management Round Table with Enrollment Resources TranscriptThis is the full transcript of Podcast #48 “How To Optimize Enrollment Revenue With Lean Management” hosted by Gregg Meiklejohn, Shane Sparks, and Tom King.

Listen to it on demand here.

Gregg: So, folks, welcome. Today at Enrollment Resources we’re going to be talking about something called lean management, which is very popular in the whole area of manufacturing, and now other industries.

Gregg: About 13 years ago, Shane and I landed on a weird notion that we could take the key tenets of lean management and we could apply them to enrollment management within education, from generating leads, to admissions, to retention of students, to placing them in graduate services.

Gregg: So we’ve stayed hard on that tenet, saying that by making little tweaks you can improve your revenues of your school while shaving costs at the same time. Our clients who’ve gone along this ride with us can attest to that.

Gregg: What we’re going to do today is I’m going to give a little overview of lean management so there’s a background, and then we’re going to give some examples and tips as it relates to lean management and how it can apply in admissions. Then, we’re going to do the same lean management hat and how it applies in the area of marketing. The goal for us today is to have you look at how you operate your school in a slightly different way and do more with less. So without further ado, I’m going to just give a little overview about lean management.

Gregg: So, of course, the Industrial Age, there’s the whole manufacturing process, and the steam engine came along, and there were iterative improvements in terms of how things were made, how clothes were made and various implements were made. Then, along came Ford and he started to simplify the process. “You could have any color car, as long as it was black,” that was his famous saying. So, again, manufacturing improved again and again.

Gregg: In amongst the time of Ford, there is this economist that came to bear in the US. His name was Edward Deming. He created an expertise in what was called choke point analysis. So his thinking was that if you were moving products down a manufacturing line, if you hit a choke point the entire thing would back up. You were only as efficient as the choke point in your manufacturing.

Gregg: So what happened is … so, of course, the Allies won in the second World War, and postwar General MacArthur, his job was to help reconstruct Japan. Edward Deming was a little bit of a pariah and a little too wild in terms of the conservative manufacturing community in the US. So they sloughed him off to General MacArthur and said, “This choke point guy, maybe he could help the manufacturers in Japan.”

Gregg: Unlike the American manufacturers, people like Toyota and the Nissan Motor Company and Sony and all these little emerging, trashy little manufacturers, totally glommed onto Deming’s theories of choke point theory and embraced them, and on it went.

Gregg: Today, Toyota will have over 50 lean management projects running simultaneously, constantly looking for ways to open up choke points, from the manufacturing of chassis to the paperwork in the financing offices. They’re everywhere. And companies like Apple, Microsoft, Nike, all these companies have adopted lean management as a core. So all of the best manufacturers in the world embrace lean management now thanks to Dr. Edward Deming back in the late 1940s and 50s in Japan.

Gregg: So the question is, can we take some of what’s learned inside lean management and apply it in higher education? Shane, what do you say about that?

Shane: You are so knowledgeable about so many things. It’s so impressive. So folks, we didn’t do introductions. That knowledgeable person is my business partner, Gregg Meiklejohn. I’m Shane Sparks, and we’ve got Tom King on the call as well, so all of the smart people we could gather today.

Shane: Yeah, no, great overview. I’m doing a reno. I moved, and I’m renoing my house, and I’m kind of confronting a version of this through the course of this reno. I was kind of thinking about our school friends as I’ve been going through it.

Shane: I have a number of excellent trades that are doing their stuff. They’re really good technicians, tradespeople. The guy that did the floors is great, the baseboard guy, carpenter people, great, awesome, cabinets, the whole … all that stuff has been executed really well.

Shane: Where it’s poorly run is in the project management and the orchestration, which is on me, and partly on the contractor I hired to do it; not a super organized person, but does an excellent job. That condition kind of exists in the schools a lot. Operationally, the school, the delivery of the education is usually pretty organized, it’s systemized. But with the individual departments, particularly marketing and admissions departments, they tend to run more skills-based. “I’m good at marketing, and so I’m the wizard that’s pulling the levers and making things happen.” Or, “I’m good at admissions, and I know the secrets.” But it’s not systemized. The deficiencies and the lack of the systems, the lack of order create problems and really prevent schools from taking full advantage of the opportunities.

Gregg: Here’s an example of choke point, Shane, is admissions reps. Because of all the paperwork and other things they can do, they might have the ability to do one or two meetings a day, two maybe. But if you go and you can take that administrative stuff off their desk or have appointments set for them, then they can double the number of meetings they have, which in theory can double the revenue of a school without having to hire more admissions reps.

Gregg: So, Tom, the big part of manufacturing are standard operating procedures, operations manuals and the like. In your travels, you see some schools that have highly-detailed SOPs, standard operating procedures for admissions. Yet, more often than not, you see it as a beautiful English garden; it’s kind of chaos, but it’s beautiful. But there are opportunities lost everywhere. Do you care to expand on that? Is that something people should be worried about?

Tom: Yeah, I think you hit the nail on the head. Having a good plan, I think the basic tenets of the Kaizen approach or the lean manufacturing approach is standardizing and improving effectiveness and removing waste.

Tom: I think one of the best ways to do that is standardize on a procedure that you know works and that you’ve tested and will continue to test until the end of time, that we don’t just rest on something that used to work for us. But making sure everybody understands their role, mapping those out in an SOP or a standard operating procedure for your school, scripting them to a large extent so that they understand what to do. “When this happens, then I do this. When this happens, then I do that.” Again, we don’t want to make people robots, but if we give them the groundwork and the processes and procedures to be successful, then we can grow and eliminate that waste and be much more effective.

Tom: The other thing that it really does is, you want to create a repeatable and scalable process, and you can’t scale chaos. That garden, as you mentioned, that English garden, it’s going to grow, but it’s going to grow out of control, sideways, upside down, and eventually it’s not going to be as effective, because stuff’s going to grow into each other, you’re going to have to cull stuff out, and it’s going to take a lot of effort to get it back under control. But if you have a great organizational process that you document and everybody’s on board with, and you separate those roles …

Tom: A great example, too, just to be really quick here, a great example that we’ve found is separating appointment settings from the actual rest of the admissions process, so we can eliminate the waste of those reps that may not be great on the phone, that may be busy with paperwork and tours while the phone just sits there and rots and those leads are getting stale because nobody can get to them, because we have all these other things that we have to do.

Tom: So, again, organizing the organization, putting an SOP together, identifying everyone’s roles. It’s the basis of everything I think we do with many of our clients to help them convert.

Gregg: So, Shane, Tom spoke this word, “testing,” this “testing” word. Testing can mean many, many things. I think of pregnancy tests or what have you. So there’s standard operating procedures, but they can’t be cast in stone because there are too many moving externals, particularly in this day and age. So can you clarify for everybody what Tom meant when he spoke about testing?

Shane: Sure. So in any lean management process … there’s different ones, but they’re similar in the broad philosophy. Like, in Kaizen you’ve got a plan-do-act, test-measure-improve, like, there’s different words. But basically, once you have a system, a fixed way of doing it, then the task becomes, “Okay, is this the best way we can be doing it, or is there waste that we can identify and fix and change our system to make that improvement?”

Shane: So the testing part of that is evaluating individual components of that system and trying an alternative to see if it performs better. So for testing to work, obviously you need a measurement of the thing being tested to have an empirical, “Yes or no, is this improving things?”

Gregg: Okay, that’s good. That’s clarifying for sure. So let’s share a few examples. Here’s one I’ll share, which is interesting because it’s from a construct of another industry, and that being program mixture in radio.

Gregg: So in radio, they’re constantly testing and tweaking audience reviews on various programming. So the thing to be tested would be the phone messages that admissions reps leave. So bear with me, folks. Imagine the phone is a radio, and that instead of having 1,000 people listening to the radio, or in this case like a couple hundred people, there’s one, and that’s the phone message, one person, an audience of one. So if you can make believe that the phone message you’re leaving is a radio station with an audience of one, then hey, you can use the best practices used in the radio industry through testing, go and find the best way to get people to return your phone calls.

Gregg: So what we’ve found is that through an iteration of six or seven different types of messages left, when you track it you can get, I don’t know, maybe 5% of the people to return your call. So now some of you may be thinking, “Well, 5% is nothing. Big deal, Gregg.” But Shane, shall we run the math real quick on that?
Shane: Yeah, do it.

Gregg: So say somebody leaves 40 messages a day, call it 600 a month, and 5% of the people that would normally phone back. And let’s conservatively say that off of those phone calls there’s a 15% conversion rate. So 600 times 5% is 30, and 30 times … it’s about an extra four to five students a month that an admissions rep can pull in, simply by going and split-testing the phone message they leave until, through trial and error, they are totally top shelf.

Gregg: And I guess, Tom, the key is that it almost doesn’t matter what you’re testing or what messages are being left. That’s the crazy thing, hey?

Tom: Yeah, it’s the basic of just testing, trying something new. And sometimes what you think will work absolutely goes the complete opposite, and something that was kind of off the cuff that you discovered somewhere may work. So the key is just to continually test and optimize everything in your process.

Gregg: I remember-

Shane: Okay, can I jump in though?

Gregg: Yeah.

Shane: I want to make a point though. Yes, and you need a basic system to test against. I think that’s where … like, people bump into good ideas and fluke into innovations all the time and either don’t see it, it’s, “Oh, hey, that worked great and I’m going to start doing it,” but forget to share with others, or do it and then forget, and then they move on.

Shane: The reason that that kind of innovation disappears or it ultimately doesn’t make it into the system is because there isn’t a system. So this testing you’re talking about, unless there’s a basic system that you’re working against that you’re trying to improve, you’re going to thrash around and good ideas will come and go and they’ll just drift in and out like, I don’t know, daydreams on a sunny day.

Gregg: Yeah, so what you’re saying is that if you don’t have a structure of testing it becomes kind of like just a big, noisy, happy, useless endeavor?

Shane: Yeah, and that’s the real challenge, is to commit to that system to start, and then have some discipline and methodology around testing these new things. That’s where, departmentally I think at least, in many of the schools we bump into, that’s where they’re challenged, because they operate them as technicians, not as strategic managers.

Gregg: Yeah, people working in labs along the way. You know, that makes me-

Shane: Yeah, because we can all view ourselves as little mad scientists trying to figure out how to help more people enroll in our school. Right? That’s our job.

Gregg: Tom, go ahead.

Tom: Yeah, I was going to say, I’d go as far … and this is probably a dangerous statement, but I’d go as far as to say any system is at least a good system initially. As long as you stick to something, even if it wasn’t necessarily the right thing, which hopefully you’ll improve down the road, even a bad system will outperform no system the majority of the time.

Shane: Yeah, that also applies to my golf swing, because it changes every time I go to the bloody golf course, and then, of course, I don’t get better and I wonder why.

Gregg: That’s because you golf like a ballerina.

Shane: I don’t follow a lean management process with my golf game, which, yeah.

Gregg: Before we move on, this brings me back to a story of about 10 years ago. Shane and I were doing split testing, a workshop by way of a webinar with 35 admissions people. The whole thing was on split testing different areas of how they interact: emails, phone calls, what have you.

Gregg: We were split testing for period drops, people who didn’t show for appointments. There’s this guy named Jim Jameson from a chain of schools called [inaudible] College, a 10-campus school. So Jim said, “Well, here’s my test.” He said, “I phone back the drops and I say, ‘Look, this is Jim. You didn’t show up. When you get serious about your life, phone me back.’ Click.” And there were these other people, 35 people on the call going, “That is so rude. How could you be so rude? That’s just so blunt,” and all this, and of course exacerbating it, as he’s Canadian, and so he’s supposed to be polite.

Gregg: So, finally, after they kind of ripped him for a while, somebody said, “Well, what was your result?” And he said, “Well, I had an 87% re-up.” And they all just shut up. So I guess to Tom’s point is, it almost doesn’t matter. But for Jim, he could deliver that based on his personality. So 17 out of 20 people in his drops came back, and his closing rates were huge.

Gregg: So let’s go onto another example. So clinical psychology, they have a very structured process in how they ask questions and draw people out in helping them to get from unhappy to happy. A number of years ago the sales industry started to adopt the core processes used in psychoanalysis, psychology, counseling, and they started to use the nature of this structured development of questions as it relates to getting people from unhealthy to healthy. They started to use it as a way to move people from not interested to purchasing. Admissions sits somewhere in between, between selling something and actually counseling somebody to have them happy.

Gregg: So Tom, the nature of how people ask questions in an admissions process, can that be tested much along the lines of how a psychologist can use a structure of testing to get someone happier quicker?

Tom: Yeah, absolutely. It’s really all about, again, having a plan or a process and understanding what the outcome is that you’re trying to achieve. In the admissions process, we know that the appointment setting or really the career planning session as well when they come in, it’s very much an emotional process. People buy based on emotion, not necessarily based on fact. They can justify the purchase with logic, but they’re going to buy based on emotion 95% of the time.

Tom: So when you use kind of that clinical psychology approach to really get to their why and make an emotional connection with them first, which gets them to realize their core why and brings out the emotional aspect of, “Well, I’ve got to make this change,” then when you present the value of what your product is, and everything after that becomes a whole lot easier to gain the outcomes that you’re looking for.

Tom: So having a great process and understanding exactly which questions to ask and when and what the purpose of those are, and being able to go a little deeper with the whole question behind the question as we call it and we train people on, really get that emotional reaction going, and it will help lead them to being much more open to what it is that you’re going to propose.

Gregg: So dreamscaping with people, helping them to envision what life might be like if they go and they move in a different direction in terms of their career actually emanated out of core work done by Carl Jung in the 1930s where he said, “90% of your problems can’t be solved. They can only be starved.” So by focusing on what life could be like and letting the unhappiness or the current situation of somebody … letting it starve a little bit, not feed it, that’s another core tenet used in admissions, right?

Tom: Yeah. Yep, absolutely.

Gregg: Now, another thing that’s about-

Tom: There’s a lot of things we can borrow from those parts of psychology. I think that stuff gets really ignored with, “Hey, let’s just … we just want to give them … We’ve got small class sizes with real-world instructors in a short program.” So we get so wrapped up in all of the things we do well we forgot the whole psychology of sales and we forgot the emotional process that we have to lead them through.

Gregg: And that all got drawn in decades ago, taking the best practice from counseling psychoanalysis. Interesting.

Gregg: Another one, Shane, is around branding. So the reps assume that when people come in they’re all excited and nurtured and fully-researched and they understand the brand of the school, and that’s a wrong assumption. So if you recognize that there’s a potential for people to have a lack of consumer insurance in their pocket about a school, you can do what Nissan did. They started a whole trend. That is, when somebody’s going to buy a Nissan, the salesperson will say, “Here’s a list of 50 people. Here’s their phone numbers. They all own this particular vehicle. Why don’t you have a sit down and phone them?” And they’ll phone three or four people, and they’ll say, “Oh, it’s a great car.” And it’s just a peer reinforcement.

Gregg: We’ve seen some schools, what they’ll do is they’ll have a list of all of the places that graduates are working at. Now, they can’t guarantee a job, of course, but they can accurately say, “Here’s where people are working.” That’s called brand writing. That’s a test that … that emanated out of the automobile industry. Do you want to build on that one?

Shane: Well, you know, Saturn had a similar thing that some schools use, sort of the photo of the new car owner that gets tacked on the wall. Right? So some admissions teams, and it’s a great strategy, it’s a great tactic, is as they’re walking through get a little photo, a Polaroid, it gets pinned up on the future students board as a way to connect somebody to the school.

Shane: Tom had a great idea that he used with his former school. They had … Tom, what was … You had those footprints on the floor, and they were, like, selfie stations, right, to go-

Tom: Yeah, we had selfie spots in different areas.

Shane: Yeah, it’s an awesome idea. And that’s used in other sectors. Like, certainly the automotive industry has used it very successfully in their sales process. Which, part of this sort of speaks to the nature of innovation, which is, “Where do you find ideas for things to test?”

Shane: We’re all pretty similar in how we buy things, whether it’s education or a sofa or a car or a relationship, psychologically, we’re operating at a similar way. So when you have a positive experience elsewhere in something unrelated to school, like, “Hey, I had a great experience buying this car,” or, “I had a great experience buying a countertop for my house, and it was because the gal who answered the phone was really friendly and made me feel at ease about something I was feeling anxious about,” which this happened the other day. And it made me think, “Okay, that is so important, that first point of contact, that first person you talk to when you’re kind of not sure about something because you’ve never done it before; makes a huge impact on the experience and the tone and the relationship you have to the brand or that business.

Shane: Same with the school business. We’ve talked about a Director of First Impressions, or having someone who’s really friendly and outgoing and warm on the phone and what a difference that makes to a school. That applies to every industry in the world.

Shane: So I guess my point is when you’re out in the world and something makes you feel good, some experience with a business, any business makes you feel good, the rhetorical question to ask is, “Wow, that’s great. How can I apply that to my school or my department or my role?” That gives you unlimited innovation if you view your life like that.

Gregg: Well, there is. They’re everywhere. Here’s an example. Folks on the call, Shane is, in a past life many years ago used to create magazines, and he’s an award-winning creative guy for making these magazines, and it’s all about font and kern and how you lay things out so that it reads well on the page, and the white space. There are very, very few people with Shane’s skillset. And that goes for schools. So when it comes to doing a brochure or a website, here’s a test. You go to the magazine rack at your supermarket and you … say your market is 25 to 50-year-old females that are smart, that’s what you want to attract on a website or a brochure.

Gregg: So rather than just guessing, go and buy Oprah Magazine, and bring Oprah Magazine back and instruct whoever’s building the website to copy how they’ve laid out that magazine. They spend, Shane, hundreds of thousands of dollars just getting the layout right through 50 iterative tests. Would you not agree?

Shane: Oh yeah, no, those magazines spend a fortune testing layout and design and using how different shades … how it connects to their market. Yeah, there’s tons of lessons to be learned from them.

Tom: Shane? I have a thing for Shane real quick, too.

Shane: I have an example of one of those principles we just recently found in a couple of tests. Like, any magazine that’s gender-specific, you know, women’s magazines or men’s magazines, there’s always the same kind of gender on the cover as the people they’re selling to. So men’s magazines, like Men’s Fitness, it’s not a hot babe on the cover, it’s a fit guy. The reason for that is they found, of course, that we’re kind of looking for a version of ourselves, or in those cases an aspirational vision of ourselves. That’s what attracts us.

Shane: So using that principle, we modified our software. So our Virtual Adviser software, what happens when he clicks on a link off of the client website or the school website, he comes to basically a sign-up page. We tested having the background image of the sign-up page change based on the program page that they had clicked off. So if it was the healthcare-related program page, the background image would be a healthcare-related kind of background image. If it was IT, it’s a more IT-related business kind of thing. Everything else about that sign-up page is the same, and the background image loads … a different one loads based on where they clicked from.

Shane: What we found is that dramatically increased the amount of people signing up to take the Career Training Readiness Quiz, thus dramatically increasing the amount of leads for the schools. That’s really a magazine innovation if you distill it back to its source.

Gregg: So, that’s exactly right. Then, of course, you can go a step further. We found through our testing that, we’ll call it relatable people, outperform in terms of lead generation beautiful, photo stock, lovely people. An ugly guy will outperform a beautiful guy when it comes to creating leads off a website. So Tom, what’s that all about, man?

Tom: It’s good for people like me, I think. It’s really creating something, again, that’s emotionally relatable. What I was saying before, too, and Shane pretty much hit on it, was we do the exact same thing with website design and layout. We’ve got a systemized process, we’ve hopefully eliminated a lot of the waste and come up with a good process. But it’s really looking at the layout and testing those different elements that helps you improve upon that base that you’ve created.

Tom: And to your point about the pictures, we want to see … we know that people relate to people that are a little more ordinary-looking and that they can relate to and feel … They want to envision themselves in that role, and when you’re looking at someone that may be a model or some type of perfect picture, maybe it’s just not relatable. It impacts and impairs the number of leads that may come off of a page. We want to have great photography that people can relate to.

Shane: The rule of thumb, Gregg, the rule of thumb for testimonials is we’re looking for a version of ourselves. That’s what really we’re looking for. So if I’m on a school website, I’m a 47-year-old Caucasian dad, I’m kind of looking for a guy who’s in and around who I am. And when they’re not-

Gregg: And not too attractive.

Shane: Well, in my case, really good-looking. But-

Gregg: Oh Lord.

Shane: No, no, I’m teasing. But, yeah, exactly, a normal person. [crosstalk] model.

Gregg: Well, hold on, if I may, Shane.

Shane: [crosstalk 00:33:50].

Gregg: Shane, you’re not only teasing, you’re not accurate. Let’s move on.

Shane: Go for it.

Gregg: Shane, I’m going to ask you to give some … We’re on a roll here, but in terms of testing, in terms of elements within marketing and lead gen. But really, we spoke about it earlier about how marketing people, admissions people should really throw on a white lab coat and kind of, while they’re doing their good work, adopt kind of a mad scientist role.

Gregg: We pull in split testing from pharmaceutical lab testing. The iterations to land on a vaccine or on a viable piece of medicine, there’s thousands and thousands of tests. You know, Einstein’s famous quote about, “Every failed test is one step closer to success.” So if people can, again, using another analogy, bring in the testing protocol and be patient enough to do it, they can come up with some amazing little marketing wins.

Gregg: Why don’t you give the folks some tips that we’ve learned through our testing as a little gift for them when they go and tweak their websites? You want to do that?

Shane: Sure. Okay, so here’s a good one. Basically, this came from the Publisher’s Sweepstakes direct mail packages. They probably haven’t been mailed in 15 years. With Publisher’s Sweepstakes, if you’re old enough to remember Ed McMahon, and you’d get all this junk mail that came, what they … and they were prodigious testers.

Shane: So one of the things they found in these direct mail pieces is that if you got somebody to do something they were more likely to return the envelope, so a little sticker, “Take this sticker and paste it there to get your four free magazines,” or whatever it was. It was an involvement device. So get them to do something and they’re more likely to put their name and return the envelope and make the sale.

Shane: A few years ago, we tried that out on our forms, on the website forms, and said, “Okay, let’s get them to click some boxes before we ask for their name, phone number and email address to see if that creates more engagement and more likelihood that somebody will do that. And it worked perfectly.

Shane: Now, on our forms on our client’s sites, it’s the, “I want answers” form. We ask, “Hey, do you want to know about financial aid? Do you want to know about start dates? Do you want to know funding options?” Click, click what’s appropriate. So when people click the little boxes we found they’re more likely to make an inquiry, and thus lead flow increases. That’s an example.

Gregg: Here’s another one. The best performing direct response ad of all times, it’s sat in the National Inquirer for 65 years, and it’s, “Corns gone in eight days, guaranteed. Phone here.” That was it. So Shane took that best practice old-time ad for corns, and he created an ad saying, “Become a nurse. Get your free starter kit here,” phone number.

Gregg: I think the best one we did we had 154 phone calls. To me, that was just basically drawing in successes from other industries, Shane. I mean, we’ve put captions under photos, right? Do you want to draw on that?

Shane: Oh sure, yeah. No, one of the current best practices is to add a little caption under every photo on the website. If you look at any newspaper, there’s always captions. Captions is the little bit of writing underneath the photo that tells you what’s happening in the photo. “Sally Jones is standing beside Mark Smith at the local baseball game,” whatever it is. People read that stuff, because they’re naturally curious. You see a photo and you’re like, “Hmm, what’s that mean?” So the caption represents a sales opportunity or a marketing opportunity.

Shane: So, when we’ve tested trying captions on images, it works great, increases conversion rate. So that’s a newspaper best practice. And the newspapers spent, what, 100 years perfecting their craft? Right?

Gregg: Well, exactly. And through trial and-

Shane: Yeah, even the layout structure of a newspaper is typically sort of photo, headline, body copy, with a caption under the photo, and then headline, what’s happening, what’s the story, and some body copy that’s … journalistic writing is simple, and the sentences are pretty short, and the paragraphs are short. It’s telling the factual sequence of events, or at least it’s supposed to. Basically, that style is the basis of all direct response or effective advertising copywriting [crosstalk] newspaper industry.

Gregg: Yeah, and that was all developed through just iterative psychological testing on the flow of logic. I remember I read a book, Ogilvy on Advertising, and they talked about how they made an error shipping out a print ad in a big magazine where the period fell off the headline. They went and sent it out without a period, and the people went crazy, “Oh, grammatically incorrect.” But what happened inadvertently was that the results from the ad increased 11%. What they determined was that because the period disappeared, the mind’s eye didn’t have instructions to stop and bounce off the ad. It kept going into the subhead. It created more readership. Then, the subhead was more compelling and it drew people in. So that was a fluky test.

Shane: Yeah. Well, there’s another famous test … I don’t know if it’s famous, another test on Swatch watches, selling Swatch watches in the Wall Street Journal. This goes back to the sort of ye old olden days of advertising. But in a way, it was very instructive, because the cost of running these tests was so high. So the A/B test of the split test as it’s called, where that term came from is, when they’re producing a newspaper they’re basically producing two versions of it, or two copies of it on the printing press. So what advertisers could do is they could run one version on one of those two, and the other on the other. So every other copy would have the different iteration of the ad.

Shane: So in this Swatch watch test, the Swatch people said, “Oh, no, we’ve got all these beautiful watches. We want to showcase all of them.” And the advertising guys said, “Well, it’s probably better just to focus on one.” They said, “Oh, no, no. We’ve got all these beautiful watches.”

Shane: So they did a split test and they had the beautiful line of all the different colors in the Swatch watches, and the other one was just selling one, a black Swatch watch. And, of course, the single one outpolled the many options.

Shane: So the learning from that is that too many options confuse people and hurt you in making sales, which could apply both to marketing and admissions for school. Because on the admissions end, when you’re laying out too many program options it just confuses people and they’re like, “Oh, I don’t know. I’ve got to think about it.” So I feel as though a different course of action is better.

Gregg: That’s become the law of singularity. You know, just a topic shift for half a sec, the beautiful thing about importing test software I’ve used and split testing, completely innocuous ideas, is that through trial and error, in all the aspects of your school you can get to best practice. It’s the easiest way to get to best practice.

Gregg: The analogy that Jim said for me is, “Every time there’s a plane crash, back into the 1960s, the FAA would go and they would deconstruct how the plane crashed, why it crashed and all that kind of thing. And through small iterations there were improvements to design and fail safes and what have you on airplanes.

Gregg: Now, there are hardly any planes crashing. That’s all because of this iterative testing that slowly but surely took the aviation operations industry to best practice. That can also be done with a school, hey, Tom? Because the tests, they stick, right?

Tom: Yeah. It’s just having a culture of innovation or a culture of testing that you create, and as we talked about at the very beginning, you’ve got to have … I think the core foundation here is you’ve got to have a great process that you created and a system first. Then, you’ve got to create that culture of innovation or that culture of testing around that to bring in these different ideas and make improvements and lean out your process so that you can eliminate the defects and focus on improving each area until you achieve the desired results in the rates that you’re looking for.

Gregg: Yeah, and you can test in all areas of your school. That’s how you can create performance improvement without spending a ton of money or time, just through these iterative little tests. You land on a winner, and that becomes the new, what we call a control, and the game is always to beat the control. If everybody plays the game throughout the school, you can create tremendous improvements. So I think the assignment for the people on the call, you guys, is to go out and look at other industries’ best practices and see if you can import them as a testing opportunity, then get at it and just start testing.

Gregg: I think that I want to make sure that we are respectful of time. Does anybody have a question for Tom or Shane and I?

Larry Bouchard: Yes.

Gregg: We’re happy to give you full answers. All you have to do is press *6 to jump on the call.

Larry Bouchard: [inaudible 00:45:22].

Gregg: Hello?

Larry Bouchard: Yes, hello?

Gregg: Hi, who’s this? Yeah.

Larry Bouchard: Yeah, this is Larry Bouchard. Yeah, hi. I just … you commented earlier about the possibility of doing lean management via freeing up the time of some of the recruiters and allowing them to have more meetings by having somebody set appointments for them. This might just … and I’m new to the whole recruitment thing, this might be a 101 kind of question.

Larry Bouchard: So my question was, does that work? Or is there a certain loss in the person that’s on the phone connecting with the perspective student and creating a certain chemistry or a certain connection with them, is there … and then they come in and then somebody else is maybe doing the tour or doing a meeting? Would the gain be better there and the efficiency of having somebody separately set the appointment? Or is there too much loss in the transference when they come in to actually meet?

Gregg: That’s a great question. Tom, you’ve done a ton of work in this area. Why don’t you speak to this?

Tom: It’s a great question, and it’s the one that’s most often brought up by people I work with, is, “Aren’t we going to lose that one-on-one and carry it through?”

Tom: Really, the answer’s no. There’s a couple of reasons for this. Number one, admissions reps are super in person. They love that one-on-one in-person interaction, giving the tour, very personable. When people get on the phone, they’re very, very, very different. And people that are great in person are not necessarily great on the phone.

Tom: The first thing would be, I would challenge the point that many of the reps are just not very good at the phones. And when you’re making dial, after dial, after dial, your energy sags and you’re just not as enthusiastic as you would be. But also, when you have a great appointment setter who builds a really good connection and has a great rapport with somebody on the phone, our number one goal is to get that person into the school, so we can get somebody in.

Tom: But then, when they come into the school and they meet with yet another person at your facility that has the same level of enthusiasm for what they do, you’re creating a very contagious atmosphere by having more than one person. When you tour somebody through your school, the more people that that prospect can tend to interact with, if there’s a student or a teacher or the director or owner or president that you can introduce them to who’s really personable, that’s giving them more people. That reinforces the whole, “Wow, everybody here is so friendly and outgoing. I love the environment.” And that’s really where it’s contagious.

Tom: So that’s really how it works. You’re not building over the phone … you can build a great relationship with people, but once they come in it’s rebuilding the relationship, because that’s already been a day or so, or 24 hours, and life has happened, and that person’s already slipped back into the daily routine. So, no, it’s a contagious atmosphere, and having people that are really great at what it is that they do that really makes the whole process work great.

Larry Bouchard: Oh, that’s interesting. Because I’m just kind of doing some of the training now and I just have found, anecdotally, just the little bit that I’ve been doing this, is that in the past I’ve always kind of made calls, and when they come in I send them to the director to do the tour.

Larry Bouchard: Recently, I’ll notice that when I make a connection with somebody, when somebody’s excited over the phone, they actually come in and ask for me, even though I told them that they’d be meeting with the director. When they do ask for me, I close them … or not “close them,” but the enroll 100% of the time, which just really blew my mind.

Larry Bouchard: So I’m just really … And so now, as a result, I’m doing all my own tours now and we’re having some good results. But I suppose if somebody else set the appointment and I conducted the tour with the same amount of connection and energy there wouldn’t be anything lost.

Shane: No, and how many more tours could you do.

Tom: [crosstalk] is the fact that your tours probably … if you looked at it side-by-side and split tested the tours, let’s say you set all the appointments, and here would be your test, and have the director do half and you do half, what’s the difference in the tours and why they’re coming in and why yours are closing at a better rate. It potentially could be in the way you’re handling them, or your enthusiasm level.

Larry Bouchard: Right, right. Okay. But in your guys’ experience, in your collective experience, there really isn’t much loss in having a separate appointment setter to the in-person meeting person?

Tom: No, and the 10%, the 20% bump in appointments would more than outweigh that.

Larry Bouchard: Right, right. That’s true. Okay, great. Thanks very much. Very helpful.

Shane: Okay, so this … Gregg, can I have a minute to share a thought?

Gregg: Mm-hmm (affirmative).

Shane: Okay. So this reminds me of a book called the E-Myth, the Entrepreneur Myth, it was written in the 80s, great book. I think the subtitle of the book is The Problem With All Small Business and What To Do About It. So in the book, Michael Gerber, he basically describes the quandary most small businesses have, in that you’ve got a technician, somebody who’s really good at whatever they do. I’m a good plumber, I’m a good admissions person, I’m a good salesman, whatever it is, and goes, “I’m going to start a business.” And then that technician is really good at it, except the technical part is only a piece of it.

Shane: It’s great in a specific role, but without the manager and the entrepreneur, the manager being basically the person that can organize the systems and the entrepreneur, meaning the person that can have a vision and identify opportunities and innovations, they cap out. They always cap out. So that’s why most plumbing companies are little and most electrical contractors are little and most massage therapists are little, because they’re good technicians, but they can’t ever grow their business, because they never figure out the manager and the entrepreneur part.

Shane: So the department in a school is similar. It caps out. So we’ve got the caller, the fella just now, he’s killer. Right? He’s awesome at the admissions stuff. But the growth of the business will ultimately be limited by that, unless management structure or structure is built around it and come continuous innovation system is built into that. Does that make sense?

Gregg: It does. So what you’re really saying is you can have an exceptional person who’s slaying it, but you can’t scale that person by having-

Shane: That’s right.

Gregg: So you need to create some actuators around that person, just get them doing fewer things and focusing on what their superpower is. Is that kind of what you’re getting at?

Shane: Well, yes. And having the structure that enables growth. Like, if you don’t want to grow, that’s fine. But if growth is part of the plan then that structure is key to it, otherwise there’s always a ceiling and it comes pretty quick.

Gregg: Does that help your question?

Larry Bouchard: Yeah, it does. Yeah, it really does. I think I have a pretty clear idea now. Because I really thought I was onto something with the doing your own tour thing. But now I’m having the same problem. There’s a lot of leads that I just can’t nurture the way I should because I’m doing more tours and everything, too. I was just afraid of hiring somebody that might not be as good at the … or just the disappointment of somebody coming in or feeling slighted because the person they had this great relationship with on the phone isn’t there for them during the tour or something. But, [crosstalk 00:54:20].

Gregg: You can position them as your assistant and get your name mentioned early and often in your colleague’s process.

Larry Bouchard: I like that. I like that. Very good.

Gregg: And position you as a guru and a counselor.

Larry Bouchard: I wouldn’t go that far. Right.

Gregg: All right. Excellent. So any other questions before we say farewell?

Christie Burns: I had a question. Can you guys hear me?

Gregg: Sure.

Christie Burns: So this question’s from Sage. They were wondering, “What does split testing look like and how do you get reliable data when you have a very small sample size?” Their example was a college that admits classes of 15 to 25 people per year, and that receives around 100 … ” and they literally said, “calls, emails, walk-ins per year.” So I’m thinking they’re not getting more than 100 sort of people coming to them.

Gregg: Sample size is tough, eh, Shane, when a school is that small? But any testing is better than nothing, wouldn’t you say?
Shane: Yeah. Yeah. So it means you have to make anecdotal determinations more than you want. But, honestly, most of us have some version of that problem. It’s not like there’s millions of visitors coming to websites for schools. Most schools have about, I don’t know, 1,500 to 2,500 visitors a month. So it takes a little longer for the tests to get to sort of a degree of certainty. And when the sample’s that small, the degree of certainty has to come down. So we generally go for around 97% certainty in a test. So if it’s 97% likely to be true, then we’re okay with that, and then we will test it with multiple clients. But you might be more of, like, 80%.

Christie Burns: So a lower degree of certainty and more patience?

Shane: Yeah. Yeah, [crosstalk 00:56:27].

Gregg: Yeah, let the test run longer, eh?

Shane: Yeah, let the test run longer. But also, there’s, gosh, so much upside. Like, look at … because even two extra students, that’s like a 10% increase in the business, right?

Gregg: Yeah, for these guys.

Shane: 10 extra students, that would, you know, add 25% to the revenue of the school. Wouldn’t that be nice?

Gregg: Very nice. Hey, any other questions out there you guys? Okay. I think we’re done today. On behalf of Tom King and Shane Sparks and myself, Gregg Meiklejohn and Christie Burns at the controls, thank you everybody for coming out. If you want to have a specific conversation on the phone about your school as it relates to testing, we have our people that we can tee you up with and kind of make this conversation specific to your school. You could just text 250-391-9494, that’s 250-391-9494, and we can give you a half an hour of time just to give you some specific ideas around testing for your schools.

Gregg: Enjoy the day, everybody, and go get testing. Take care. Bye-bye.

Tom: Thanks guys.

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