Wednesday, April 26, 2006

The Charm Offensive

Swarthmore College was featured in an article in today's New York Times on how colleges woo students who have made the cut.

It's not an academic exercise. Far from it, with annual tution and fees cresting at over $40,000 per year at top schools.

Here are a few of the techniques schools use to create a bond with accepted students:
  • Denison University pays up to half the airfare of any admitted student from outside Ohio who wants to visit campus.
  • Colgate hosts receptions in cities around the country.
  • Swarthmore, as well as others, hosts a multi-day event filled with activities and opportunites to make friends and develop an affection for the campus.

This is similar to how businesses reward customers and clients, yet goes beyond giving a new customer an umbrella for opening a checking account at the bank.

I encourage my clients who are looking to grow their business or expand into a different market to calculate the cost to acquire a new customer and also the lifetime value of the customer as you decide on the appropriate level of expenditure.

For instance, when attempting to influence a prospective undergrad to enroll at a university, you are discussing influencing a $120,000 plus decision per customer. The $20 cost to send a t-shirt is neglible. The real question is whether it's an effective use of an incentive.

How are you using incentives and rewards to build a stronger business?

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