Case Study: Customer-centric approach to operating model transformation yields $10m annual saving for a global education services business

The insights and recommendation set generated by a 360° operating strategy and operational effectiveness review enabled the business to overcome performance-limiting beliefs and collaborate with Atlantic Insight in the creation of an actionable plan to become world class. When the recommendations were implemented this enabled revenues and customer accounts to grow for more than three years without the need for further enrolment resource. The new operating model better aligned the student journey to their preferences and the cost of student acquisition was reduced by the equivalent of a $10m annual run rate saving.

Our client, a global Education and Research Publishing company, had acquired a market leading Online Programme Management (OPM) business serving the Higher Education sector several years earlier. OPM providers enable Higher Education institutions to expand access to higher education through online learning. Their mission is to increase student enrolment online, support the online learning experience and enhance graduation rates through expertise in program development, marketing and recruitment, enrolment, pedagogical design, technical support, and pastoral care services. Higher Education institutions can select an end to end full-service package or focus on specific capabilities.

The US OPM market at the time was estimated to be worth over $1.75bn per annum. Double digit growth rates however were slowing, in a highly competitive market dominated by five players including Pearson, 2U and Wiley Education Services.

One of the key challenges in the marketplace was the high cost of student acquisition. All players in the market were therefore struggling to simultaneously grow both revenue & profitability. The predominant strategy deployed by our client’s competitors to date was to postpone profitability to protect & grow market share.

Any player capable of transforming these economics had the potential to deploy game changing partnership models and grow profit margins, in both percentage and absolute terms, and top line revenue.

Predicted financial projections used to justify the acquisition needed to be achieved. The Group CFO and CSO both recognised that the high cost of student acquisition was a weakness that could be transformed into a strength and a threat transformed into an opportunity. The challenge was to design a new operating model that enabled customer expectations to be more effectively delivered and met.

The CSO and CFO urgently needed answers to the following questions.

  • Why is the cost of student acquisition so high? What is the potential for improvement?
  • What needs to change to optimise the operating model?
    1. to enable the business to scale more effectively such that student recruitment costs scale more slowly than both enrolment volumes & revenue
    2. to deliver a student journey better aligned to their preferences and higher levels of student engagement
    3. to create the financial headroom to develop a new transformational self-service enrolment model
  • How can the business be rapidly transformed so that it can achieve attractive economics and justify ongoing investment in organic growth and future acquisitions?
  • What is the delivery roadmap to the target operating model?

What we did
A 360° operating strategy and operational effectiveness review was commissioned to critically evaluate the current operating strategy and operational practices versus best practice reference models, design a Future State Operating Model, develop a business case for improvement and implementation roadmap.

We applied our 360° Operating Strategy and Operational Review methodology and tools over 6 weeks to establish the performance of the current operation versus best practice reference models. In conducting the review we critically evaluated the key elements of the clients operating environment through the combination of colleague interviews, first hand observation of front line roles and their interactions with the customer using processes, tools and systems, and analysis of over 2 million data points. This included:

  1. Market and financial information
  2. Current operating strategy alignment with corporate intent
  3. Business processes and customer journeys mapping and critique
  4. Customer and colleague behaviour analytics and modelling
  5. Activity based cost modelling
  6. Operational resilience maturity assessment
  7. Digital and technology strategy and roadmap optimisation
  8. Colleague engagement and experience analysis
  9. Impact assessment of current improvement initiatives

The case for change was evidenced from both outside in (market, partner, and student) and inside out (business, colleagues, and key stakeholders) perspectives. It was then presented and agreed with the leadership team. Nine recommendations were identified and developed into workstream charters with the client’s management team. Successful implementation would enable their current operating model to be optimised and then transformed.

This enabled the business to relinquish long-held beliefs centred around pre-digital dominated sales & service models and embrace a simplified approach better aligned to student preferences across a seamless multi-channel customer journey.

Outcomes and benefits
The insights and recommendation set generated by the 360° operating strategy and operational effectiveness review enabled the business to overcome performance limiting beliefs and collaborate with Atlantic Insight in the creation of an actionable plan to become world class.

The following outcomes were achieved as result of the client’s implementation of the transformation plan.

The organisation structure was aligned to the new operating model. Enrolment resource was matched to requirement across partner institutions. Workforce optimisation best practices and routines were implemented to optimise availability, work patterns and approach to managing productivity.

A simplified student journey better aligned to their preferences that would deliver a superior customer experience was designed. This in turn positively impacted student enrolment numbers and then retention and completion rates.

Historically each institution had their own dedicated team to handle student enquiries and make appointment for them to speak with a Partnership Director. Each of these teams worked differently. A contact centre was designed and built that disaggregated the process step and resource from the partner institution. This enabled customer enquiries across all channels to be better managed and qualified before handover to the Partnership Directors and a more effective deployment of colleague resource. This was the first step in the disaggregation of the student from the enrolment resource. To support this initiative a tactical project was completed to improve lead qualification processes.

Further productivity improvements will be achieved as the business moves closer to a fully automated end to end process for those students wishing to self-serve across the end to end customer journey.

The review identified that the productivity of enrolment resource could be improved by >50%. When the recommendations were implemented this enabled revenues and customer accounts to grow for more than three years without the need for further enrolment resource.

This equated to >$10m annualised run-rate cost saving against the historic scaling approach; the improved economics enhanced the business case for future investment in organic growth in what is a very capital-intensive business and two further acquisitions.

The engagement delivered targeted outcomes to all five key stakeholders - higher education institutions (partners), students, the business and its colleagues, and shareholders. The engagement was a catalyst for the Leadership Team to question and examine long held beliefs, and in doing so highlight biases that are difficult to self-diagnose. As a result, the leadership team developed a paradigm shift in perspective and a set of tools to look at business challenges differently.

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