To be [loyal] or not to be?

It's 2040. Maria Tan (not her real name), the CFO of Uni L, stands in front of the Board of Directors to present the accounts and the financial sustainability outlook for the coming 10 years. She smiles as she gets only "Ooohs" and "Aaaahs" from her audience. As she finishes her presentation, she gets standing ovations and many taps on her shoulder.

Isn't this unusual?

No doubt it is! Maria has been in her role for more than 15 years. She took a role that nobody wanted. Over almost a decade the board interactions ended up in hour-long serious discussions on bankruptcy, mergers, and layoffs. Year after year they managed to keep Uni L afloat.

In the last couple of years, the financial pressures eased, the enrolment started growing, and employers started to recognize the future readiness of their graduates.

Besides, other universities, airlines, and hospitality groups stood in line to learn more about their unique loyalty program. Even Harvard Business Publishing requested to write a case on their successful initiative.

A loyalty program for universities?

It's not common, or was not common some years back, to ideate a loyalty program for universities. Alumni and graduates might be proud of the education they received and will pay back without any incentives. Have a look at my recent article in this regard:

If they're not proud or not engaged, they just look the other way and do not relate, don't update their details, and end up being "lost alumni".

Sad, but true... unless...

First, let's go back to Maria Tan and Uni L:

Uni L was not the university that strategized a lot on alumni relations, not even on the student experience. If you talk to their senior leadership off the record, they would describe themselves as an unemotional, transactional university. Students study, get their degrees, and get a job. In a nutshell, they got the job done.

Unfortunately, out of comfort, they didn't realize the changing expectations towards universities. Beyond studying, students wanted to experience, enjoy their "parental freedom" and make the most of of it. Uni L didn't cater for anything of it.

The downward spiral

Enrollment at the university declined by double-digit percentages year after year. The first year was attributed to bad luck. In the second year, the head of Marketing and Admissions was replaced. In the third year, a global economic crisis made it difficult to determine the reasons for the continued decline in enrollment. At the same time, it became clear that the lack of investment in technology had created a data mess, making it almost impossible to analyze the situation effectively.

In year 4, banks started limiting credit. Suppliers started to ask for advanced payments before delivery. The income from enrollment was at 50% of the income 4 years back. Uni L had a more than obvious problem and it was at risk of disappearance.

Everybody got nervous... Maria Tan and the senior leadership made a unique town hall meeting gathering all staff, faculty, and current students. They reached out to alumni through a series of online town halls.

What made those town halls so memorable was that they were very upfront with the current situation: Either we row together or we disappear.

While the classes continued, Uni L became a huge project-based learning project:

• Marketing students created and ran campaigns under the guidance of the marketing team.
• Finance students designed fundraising campaigns for scholarship funds with local and regional businesses together with the Finance and Entrepreneurship faculty.
• Management and communication students became the university planners and event organizers under the supervision of the operation team and faculty.

As a result, enrollments were trending upward thanks to the huge positive vibe and on-campus dynamics. Expenses were dropping as many third-party commitments were taken over by students.

Giving back

The turn-around wouldn't have been possible without the students, alumni, and staff. When the economic situation improved, the Executive Committee felt obliged to GIVE BACK. They looked at other universities, but they couldn't identify any institution that was "giving back" to their graduates.

In consultation with a wider audience (though not representative), they found out why:

Digging deeper, they got to understand why:

Nonetheless, they got inspired by so many other industries that offer Loyalty Programs. They were determined and created their very own loyalty program.

It provided credits for every action students and alumni undertook. With those credits, students could shop branded merchandise from their store or use them to take skills-focused courses.

As a curious fact, by 2040, Uni L is now known as the institution with the highest percentage of graduates coming back to take lifelong learning courses. Few institutions have achieved comparable rates of returning alumni.

Belonging vs Loyalty

When determining the strategic purpose of engagement of students and graduates, universities might explore the creation of pride in belonging to an institution. This would entail very purpose-driven initiatives along the entire learning journey and beyond. In financial terms, it's an important long-term investment in the hope of future commitments of graduates to take the initiative and give back.

Loyalty Programs take a more reactive and conditional approach: "You show me some love, and I will reciprocate at a later stage". Certainly, there is an initial concept development investment. However, the university spends money only after it benefits from it. It's a kind of pre-paid service with benefits. You could even tentatively price those benefits into the next tuition fee review.

But let's have a look at how it works in other industries...

Becoming Gold

How do you get a hotel chain gold status? First, you have to stay several times within one year at a premise of the same chain. Doing so, you spend quite a bit of money as well.

Why do you do it?

Because after x amount of stays you get a higher category of loyalty which comes with some perks (early check-in, late check-out), maybe some discounts and points. The points you can use to spend free nights at hotels your now preferred chain.

The perks you get, make it convenient for you to continue choosing the same hotel chain. Now, think about your choice of airline groups, and credit card issuer. You spend, therefore you get and you spend more...

What's in for the university?

Returning alumni is a challenge for many universities. As students learn about the diversity of thoughts, many take it literally and look for other institutions for further education.

A loyalty program of some sort can tie them closer to the university. If they receive perks for their engagement, they have an incentive to come back or convert their credits into merchandise from the university and take the brand wherever they go.

Ongoing incentives imply that alumni have an interest in keeping their data up to date. Sophisticated universities would use those data points to analyze the professional journey of their alumni and propose future learning engagements, communities, and events. The data-fanciest universities would use algorithms and AI, to predict learning journeys and build a course portfolio accordingly.

Belonging or Loyalty: What is better?

Belonging is more powerful as it triggers human emotions to act (pride, commitment). It comes however with a higher investment and more uncertainty. If done wrong, it backfires and there is limited leverage.

Loyalty programs foster rational behaviors and it's easier to predict success with a limited financial commitment. Participants join because of their convenience and the benefits associated with it.

The below hierarchy illustrates the institutional strength of any kind of strategic project involving graduates and current students. We ignore FIDELITY as it relates mostly to 1-to-1 relationships. It could trigger action but is not scalable.

The beauty of higher education is the opportunity to shape people's lives and build the foundations for their success. So, it evokes emotions and rationality at the same time (read about ROI and ROE here ). Hence, a combination of both, fostering belonging and building loyalty could be a tempting scenario.

... try this with a credit card!

P.D.: Uni L started over the years to emphasize more in the student experience and alumni relations, however, prioritizing the loyalty program in any situation.