Consumer Behavior and its Impact on the Non-Degree Online Higher Education Market
#2 in a series
In my first post The student as consumer, and the burden of choice, I suggested that when learners face a high stakes purchase (the full degree) and information overload, they often narrow their decision to either known institutions or those that rank on Page 1 of search results. The endless aisle sounds great until you have to walk down it. The learners’ simplification strategy and conscious or unconscious bias excludes lesser-known institutions from the consideration set, even if they may be the “best fit.''
In this post, I examine consumer behavior and its impact on the online higher education non-degree market. Those who have worked in direct-to-consumer businesses (either digital or brick-and-mortar) will recognize the language of consumer behavior trial, offer, purchase, add-on purchase. For learners as consumers, this language is profoundly relevant, and it is vital to the institution’s strategy for non-degree online learning programs.
How consumer-learners reduce perceived risk
In their study, Behavioral Changes in the Trial of New Products, Shoemaker and Shoaf found that consumers respond to the perceived risk of trying a new product by reducing the consequences: they buy a smaller quantity (trial). The growth of the non-degree market (certificates) is that very behavior in action.
For the new traditional learner older, more diverse, navigating career and family obligations, concerned with increasing debt, and having spent years away from any formal academic setting entering a full degree program raises the stakes. Their anxiety is palpable. The resulting behavior is predictable.
If a learner is uncertain about moving forward, or unsure they can succeed, they update their beliefs through a consumption experience (the trial). What better consumption experience than to begin with a “smaller-quantity,” affordable, low-stakes online learning program that provides an immediate, career-enhancing credential and a powerful signaling opportunity to the learner’s social and professional networks?
Non-degree online program development and a wider view of student acquisition cost
I hear many question the economic value of certificates to the institution, relative to the cost of acquiring each student. In isolation and barring substantial scale, one would be hard pressed to show meaningful economic return on a modestly priced certificate. But that misses the bigger point. If viewed as a valuable student acquisition strategy, the university generates exposure, awareness, and trial by delivering short form, employment-relevant content.
With an appropriately constructed “offer” (freemium, credit bearing, pathway to degree admissions, university credential, digital badges) for these certificates, the institution creates affinity. Upon completion, and with a student’s newfound confidence, some of those learners will enter a degree program at that same institution (the “purchase”). When reskilling and upskilling becomes necessary, the student returns to what is now familiar (the add-on purchase). Coursera calls this “the flywheel effect”:
“Coursera’s consumer flywheel creates a price-to-cost advantage: We make it easy for learners to come to Coursera and explore learning options through free open courses and projects. We believe this efficient acquisition model... enables us to attract learners to Coursera at scale and connect them with the right learning experiences over the course of their academic and professional lives. This acquisition model has allowed [Coursera] to add over 12,000 Degrees students over the two years ended December 31, 2020 at an average student acquisition cost of under $2,000.”1
The Inverted Admissions Process
Just as shorter, lower-risk, non-degree online higher education programs reduce risk to the learner, they also reduce risk for those evaluating learners for degree program admissions.
There are those who believe that standardized testing continues to be the best predictor of a student’s performance. There is also a growing chorus from test critics who believe that the “test” provides an incomplete picture of the student. While this post is not meant to debate the merits of the standardized test, what seems obvious is that both institutions and learners are seeking more holistic ways to evaluate preparedness for the rigors of a degree program. While the student moves from low stakes to high stakes education decisions, the opportunity exists for the certificate to serve as an alternative or complement to the standardized admissions tests.
MIT pioneered an “inverted admissions” process: learners first take a set of very low-cost massive online courses to earn a “MicroMasters” in supply chain management. Those who succeeded at the MicroMasters level become eligible for admissions into MIT’s full master’s degree program.
A study of MIT’s first Supply Chain Management MicroMasters cohort showed that completers who entered the master’s program were not only well prepared when they joined their on-campus peers, they performed better than the students who entered the full MIT Supply Chain Management degree program through the traditional application process.
Researchers found that the blended master's program attracted a cohort of highly educated mid-career professionals from developed countries who were looking for more flexible alternatives to traditional graduate programs. Success in the online courses was correlated with higher levels of prior formal education and effective use of learning strategies. Students who enrolled in the blended graduate program reported being academically prepared for their coursework and had higher GPAs (3.86, p<0.01) than students in the residential program (3.75).2
MIT’s pioneering MicroMasters experiments in inverted admissions recruited new learners who outperformed those admitted through traditional channels
Additional thoughts for planning your online learning services strategy
As institutions plan certificate strategies that take advantage of consumer behavior patterns and alternative approaches to admissions, I recommend considering a few additional ideas:
- Don’t view “degree vs. non-degree" as a binary choice. There can be overlapping paths between the two.
- Fully embracing an understanding of consumer purchase behavior means developing education products at the intersection of institutional expertise and consumer demand. Those are the offerings most likely to benefit learners, their employers, and the university itself.
- Despite the movement towards a fully digitized marketing/recruitment experience for students, education is a deeply personal, often anxiety-ridden decision. Use technology to facilitate human engagement, but don’t leave it to a bot to assist your potential student when she needs help.
- Optimize online programs to include some live, team-based synchronous, and experiential learning to address authentic assessment, communities of practice, capstone projects, and differentiation. These forms of engagement aren’t just what learners want: they make for a world-class learning experience.
Please look for other posts in this series:
About the author
Joe Morgan
Vice President, University Partnership Development, is responsible for Pearson Online Learning Services’ strategy for partnership growth and profitability. Joe brings to Pearson more than 20 years of experience in business management and brand management in large multinationals and successful startup environments.
Prior to joining Pearson, he was Founder and CEO of MaverixLab. The company worked to develop the innovation ecosystem in Miami through business incubation. He previously served as CEO of Noodle Education, a vertical search engine for formal and informal education and recognized by Forbes as one of the 10 Greatest Industry-Disrupting Startups of 2012 transforming industries that affect our daily lives, by Mashable as 1 of 5 start-ups transforming education and honored by the Obama White House for building the most comprehensive API for assisting college-bound students. In addition, he was Chief Marketing Officer, SVP of Strategy for Kaplan, Inc., and founder/CEO of Colloquy, an online program management company supporting the higher education market, both Washington Post Companies.
1 Coursera SEC Registration Statement (Form S-1), March 5, 2021, p. 10.
2 Littenberg-Tobias, Joshua & Reich, Justin. (2018). Evaluating Access, Quality, and Inverted Admissions in MOOC-Based Blended Degree Pathways: A Study of the MIT Supply Chain Management MicroMasters. 10.31235/osf.io/8nbsz.
