• Consumer Behavior and its Impact on the Non-Degree Market

    by Joe Morgan, Vice President, University Partnership Development, Pearson

    A young person listening from laptop and taking notes in paper

    #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 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 program offerings.

    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 certificate program that provides an immediate, career-enhancing credential and a powerful signaling opportunity to the learner’s social and professional networks?

    Non-degree programs 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”:

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  • The student as consumer, and the burden of choice

    by Joe Morgan, Vice President, University Partnership Development, Pearson

    Woman looking at a computer with a smile on her face

    If we’ve spoken or crossed paths in a webinar recently, you may recognize a recurring theme (perhaps obsession) of mine: the student as a consumer. My preoccupation is a reaction to a common assumption that higher education purchases are somehow different than other high-stakes purchases. While the benefits of education arguably outweigh those of other purchases, the learner is first a consumer, and consumer psychology is unequivocally at play.

    To more intimately understand the student-consumer’s expectations for digital or online learning, Pearson (the global learning company) partnered with Accenture (the global management consultancy). We believed Accenture’s consumer behavior insights could be applied to the student-consumer journey, to benefit learners, providers of learning, and employers. This series provides a few observations about what we learned together. This post focuses on the beginning of the student journey: the purchase.

    The burden of choice

    Accenture observed that businesses struggle to create personalized experiences that don’t drown their customers in too many options. Overwhelmed by choices, consumers are likelier to make poor decisions, be less satisfied, and abandon a website or brand altogether. To paraphrase Accenture, the endless aisle sounds great until you have to walk down it.1

    That burden of choice also applies to a student’s education decision, with profound implications. Making the best choice in higher education is methodical, often taking four months or longer. It is high stakes — particularly given its cost, and it is nearly impossible to do effectively today. Learners faced with information overload and limited processing abilities will narrow their decisions to known institutions, or those that rank on page one of search.

    As a simplistic thought experiment, I searched for “online MBA.” In .46 seconds, I received 332 million results. Valuable information… no doubt. Finding insight of value to me as a prospect… dubious. We know from our own research that nearly 3 in 10 learners are so overwhelmed by education search that they abandon the process without ever enrolling.2

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