Students will 'shop' elsewhere if a university fails to treat them as paying customers, argues John McCarthy

With a significant number of universities having declared that they will charge fees of ?3,000 a year it appears that the "top-up" debate is over bar the shouting. Of course, there will be generous bursaries and scholarships to woo unsuspecting students into subjects they don't really want to study and perhaps even to locations they have never heard of.

But that is only the beginning of the story. It is about time we all woke up and smelt the coffee because things are about to change. There will be more money in the coffers of the most popular institutions, but it is what they do with that extra cash that will really make a difference in the long term.

Debate about what to do with the extra money is creating all sorts of management conundrums: should it be spent on better pay to attract and retain the best staff; new buildings for teaching and research; improved staff-student ratios; increases in the library book fund; investment in information technology? These are all laudable aims with a likely impact on league-table positions, but what about the customer? Yes, the customer.

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We may not like the term customer but that is what students will be and, if my prediction is correct, there are a few institutions that are about to get a very rude awakening. Think for a moment about your own life and the purchases and investments you make. When we return from a much-deserved holiday we often praise or criticise the hotel we stayed in. It was dirty; it was clean. The food was awful; the food was wonderful. We can't wait to go back; we'd never go there again. And so on. We know such comments are already made about our own institutions. We all hear the mutterings in the car park as visitors to open days prepare to return home, the discussions between family, friends and parents as the decision about which institution to choose looms ever closer.

People can be swayed by the strangest of experiences. A colleague once explained how his mother based her judgements on the quality of the tea in the refectory. So what does it mean if I am right in my prediction that the totality of the customer experience is soon to become equally, if not more, important than the quality of the course? If we are honest with ourselves, most institutions offer similar academic programmes taught by academic staff with similar preparation and similar teaching styles. We also offer similar extracurricular opportunities, similar services and similar degrees. So how do we differentiate what we offer from what our competitors offer? By improving the quality of the customer experience from the point of initial inquiry right the way through to graduation.

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Let's for a moment reflect on what doing this implies. Institutions pride themselves on the prospectuses they produce, the "sales brochure" that shows prospective students how it is. Yet I do not recollect ever seeing a prospectus that shows classes taking place in poor-quality classrooms or pictures of burgeoning car parks. We throw everything into one publication and leave it to the prospective students to find what they want. This is very lazy and typical of the sector as a whole: we are product and producer-led. Surely we want to entice students into our institutions by providing them with the information they need at the time they need it, not when it suits us? If we make it difficult for prospective students they will simply walk away. It is for this reason that I believe that we will begin to see greater pressures being placed on how we market our institutions and I don't mean gimmicks. We should, for instance, be providing the highest quality information that is relevant to the student.

We are already seeing more institutions beginning to develop more sophisticated databases, targeted mailings, online subscription services and 24-7 virtual advisers. We must also recognise that our prospective students are as individual as we are - even though we tend to treat them as a single, homogenous body. Those universities that get their one-to-one marketing right and understand the customer will succeed in meeting their enrolment objectives.

Marketing is just one tool we can use, though. We will need to deploy techniques from the commercial sector to assist us in maximising revenues based on sophisticated models of financial aid and the strategic use of bursaries and scholarships. This means that we will need to understand the needs of our customers better. We are already seeing bursary schemes emerging that offer cash payments for specific equipment in a student's first year.

How long before we see some form of short-term bond where students can opt to "invest" their bursary for a lump sum on graduation or perhaps let the investment grow over a longer period of time? A strategic alliance between universities and financial service providers could soon be a reality. But it doesn't end there.

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The truth of the "brand" experience is soon confronted as students arrive to enrol and find their accommodation. I do not doubt the commitment of the few frontline staff who are annually set the challenge of managing the incoming cohort. But let's be honest: are the systems we have in place designed to meet our needs or those of our fee-paying customers? Are we as institutions really geared up to allow students to complete enrolment when it suits them? Will we see "personal enrolment advisers" making contact with students as soon as an institution is made first choice? Can we deliver this level of customer service even before the students arrive?

And once they are enrolled, how will we cope with increasingly demanding students? We can perhaps predict the scenario of the odd cancelled class, even the use of classrooms or laboratories that have seen better days. But how will we deal with students who dictate when they want a tutorial or the maximum number of students per tutorial? If you think it won't happen, think again. Even if we make modest estimates of the cost of attending university from 2006, we are looking at an investment of ?20,000-?30,000 for a three-year degree course. How many of us would spend this sort of money without questioning the quality of the service we receive or the value for money?

However we choose to stratify the higher education market, we must accept that within each strata of competing institutions there is little to differentiate between providers. Those institutions that can differentiate successfully will become increasingly sought-after. Organisations that make it easy for their customers - by anticipating their needs and aligning their services to how students want to use them rather than how the institution wishes to deliver them - will soon gain significant competitive advantage. The rest will simply have to try to catch up. Long-term success will depend not simply on the delivery of high-quality academic programmes, but also on the systematic delivery of the "brand" experience. Ignore the customer at your peril.

John McCarthy is director of marketing, recruitment and external relations at Liverpool Hope University College Working knowledge, page 62

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