Evidence-Based Innovation Blog

The Importance of Measuring Student Loyalty

Posted on Feb 21, 2020 7:15:00 AM

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SM-Detractors Neutrals Champions thumbsEstablishing, maintaining, and growing buyer loyalty is a cornerstone of business. It is important for organizations to understand what attracts buyers in the first place, but equally; if not more important, is discerning what will keep them coming back – and motivate them to refer others to purchase.

Drivers of loyalty are just as important to higher education as the corporate sector. Sustainability of academic programs relies in large part on fostering a loyal group of students and alumni who are willing and anxious to promote their experiences and influence others to attend.

Percept Research’s MBA Student Entry Study confirms that incoming students are more likely to choose a graduate management program based on recommendations from friends and colleagues that previously attended than from any other influential source, so maintaining high levels of satisfaction is important.

Approximately 47% of incoming MBA students indicated alumni and current students as the most influential sources in deciding to where to apply in the 2018 MBA Student Entry Study. Personal contacts were the next most influential information source (32% of respondents) selected by the survey respondents.                                                 

What is the Loyalty Index?

Our MBA Lifecycle Surveys and Executive Impact Assessments empower business schools with a Student Loyalty Index to track student and participant (non-degree) loyalty over time – a measure of how likely students will promote the business school brand and how much they tend to abandon it.

The Student Loyalty Index is a standardized tool that incorporates the likelihood of referring, repurchasing, and up-selling as a composite of a student’s ratings (on a 5-point scale) for three questions:

  1. Overall, how would you rate the quality of your program?
  2. How likely are you to recommend this program to a friend or colleague?
  3. If you were seeking an MBA again, how likely would you be to choose this program?

Based on these ratings, graduate management education students are classified in one of three categories*:

Detractors. Students with a composite rating of less than 2.5 are segmented as “Detractors” as they are unlikely to recommend the school and likely to share negative word-of-mouth.

Neutrals. Those rating between a 2.5 and 3.4 are segmented as “Neutrals” as they are satisfied, but not ecstatic enough to recommend the school and may attend again as long as they don’t run into an institution with a better value proposition.

Champions. Students with a composite rating of more than 3.4 are segmented as “Champions” as they are the most satisfied with their experience and will highly praise the program to others.

* The classification scale is slightly different for custom executive education programs based on the nature of those programs.

Based on our experience in benchmarking graduate management programs with the Student Loyalty Index since 2003, we advise our clients that an overall Detractor rating above 9% is an indicator of concern for poor brand health. Conversely, an overall Champion rating above 70% is an indicator of high business school loyalty.

Percept Research Student Loyalty Index Exit 2019Student Loyalty Index within the Program Roadmap & Market Trends Report

Student Loyalty Index as the basis of Key Driver Analysis

In addition to serving as a brand health barometer for graduate management programs, the Student Loyalty Index serves as the basis for the Key Driver Analysis conducted by Percept Research.

Put simply, Key Driver Analysis enables business schools to identify drivers of loyalty. Percept Research utilizes linear regression to the Student Loyalty Index to quantify derived importance for every attribute within each dimension (faculty, curriculum, teaching methods, etc.) of our student surveys.

Key Driver Analysis identifies which factors have the greatest impact on important program metrics and determine where to focus limited resources on the issues which are both important and performing relatively poorly. The Student Loyalty Index and Key Driver Analysis maps are provided in the Program Roadmap & Market Trends Reports offered by Percept Research.

Percept Research Key Driver Analysis QuadrantKey Driver Analysis within the Program Roadmap & Market Trends Report

What are the advantages of the Student Loyalty Index?

Customer loyalty is one of the main predictors of success and measurement is the first step in student loyalty management. By measuring student loyalty, business schools can benchmark, aim, and improve.

The three main advantages to this tool are that it:

  • Enables tracking of loyalty over time;
  • Facilitates benchmarking to peer schools and industry segments; and
  • Identifies drivers of program strengths and weaknesses.

As with the corporate sector, loyalty drives success in academic recruiting. Graduate management program administrators should invest in determining – and improving – the program factors that are most important to their students and non-degree participants.

This approach will allow business schools to grow their share of “Champions” who will inherently promote their positive experience to prospective students and potentially increase applicant pool.

By-line:

Brian Mahoney, author for this article, is a Managing Partner at Percept Research. He welcomes your questions and comments.

MBA Student Exit Survey

Topics: Analysis/Reporting, Key Driver Analysis