Retaining Student as a Customer in Higher Education


Dr. Narinder Tanwar
Asst. Professor
Department of Management Studies
B.S. Anangpuria Institute of Technology and Management


In today's competitive academic environment where students have many options available to them, factors that enable educational institutions to attract and retain students should be seriously studied. Higher education institutions, which what to gain competitive edge in the future, may need to begin searching for effective and creative ways to attract, retain and foster stronger relationships with students. As a private organization, it has to depend on the interaction and mechanism of the market. As a result, competition to woo as many students as possible or so-called "potential customer" may become more and more intense. Higher education customers are demanding more attention and immediate service. Proactive institutes are now adjusting their practices by refocusing their efforts externally. The article describes 'student' as a customer in the field of higher education and focus of student retention .

1.1  Introduction

Educational institutions worldwide are undergoing fundamental shifts and it has become highly important issue for the higher education sector to interact and maintain relationships with their customers: students, alumni, donors, faculty members and staff members. Although marketing issues in education are qualitatively different form those in consumer products sector, higher education institutions have a lot to learn about taking care of their students like many successful businesses take care of their customers. At the same time, educational institutions need to maintain their roles as centers of knowledge and keepers of academic standards in order to remain socially and economically viable.

According to Cultip (1971), the environment that higher educational institutions have operated in has changed dramatically over the last decade. Tuition-free state colleges and universities are rapidly raising tuition changes as the federal and state student aid has dropped significantly. Technology has improved the range of teaching and learning tools while further raising the cost of higher education. All these uses, coupled with the huge and diverse higher educational system, which includes institutions striving to maintain or increase enrollments, improve program quality and increase donations and grants, place higher education institutions into a market place where significant challenges lie ahead. Even though satisfying the wants and needs of customers is not new organizational concept for these institutions, customer orientation has been underemphasized in colleges and universities compared to the profit-oriented organizations.

According to Anderson and Sullivan (1993), due to the economics of retention and to insulate the organization from competition colleges, universities and businesses need to emphasize extending the duration of the relationship with the end users. Specifically, small increases in retention rates can have dramatic effect on the profit of a company because of the cost of retaining an existing customer is much less than the cost of acquiring a new customer. For example, a major symphony orchestra discovered that it cost 67 cent on the dollar to attract a new subscriber, but only 7 cent on the dollar to entice an existing two-year subscriber to buy a third-year concert season subscription.

1.2  Customer Segments in Higher Education

The higher educational institutes have a great number of customers groups as discussed by different authors who studied the subject. According to Kanji and Tambi (1999) the customers of higher education are divided in different groups of actors, who are linked to the educational process being the main: current students, potential students, employers, government and industry. The authors have classified the customers in internal and external, emphasizing that the internal customers are who work to the satisfaction of external customers as explained by Juran (1988). According to Kanji and Tambi (1999) the customers of higher education can be classified in primary ones and secondary ones, basing on their location being as internal customers or external ones and basing on the frequency of interaction that the institution has with them too. The author considers that the product of higher education is the education and then, depending on the role developed by them during the course, the students can be classified as internal or external. The classification made by the author is shown in Figure 1.1.

Figure 1.1: Customer Segments in Higher Education

Source: Customer for higher education (Kanji and Tambi, 1999)

Hewitt and Clayton (1999) state that the most obvious educational stakeholders are "the educators and those being educated, those teaching within universities and those studying there". The authors affirm that the faculty and the students are clearly the primary participants of the teaching and learning process. Then, they list as other significant stakeholders the future employers. They emphasize that, on their opinion, a list of stakeholders only could be considered more consistent, if were included the government, its agencies and university mangers. O'Neil (1999) has made an analysis of the customers of higher education institutions from different view and authors in marketing areas, quality and Balance Scorecard reveal that prevail the rule of multiple customers of higher education. The different customer categories and definition of each one of them adopted in this work are the following:

  • Students - registered students regularly and studying in an institute.
  • Employers - the future employers of students, being the industry, the commerce or the government.
  • Faculty - all the faculty members who work on different activities in the university.
  • Society/Government - the society as a whole, including citizen, taxpayers and government authorities.
  • Families - families of the students those are most responsible by its financial management during the course.
  • Managers/Employees - institutes' managers and staff members from administrative and technical group.
  • Others - all whose re spoken by different authors and not referred on the last categories as secondary students, alumni, suppliers, competitors, council or community group and etc.

In the same way, Owlia and Aspinwal (1996) describe the existence of different groups of customers in higher education and  each one from these groups of customers have different requirement. They conducted a specific survey about the questions in the quality area of higher education. In this survey received 51 answers of people that had already published articles in quality area, mainly about higher education. The respondents were related to the different areas of education such as, management, engineering, and from different countries, being most of them university teachers. One of the questions of this questionnaire was asking to classify the higher education customer relevance, classifying in an order of importance from 1 to 5, the following customers: employers, families, faculty, society/government and students. Basing on the answer, the survey authors got the following ranking: 1 - Students; 2 - Employers; 3 - Society/Government; 4 - Faculty and 5 - Family.

1.3  Student as a Customer in Higher Education

According to section 2(1)(o) of Consumer Protection Act, 1986, the educational services of an institution which charges fee for its services are covered by the word 'service' and under section 2(1)(e) of the Act consumer means any person who hires or avails of any service on payment basis. Therefore, the student is essentially a consumer of services in an educational institution and he is within the ambit of the definition of 'consumer' under the Consumer Protection Act.

One ethical dilemma that faces higher educational institutes is how to deal with pressure applied by students who perceive themselves as customers in the classroom. Students are becoming more demanding with respect to grading, assignment and their position in the faculty/student relationship. A brief literature review is presented with highlights some of the reasons for the change in students' perceptions of how they should be treated and the rationale for institutes administrators' embracing the tendency to treat students as customers.

Cuthbert (1996) in his study explained that it is accepted that educational institutions have many customers: students, staff, faculty, alumni, donors, and others. But the primary customers are students and without students to teach to, there is no business for higher education institutions, no research to conduct or service to provide. Without perceived value there is no reason for students to choose one institution over an increasingly large number of similar institutions. A drop in the student retention without a compensating enrollment increase impact all the above customers.

Clayson & Haley (2005) have discussed the adoption by students of the perception that they should be treated as customers in the students-higher education exchange. Alsop (2006) has explained the reasons for the customer approach at the tertiary level range from student's simply being more demanding while Popli (2005) concluded that schools that did not adopt the customer approach would face bleak enrollment growth and financial future. According to Cooper (2004) in today's higher education environment where traditional funding sources are drying-up, and many schools have moved to a user-pays model, the logical conclusion from both students and educational administrators was that students are the source of revenue and needed to be treated as customers would in the marketplace. Lee (2005) explain that academics may accept the treatment of students as customers by university recruiters, the thought of students being customers of the classroom professors has put many academics under pressure or created a dichotomy that has posted market-driven academics at odds with the traditionalists. At the core of the debate on whether to treat students as customer, lay the key issue of quality, and how quality is defined in higher education. Research by Koversi et. al. (2004), proposes that a student as a customer approach in higher education will drive higher levels of quality in education. In support of the result of the above research Lipsett (2005) has concluded that the most prestigious programs in medicine, dentistry and veterinary services, and universities, like Oxford and Cambridge in Great Britain, have noted declines in the applications caused by a lack of student orientations by faculties.

Hersh (2005) described the growth in the students as a customer approach to the uniqueness of the higher education marketplace where success was measured by the caliber of the customers rather than on their product. He notes that the driver for institutional success is based on how well the institutes recruit and graduate already successful higher graduates. The treatment of student as a customer is the reason of two contradictory views that compete in higher education as described by Lea and Troy (2003). The first viewpoint, traditionalists, centers on the view that the teacher know best and as such should set all the direction and limits in the classroom. This view is contrasted with the second or practical group, who recognized that times have changed and for institutes to survive, students need to be served in the similar fashion to what occurs in the business world. One interesting alternative to the students as a customer relationship was proposed by Shelly (2005) that students be treated as patients would be by a physician, rather than as simple customers. This relationship style would focus the professors' efforts on improving the classroom students' performance (or health) in an on-going relationship with the student's journey through life.

--> Article continued on next page, click here  -->

Source: E-mail June 24, 2011


Articles No. 1-99 / Articles No. 100-199 / Articles No. 200-299 / Articles No. 300-399 / Articles No. 400-499/ Articles No. 500-599
Articles No. 600-699 / Articles No. 700-799 / Articles No. 800-899 / Articles No. 900-1000 / Articles No. 1001-1100
Articles No. 1101-1200 / Articles No. 1201-1300 / Articles No. 1301 Onward / Faculty Column Main Page