When managing your school’s budget, you have to be thoughtful, judicious, and, most importantly, you have to be precise. Because marketing consumes such a significant chunk of your institution’s resources, it’s crucial you’re getting the most out of every dollar — especially when many schools have tightened their purse strings.

But, with so many platforms and channels for marketing to prospective students and their families, it can be challenging to determine which strategies will yield the greatest return, measure performance, or define the success of specific efforts.

While you should undoubtedly factor your experience and intuition into your decisions, relying too much on gut instinct (and not enough on solid metrics) can make it harder to achieve a healthy return on investment (ROI) consistently.

So what can you do to evaluate your efforts and ensure you’re spending on efforts most likely to help you reach your enrollment goals? In this post, we’re delving into how to calculate your student lifetime value (SLV) and why it’s important.

What is Cost Per Enrollment?

Cost per enrollment (CPE) is the total cost of getting one student to your classroom — including every dollar you spend from the moment you first engage until the moment they officially enroll.

It’s helpful to think of CPE as your baseline metric for acquiring new students. The goal is to reduce your cost per enrollment while increasing overall enrollment — and this can only be accomplished when you’re highly efficient with your marketing spend.

One way enrollment professionals use CPE is as a metric for comparing performance between multiple marketing efforts or campaigns. For example, suppose you launch a new campaign and discover the cost per enrollment is significantly higher than your average. In that case, it likely needs to either be optimized or paused in favor of other, lower-CPE efforts.

You can learn more about calculating CPE here.

But CPE isn’t the only metric you should consider when evaluating your marketing spend. It’s also essential you take time to calculate your student lifetime value.


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What is SLV (and How Do I Calculate It)?

Enrolling new students is critical to your school. And, often, when we talk about marketing spend, we’re laser-focused on acquiring new families. But, as the old sales adage goes, it’s less costly to keep an existing customer than to earn a new one — and the same holds true for students. You should be just as focused on retention efforts as bringing in new students (if not more so).

This is why, in addition to considering the cost to enroll one student, it’s also essential to consider the value each student delivers to your school throughout their education. It’s one of the best and most accurate ways to predict revenue.

To calculate your school’s student lifetime value, you can follow this simple formula:

SLV   =   margin   (retention rate   /   1   +   discount rate   —   retention rate)

(Keep in mind, your margin is the tuition cost for a student minus any costs incurred while serving a student.)

Knowing your SLV helps you set a maximum on the amount you can spend on your cost per enrollment — your CPE should never exceed your SLV. And the greater the margin between your cost per enrollment and student lifetime value, the greater your school’s revenue. In other words, it’s crucial you strive to increase SLV while decreasing CPE. 

Of course, this isn’t always as cut and dry as it may seem when entered neatly into the formula above. There are plenty of complexities that influence potential value. But, regardless of these variants, there’s one thing that will never change: the greater the value you provide students (through an intentional and thoughtful student journey, meaningful opportunities, and community outreach), the greater the value they’ll provide your school in return. 

That is, the best way to increase your SLV is by always seeking new ways to increase the value you provide families and highlight that value through your marketing efforts. It all comes full circle.

calculate CPE and SLV

Provide More Value & Ensure a Greater Return

We know it can feel uncomfortable discussing students in terms of revenue. Using sales methodologies and revenue models in education can feel wrong because your students are so much more than numbers. But, by using metrics like CPE and SLV to measure your marketing effectiveness and spend strategically, you’ll ensure a greater return — which means more money to spend on further increasing the value you provide your students.

We agree that your students are more than a line item. And by focusing on increasing the ROI of your marketing efforts, you can further your mission to provide the best quality education to every family you serve.

A related post here: How to Calculate Cost Per Enrollment at Your Private School