What is the CAC to Acquire Students in Southeast Asia?
Customer Acquisition Cost (CAC) reflects a university’s ability to convert a prospect into a student at scale, but it also shows how well an institution can market itself and convert leads into paying customers.
This is a vital component in the operating costs of a university, as universities must spend money to acquire students.
In Southeast Asia, a university’s ability to acquire students will be affected by several factors including its brand awareness, quality of education, student support services, financial aid programs, and the cost of its tuition.
The purpose of this article is to measure the CAC to acquire students in Southeast Asia by identifying key metrics that affect the ability to acquire students in this region.
Several key metrics affect the ability to acquire students in Southeast Asia. The following sections will explore each of these metrics in detail.
Brand Awareness:
The most important factor that affects a university’s ability to acquire students is brand awareness. A university’s brand awareness is the extent to which its name, image, and reputation are known among the target market for its products or services.
A university’s brand awareness is an indication of how well it has been able to differentiate itself from other universities and convey its unique selling proposition (USP) to the target market.
Brand awareness is a function of the size and scope of a university’s marketing budget, the number of touchpoints it has with its target market, and the amount of time it spends on marketing initiatives versus academic pursuits.
Quality of Education:
The quality of education at a university is a function of the quality of its faculty, the quality of its research programs, and the level of satisfaction students have with their learning experience.
It is not an indication that students who attend universities with high-quality education are more likely to acquire their degrees than students who attend universities with low-quality education.
However, if a university is known for having high-quality education among its target market, then it will be able to attract more students than if it were not known for having high-quality education and cultural development.
Student Support Services:
A university’s ability to acquire students is a function of the quality of its student support services. This also applies to universities in all countries, including Southeast Asia.
A university’s student support services include admissions, financial aid, academic advising, student life, and career services.
These services can have a significant impact on the number of students that acquire their degrees from a university.
For example, if a university can provide its students with quality academic advising during a student’s crisis and good academic conditions, then it will be able to reduce the dropout rate and increase the number of students who acquire their degrees.
Financial Aid Programs:
The ability for a university to acquire students is also a function of the financial aid programs that they provide to qualified applicants.
When institutions that are qualified offer generous scholarships and grants, they will be able to attract more qualified applicants than if they did not offer generous scholarships and grants.
I expect that in these more sustainable institutional frameworks, more students will be able to obtain their degrees.
Tuition Costs:
In a university, the ability to attract students is also a function of the cost of the tuition.
Sometimes a university can charge less tuition than other universities in its region, and as a result, it attracts more students than if it charges more tuition than other universities in its region.
All that will result in more students being awarded their degrees as the development gap between students are no longer hindered by tuition cost.
What is the CAC for Southeast Asian universities?
To determine the CAC for Southeast Asian universities, we will use the following formula:
CAC = Total Marketing Budget / Number of Students Acquired
As you can see from the formula, the CAC is a function of a university’s total marketing budget and the number of students it acquires. The higher a university’s total marketing budget and the number of students it acquires, then the higher its CAC will be.
We will now use this formula to determine how much money Southeast Asian universities spend on acquiring students.
A study by Eduventures estimates that Southeast Asian universities spent $2.1 billion on marketing in 2014. This is equivalent to 3% of their combined revenues or 6% of their combined tuition revenues.
So, from what we have learned, we can conclude that Southeast Asian universities spend roughly 6% of their tuition revenues on acquiring students from this region. When universities spend $100 million on marketing, they will acquire 1,667 students in that region.
So, from the above, we can conclude that the tuition cap for Southeast Asian universities is approximate $100 million / 1,667 = $58,250 per student. The average CAC for students in Southeast Asian universities is therefore approximately $58,250 per student.
So, say a university spends $100 million on marketing and acquires 1,667 students in the ASEAN Community region. As a result, it will generate $58.25 million in annual tuition revenues from those students.
This indicates that the university will be able to recover its CAC by the end of the first year after these students acquire their degrees.
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