Address by the Rev. Dennis H. Holtschneider, C.M., to College Power Conference at University of Chicago
July 25, 2007
Good Morning. For those of you who are visiting, welcome to Chicago. I’m starting my fourth year in Chicago, and I can promise you that it’s a great town. I hope you get some time to get out and enjoy it.
But you didn’t invite me as a tour guide this morning, unless maybe as a tour guide of the presidential mind or university thinking about marketers. I’m happy to be here this morning because “you and your kind” are partners with “me and my kind.” Your businesses and our universities work closely together at times, and not so well at others.
You’re spending most of your time at this conference considering how best to work with the college-going market. For a few minutes, then, let me tell you how presidents tend to think of these relationships. David Morrison wrote a terrific book back in 2004, called “Marketing to the Campus Crowd: Everything You Need to Know to Capture the $200 Billion College Market.” In it, he talks about presidents as gatekeepers. Fair enough. In truth, we presidents usually only know about a fraction of the activity on our campuses, but it’s true that we set some policies and directions—and limits—to the kinds of partnerships that we craft with organizations such as yours. So let me explore that with you a bit this morning.
Let’s start, though, by acknowledging the obvious. You don’t really need our help to market to college students. You have so many ways of getting their attention through the Web, their favorite media, their places of socializing, their entertainment and even their existing relationships through buzz campaigns.
But if you want privileged access inside a campus or if you want lists of our students or our alumni then that’s a question of cutting a deal. And universities do cut deals, lots of them. And we base those decisions on mutual self-interest, but a bit differently from what you might imagine. So I'll share with you three things today about how colleges view these relationships.
- Let me tell you what makes these deals “strategic” for us.
- Let me talk about some of the reputational concerns we have when we strike these deals.
- Let me tell you about a new development that is changing how we approach these relationships.
First, then, let me tell you what makes these deals “strategic” for us. When it comes to strategic partnerships, we think in “three’s.”
- How will this deal benefit you the supplier?
- How might this benefit the university?
- And, how might this benefit the students?
It’s three, not two: supplier-university-student. Some quick examples will make the point.
When DePaul’s contract with a longtime office supplies vendor came to a close, we issued an RFP. Here’s what we were looking for in a successful relationship:
- the supplier had a business model that gave us confidence it would survive for a long-term relationship. (Universities don’t like to change vendors frequently. It causes too much inner angst.)
- that the costs to DePaul were competitive, but also
- that the vendor would provide something that would benefit the students. The successful vendor, Staples, provided discounts for the students, became a major supporter of the athletic programs and The Theatre School gala, began recruiting our graduates for jobs, and even offering internship opportunities. Great things for the students.
When DePaul was buying cell phone service, we sought:
- a stable company that would make money on the deal so it would be around tomorrow
- a competitive price to help the university keep its costs in line, but also
- a solution that would increase phone coverage in Lincoln Park, which had terrible signal coverage. The successful bidder, Cingular, built a new tower on top of a dorm and gave our students (and the rest of us, as well as the neighbors!) excellent coverage.
That relationship served Cingular. It served DePaul’s bottom line. And it served our students. It’s three’s. When we evaluate new relationships with vendors, we look for the best package in all three categories. Two out of three? Not always acceptable.
When DePaul was approached by credit card vendors seeking table and mailing access to our students, the first two criteria were easy. Both the vendor and DePaul would have been advantaged. But we weren’t convinced this was in the students’ interest, and we declined. (I’ll say some more on this in a moment.)
The question when you look at universities as a potential partner is not, “How extensively can I touch that market?” The correct question is, “How can I set up a strategic partnership?” What makes a strategic partnership is the combination of all three. “How does this benefit the students?”
Universities will create partnerships where businesses help us accomplish something we consider noble. Help us with:
- service projects. We do a lot of service. Provide some free product, or help with some simply funding, and we’ll put your name all over it.
- academic competitions (e.g., computer gaming, entrepreneurship)
- job fairs
- internships and early hiring
- social events, concerts, alumni weekends
- facility needs—computer stations, for example. Coffee bars.
- programs for high school students where we are both looking to develop new clients.
- or simply save students money in a way that they appreciate.
There are so many more examples. When you approach us, know that it’s never going to be only about the money. It helps when the students benefit too. If it’s only about extracting profits from our students, you won’t likely find a partner.
So that’s the first. Think in threes.
Second. Universities prefer to burnish their reputations with their strategic partnerships. Reputation matters when we consider these partnerships: your reputation and our reputation.
I was grateful, for example, to welcome a Barnes and Noble superstore to DePaul, not only for the better bid they submitted but because their name recognition and the respect their brand carries is a nice reflection of DePaul’s own national ambitions. I was happy to have DePaul’s name associated with Barnes and Noble’s.
But when Coca-Cola continued to stall on independent, third-party inspection of its suppliers’ business practices in South America, universities like DePaul began to question their relationships with the company, in our case, a 22-year relationship. Several prominent universities dropped their contracts with Coke altogether over these matters. DePaul chose to remain with the company but asked them to accept independent review in order to put these concerns to rest.
Coke resisted, stalled and then only half-heartedly sought a renewal of our contract, offering shockingly less value than its competitors. So DePaul is now a Pepsi school. That’s fine; I happen to like Pepsi! But you see a certain dynamic at work here that’s present at other major universities as well.
College communities, especially college students, are idealistic. By that, I mean that they are more ready to take an action that will change something in the world, and they are more likely to do something where they can see the change. Oftentimes, college students are at a loss on what to do internationally, so they focus their energies more locally: campus-based activism. If, for example, they learn that some brand of bottled water sold on their campus is taken from the limited water supply of a third-world nation, or that labor has been mistreated—whether or not that labor works for the company or for a distributor—they will protest by organizing to get the product out of the campus.
College presidents choose their battles. We lead highly competitive institutions in a highly saturated market. That means we are attentive to public criticism, and especially criticism from our key constituents: students, parent and donors. And contrary to the assertions of some, we even have moral convictions of our own. When a product becomes associated with a behavior that society finds repulsive, we take these concerns seriously.
Companies that find themselves embroiled in such matters will normally survive this just fine if they move quickly. If they deny or delay, the energy will only grow, and their reputation will not likely survive. Nike learned the hard way that student concerns take on a life of their own, especially online, and do not go away easily.
That’s a rather dramatic story from the last year at DePaul. But the reputational concerns play out in more ordinary ways too.
We don’t advertise alcohol at DePaul. We know that beer is already sold at the arena in which we play, and we know there could be some income in striking a long-term partnership. But we chose not to strike that deal because our reputation is at risk if we appear to be supporting underage or binge drinking so common among college students.
The same is true of credit card promotion. The reputational issue is that DePaul will appear as if we are unconcerned about student indebtedness in the name of simply making a buck for the institution. It feels unseemly to us because our highest concern should be the students’ welfare. If you market products that have these challenges, you’ll need to think through how to address these matters in a real and substantive way.
Presidents—those gatekeepers of which Morrison wrote—balance reputational concerns when we enter into these kinds of relationships.
There’s a third issue we consider. And it’s one that I suspect is a bit newer than the others. As you may know, there is an increased level of public sensitivity to the price of higher education. Annual costs of private higher education at a selective institution, including room and board, can now exceed $40,000 and will soon surpass $50,000. Tuitions at state institutions have gone up by double-digit percentages in certain years. Certainly, tuition increases are yearly outpacing the various cost-of-living and inflation indices. These increases have raised the ire of parents and students and brought increased legislative oversight and regulation. But it has also changed how universities think about our strategic partnerships.
Increasingly, higher education is becoming a luxury good. And when something is a luxury good, customers’ expectations change.
If you went to a Four Seasons hotel, for example, you don’t want that hotel to nickel and dime you, and you certainly would be surprised if they started selling sponsorships on their deck chairs, pool, paper napkins, wireless access, etc. The Four Seasons does not want to become NASCAR, where every square inch is branded with partner brands. Their guests want to pay good money for the experience and assume that most items are included.
Same with higher education. Universities begin to look cheap when they sell off everything they can for a sponsorship fee. We’ll name buildings, of course, for major donors and scholarships, but we’ll do it when we can justifiably show students that there’s a true benefit for them rather than the university. There is a limit to the number of partnerships we’ll enter into. We can only do so many deals, and we can only touch our alumni so many times each year, so we have to choose carefully.
You can see this even more clearly when it comes to the alumni. An alum of another institution recently told me that he had not heard from his university in 25 years and suddenly he started getting regular mailings asking him to sign up for a university credit card partnership. He found it a bit revolting that the institution would sell his name and address for what he assumed was very little money. It made his institution look grasping, greedy and ready to compromise their relationship with him for a buck or two. DePaul balanced this dynamic by selling our alumni and fan lists, but limiting our partners to only four mailings per year. Anything more than four mailings a year begins to tick off the people we really care about.
There’s a certain decorum that people expect of universities—a principled, ethical standing above the fray—that gets compromised when institutions enter into too many sponsorships. We’ll let you poster our athletic events because these feel a bit more removed from the heart of the institution’s intellectual mission.
But I won’t poster graduation with ads. And we have strict limits on what posters and advertisements can be placed on buildings and facilities through campus. The university simply can’t look like a NASCAR racecar. Luxury goods must maintain an image.
Sometimes, the line gets a little fuzzy. This past year, Dean's Chip Dip approached us and asked if we could create a chip and dip eating contest during our men’s basketball half-time. No problem, in theory. But then came the hook. They wanted our actual deans to sit in the middle of the arena and see who could eat the most chips and dip.
Now I’m not usually consulted on these kinds of promotions. But the athletics office came to me in advance because they knew they were approaching a line that removed some of the decorum and dignity normally attached to university life. Deans hawking chip dip was just a tad questionable. I decided that the event would work fine if it was handled with respect and light-hearted humor. In the end, it worked out fine because the deans who volunteered had fun with it, and the crowd had fun cheering for their various colleges since the prize was a few thousand dollars for scholarships to the winning college.
And that illustrates my very first point to you today. If your promotion can show a genuine contribution to the students—in this case scholarship money to their particular college—that actually creates room for a marketing event that would not have been there otherwise. It’s value to your business, value to the university and value to the student that makes the difference.
Make no mistake, though. While we skated successfully along that line that day, the line is definitely there. Universities are increasingly considered luxury goods and presidents like me must be certain that the college experience meets those expectations that our students, fans, alumni and friends have of us. Because of that, universities have limits to the number and kinds of deals they will strike. And as the public increasingly sees higher education as a luxury good, those limits will come more into play.
So, where does this all leave us?
You should know that universities value great partnerships. We’re glad to partner with you. We believe in exclusivity contracts. We like long-term relationships. We like working with our alumni. If you have them in your company, we take their meetings more quickly.
We will always make decisions on the basis of price, product, service and delivery, but partnerships that benefit our students matter too. We like working with partners who understand our reputational needs; who understand that we are marketing a luxury product; who think creatively about ways we can serve students together. Work with us on these issues, and I think you’ll find a ready ear to your ideas.
I wish you a wonderful conference and stay here in Chicago. God bless.