How to Exit an OPM Relationship

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0:00:08.6 Intro: Hello and welcome to Office Hours with EAB. Today, we look at the relationship between universities and OPMs. Companies that partner with universities to help them develop and market online programs, when that relationship works, everybody wins, but when it stops working, universities need to look at other options. Our experts today share advice on how to know when to say goodbye to your OPM and how to prepare for what comes next. If it sounds like I’m talking about divorce, that’s because like any relationship that’s headed down hill, things can get messy and expensive if you can’t find a way to exit gracefully. So give these folks a listen and enjoy.

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0:00:52.2 Jennie Bailey: Hello and welcome to Office Hours with EAB. My name is Jennie Bailey, and I’ve spent much of my career helping universities grow enrollment at both the undergrad and graduate level. One of the ways that they do that, in some cases, when they can’t handle it in-house, is by contracting with Online Program Managers or OPMs as they’re called, to do exactly what the name suggests, which is developing online programs for schools that can’t really do this easily themselves and share in that enrollment revenues generated from those programs, and that’s the key there, they’re sharing the revenue together, which means that typical NTR, Net Tuition Revenue is going to be smaller for the university that partners with an Online Program Manager. It can be a win-win situation when the school sees healthy return on the investment, however, because these OPM revenue agreements come in different shapes and sizes, and sometimes schools find themselves on the short end of the stick. That is something that we are here to talk about today. So sometimes universities are looking to get out of those partnerships and sometimes they are looking to find a way to continue to build off of those partnerships and supplement them.

0:02:13.9 JB: So we’re gonna talk a little bit about that today. Talk about the options schools have at their disposal for exiting those partnerships, and also some of the risks that you’re going to face in transitioning to whatever comes next. So joining me today to explore this subject is my friend and colleague, Val Fox. Val, would you mind saying hello and telling folks a little bit about your role at EAB?

0:02:40.0 Val Fox: Jennie, it is so good to be here with you today my friend. Hello, everybody I’m Val Fox. I’ve been with EAB for just going on a year now, and I am a senior director and consultant focused on adult learner recruitment, so I work on a team of colleagues where we are focused squarely on helping universities attract and retain adult learners into traditional graduate programs, online programs, certificate programs, Degree Completion programs, all of those kinds of programs. And prior to joining EAB, I was like probably many of our listeners today sitting on a campus, struggling with these issues, I was the chief marketing officer for a regional private university up in New England. Lots of competition in that space. And what’s really cool, I went back through my notes, because in about 2016, 2017, when I was on this campus, I was with the cabinet of the university, entertaining proposals from different OPMs, and we were trying to make the decision ourselves whether or not to pursue an OPM. We ultimately decided not to, but I can tell you there’s probably very few people in this industry that have not considered it at some point, and so we’re here today to talk about the incidence of that and why so many universities are choosing to part ways and what the options are as they think about transitioning away from an OPM provider. So, so thrilled to be here with you, Jennie.

0:04:12.1 JB: Awesome, thanks Val. I’m really excited to have you join us and talk about this topic, and it sounds like you’ve got a lot of experience, and so I really appreciate your time today and just excited to unpack this a little bit further for our listeners. So I’m gonna start with a question of context. So let’s talk about context, could we walk… Could you walk us through the evolution of an OPM, particularly in terms of how universities have used them historically to grow enrollment, especially as we think about adult learners. Share a little bit about what an OPM really means.

0:04:51.5 VF: Sure. Well, you did a good tee up. Let’s remember, these are online program managers or OPMs, and they really emerged in the 2000s as a response to the growing demand for online education, they came to market with the suite of services that they bundled. They included Marketing, Enrollment Management, course development, all the kinds of things that most colleges and universities were happy to turn to these companies to do, because it was very difficult for most institutions to do these things in terms of standing up an online program of any kind of scale. So not only was it difficult to stand a program up and do all the online course design, but OPMs provided the technology and distribution capabilities, the schools were in no way, shape or form prepared at the time to develop themselves. In addition, recruiting adult learners wasn’t in the wheelhouse for most of these institutions. Right. Think of where most universities were spending their time in enrollment marketing and management in the early 2000s, early aughts, this is on serving undergrad, traditional undergrad population. So these institutions were happy to turn to these partners to say, Hey look, we’re facing gaps in revenue on undergrad, help us make up, given there’s growing demand for online, given these are new, net new learners we can bring into the fold, help us make up those gaps in tuition revenue and grow in standing up these online programs.

0:06:23.3 VF: So OPMs came in with the revenue share model, meaning they absorbed the upfront costs of launching and marketing these programs in exchange for a significant share of tuition revenue and often under pretty restrictive long-term contracts. So that’s where this got started.

0:06:40.5 JB: Right, great. And how has the higher education marketplace or the nature of OPM contracts changed since then, and also what factors drive schools to sever OPM contracts as well?

0:06:58.0 VF: Well I think what’s happening now is, we’re about 15 years, almost 20 years past that initial timeframe and conditions have really changed. Institutions are taking a step back and rethinking the trade offs that come with using OPM providers, they’re realizing that they need more control, they need more ownership over their own online programs, that the cost structure involved are making them question the value and long-term sustainability of staying the course with OPMs. And writ large, the industry is rethinking relationships for I’d organize it into maybe three main reasons. First, the market, the bundled services market is no longer really needed. We’ve got, colleges and universities have very different capabilities today than they did 20 years ago. And so they may be able to do some of the course development or some of the recruitment work on their own. And there are other providers that can come in and do that kind of work, a different kind of and more palatable cost structure. Second, I think the rev share model led to what you could consider being some bad behavior in terms of encouraging high tuition programs, shifting resources towards programs that were only gonna be profitable, because that made, given you’re in a, everyone’s got skin in the game situation, programs were much more inclined to market and promote high tuition programs.

0:08:30.4 VF: So in turn, institutions’ ability to kind of focus on smaller, yet important programs diminished. So there wasn’t this equitable treatment across the graduate and adult serving portfolios. And then third, and probably the most important is that the Department of Ed is, anyone who’s been following this should be aware that they’re likely to rescind or even really neuter the bundled services with their new regulatory guidance that they’ve been issuing. And that’s really what underpins and enables OPM rev sharing. So it’s really, OPMs are in kind of, life-threatening, facing life-threatening regulatory challenges right now. And it’s creating a perfect storm with a lot of institutional leaders really worried about putting their eggs and keeping their eggs in that basket.

0:09:21.5 JB: Yeah, that’s right. And I, personally am reflecting on several of the partners that I work with, and I feel like I have a partner, at least one partner in each of those buckets you just described, where either they’ve developed the in-house capabilities. And so really now all they’re looking for is marketing support and revenue share seems silly for marketing support when there’s so many fixed price options out there and they really can grow that net tuition revenue per enrollment pretty substantially through that type of option. And then I have others that are concerned about Department of Education and the new regulations coming out. So they’re already starting to think about, well, what do we do if we can no longer, work with our partner? And then I have others that just are waiting and seeing. They’re not ready to look at the light at the end of the tunnel at this point. But it is a known thing. They are already starting to question and tell themselves, this is not something we want to have as a sustainable avenue for growing our online enrollment.

0:10:32.0 JB: We eventually want to be sustainable by bringing everything in-house and doing this ourselves or partnering with a partner who has more fixed costs so we can have more control over either the program design, what programs we support, the marketing spend, or even in some cases I have a few partners where the lack of visibility into the marketing and recruitment tactics. Even the, program design has been a real big pain point, particularly with faculty and deans, which, as we all know, hold a lot of the power at colleges and universities, believe it or not. So if you are a dean or a faculty member listening, you will probably be agreeing wholeheartedly with that statement.

0:11:28.1 VF: No, I think that’s absolutely, I love that you teed up already some of the different, some of the alternatives. I mean, there’s no better time, I think, to start exploring the alternatives when it isn’t, we need this done three months ago. It’s, you’ve gotta start thinking and contemplating the options as soon as you can, really. So maybe we should have that conversation, Jennie.

0:11:53.5 JB: Yeah, yeah.

0:11:56.1 VF: You have so much exposure to this, but obviously you teed up the fee-for-service partner models. And so we’re both very familiar with that because that’s the space we work in. So at EAB, the Adult Learner Recruitment Team, we offer this full suite of end-to-end from lead gen and nurturing all the way through to generating applications. We will take that off the hands of university partners if that’s what they want, a full-service provider there, but where they still control admitting and enrolling students. But there are pros and cons to this. I mean, when I see the pros, I think, well, relative to OPMs, these fees will be a much lower share of total revenue generated. And it’s not limited to just profitable or even online programs. I mean, we wind up supporting on-ground programs. We support programs that are very critical to the mission of the university but might not be the highest enrollment and or tuition-driving programs. And so we’re flexible in that capacity. I mean, oftentimes that’s when our academic partners are driving kind of the agenda there. And they tell us these are the programs that are most critical and important to us based on, it can be a number of factors.

0:13:15.0 VF: So we also hear from partners that, there are, there’s flexibility, I guess, universities and you started saying this, they really want flexibility in program design and marketing. So talk, you’re right, you’re in the trenches with partners there. Tell me what flexibility today means for a university partner. When do you see them really weighing in and when do you see them stepping out, maybe of the program design and or marketing of the program?

0:13:50.1 JB: Yeah, so it’s a double-edged sword. So you’ve got with an OPM partner, and let’s talk about program design, for example. With an OPM partner, you know that that OPM partner is very experienced in understanding exactly what is attractive to prospective students when they are marketing that program. And so they are going to push for essentially what they want to see in a program design, shorter credit hours, specific content, cost, specific costs. And so that flexibility, or dependency, really, the dependency on the OPM to provide that information is something that universities have both enjoyed as well as not enjoyed and have struggled with on campuses. And so being able to create your own way at a university of checking to see what programs are going to be feasible in terms of generating that tuition revenue that will be attractive options for the institution based off of local labor demand, based off of faculty in-house expertise, and also based off of student demand in the region, that’s something that many universities have started to take in themselves and execute themselves.

0:15:10.2 JB: And with a partner who can provide that guidance without ultimately saying, you do this or we don’t do this, that is something that is very attractive to institutions, is being able to have that balance of hearing what the best practices are, hearing what the recommendations are, but being able to make that choice themselves and track the outcomes of those internally as an institution and make the decision about whether or not to continue or not to continue that program after the typically three to four year trial period. One of the other things that you had asked was about marketing. So marketing, it definitely varies by OPM. Some OPMs are very transparent with the marketing that they are putting out there in front of prospective students, working closely with the institution. But there’s still a degree to which your leads are not necessarily your leads. So OPMs out there, they’re generating leads for programs that are online MBA programs, for example, but those leads may not necessarily be your leads. And so the way that they are marketing that, sometimes it doesn’t have the same feel as when a university is able to market that or is working with a partner, fixed price partner, to market that for them. So there is that component as well where the university wants to have ownership over leads generated with dollars that are invested in promoting their program. So that’s one of the other components.

0:16:52.1 VF: Yeah, just to be clear, I wanna make sure you’ve said a few times your leads aren’t really your leads. You mean that, Lakeland University, I’m just making or Webster University, whatever university ABC, they have a contract with an OPM, but that is generating leads for them. But those leads don’t belong to them. The OPM, are you saying the OPM retains the leads just for folks who are…

0:17:17.6 JB: In some cases. Yes.

0:17:21.1 VF: Okay. Got it.

0:17:21.1 JB: Yeah. Like I said, every, there is not one size fits all OPM. There are a variety of OPMs out there, but in my experience, I would say about 50% of the time, maybe even 70% of the time, like within that range, a lot of the leads that, we will start working with a partner right after the end of the OPM partnership, and then I say, gosh, could you hand over those leads? We’d love to help you continue to nurture them and encourage them to enroll, and they can’t get the leads. So that, the other piece of this too is lack of data. And this is the last thing I’ll call out.

0:17:53.5 JB: When you work with an OPM, they retain a lot of that data. And so when you don’t have the dependency of needing to keep that data in-house, needing to manage that, needing to track that, you really are cutting off your legs from under yourself because you are not learning, right, about what trends, what reactions, what marketing tactics and strategies are best suited for you. So that’s oftentimes why when you are thinking about ending an OPM partnership, there’s a lot of steps and things you need to consider in doing that, which is something that we definitely should touch on as well on our session today. But that is, one of the pieces is lack of kind of data and transparency there. Again, it’s really just a function of having a completely separate unit run and manage all of those components on behalf of an institution. And just having to, again, learn, relearn all of that internally or with a new partner when you make… When the decision comes.

0:19:09.7 VF: Thank you. Thank you. So then to summarize, it sounds like… So we were talking about the pros and cons. We’ve got a fee-for-service model, like ALR, and you’re saying, basically with the fee-for-service model, your team is learning and growing. Like, your data is yours, your leads are yours and your team. And I know, when I was a CMO, it was very important for me that my team, anyone that’s wearing an enrollment marketing hat, involved in this, their capacity is growing. If we’ve got an agency that we’re partnering with, they have increased capacity, and their skills are growing, meaning they’re learning from best-in-class practices alongside an agency. So I think that’s really… Those are good to remember. I know another action, maybe some schools think they can bring this fully in-house. And I would argue, ’cause I remember looking at this, it’s…

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0:20:05.9 VF: Sure, I would love to have been able to build an exceptional end-to-end student recruitment and enrollment engine in-house, but… ‘Cause that would have been an incredibly strong competitive lever in my region where I was competing. But seven, eight years ago, I don’t even think the market… The market conditions, the hiring conditions, weren’t as challenging as they are today. So I don’t know… We just ran a survey at EAB with NAGAP, and about 45% of grad enrollment leaders we surveyed in the fall, they’re still citing “unfilled staff positions.” Almost 50% are saying “unfilled staff positions” are the greatest challenges and drivers of stress [chuckle] that they’re facing. So it was the top issue that they’re facing in enrollment teams today. And so I think it’s gonna be hiring really highly skilled digital marketing staff today is even more challenging. And it’s certainly not an expense that we recently modeled the cost of billing roles. Just if you had to go and find roles that are supported by the kind of work we do, for example, we estimated that annually, it would run from about 715,000 to 850,000 a year in filling those roles. And that’s before… University benefits. So it’s not an inexpensive proposition, and it’s probably an unlikely proposition given the staffing and hiring market today. So I think that’s a really tough position. I bet we would both land on this idea that if you could blend both, do open house…

0:21:44.5 VF: And this is where I would encourage… And we might try to link to it in then show notes here, but we came out… I helped on something that we produced last year called this new staffing model for higher ed CMOs, and it’s… Our rule of thumb was to think about outsourcing functions where you need to scale or specialization, and then in sourcing the capabilities that are supporting key strategic assets like your brand. So I know that most universities are going to have copywriters, creative leads, brand managers who are making sure that that brand… They’re stewarding and shaping the institutional brand consistently across divisions, across agency partners. And so I think that’s a critical in-house kind of resource that you want. But some things that I think should outsource when you think about the specialization or the episodic nature of the work, maybe Data Science, AI, search engine optimization. Those are things where you can find teams and agency partners that… They have those resources and/or that’s all they do, and they can do it very quickly and more efficiently than if you were to try to hire for that episodic need.

0:23:04.2 VF: So I don’t know if there’s a silver bullet here. For folks that are wondering, “Well, what’s… Spoon-feed me the answer,” I think a blend of both, and definitely check out our staffing model for higher ed CMOs, if that’s of interest to you. But there are… Fully in-house is a difficult proposition, and there are certainly fee-for-service partner models that are trying to, I think, offer the same end-to-end, in many ways, end-to-end recruitment and driving admissions, let’s say, for university partners that are looking for partners to do that all the way through to enrollment without the restrictions that OPMs provide. So there’s a number of different options. And I think… In terms of timelines, let’s talk about how long in advance we should be thinking about some of this stuff, Jennie.

0:23:58.2 JB: Yeah., so when we think about timelines, we think about if you are in a situation where you are currently working with an OPM and you’re looking to end the contract or where your contract is coming up. Many of you are in the situation where your contract’s coming up, you’re trying to figure out what your next steps are. It is not a decision or something that you can do lightly. It takes time. And really, our recommendation at EAB is, really, you need to be developing your transition plan at least three to six months in advance of getting notice to your OPM. And once you begin the contract termination process, it is common for OPMs, or other agency partners, to scale back their marketing and recruitment efforts. So you really need to think about developing a plan and to have your new partner in place before those discussions begin with your OPM.

0:24:54.4 JB: And if you think about, “How long does it take, typically, to impact a given term with marketing?” you really wanna be planning those marketing initiatives minimum 8 months in advance. So while we say three to six months, we really mean six. And you also should be thinking about, before that even, kind of teeing up who might your other partners be. When you are making these decisions, you also need to make sure that you’ve got kind of a transition plan, work streams. You need to pull together a task force or a working group that can focus on this. For each of the work streams, you really wanna determine which key stakeholders should be responsible, accountable, consulted, informed, and then you wanna make sure that the work streams you’re thinking about are enrollment marketing transition. Super important. That’s definitely a big one. Contract negotiations. Obviously, you’re gonna have to… If you’re in a current OPM contract and you’re trying to end it early, definitely contract negotiations there. But also as you begin work with a new partner, you’re probably going to need some sort of lead-in contract negotiation conversation there.

0:26:10.4 JB: Your learning environment and infrastructure transition. So again, going back to the data piece, your CRM, your LMS, so learning management system, all those pieces that are operating as kind of the logistics for executing the work in-house or monitoring and keeping track of any new partners that you work with, all super important, which is why lots of benefit when you’re looking for new partners to work with on certain pieces, to ask them questions about what sort of reporting and analytics they’re doing, what sort of in-house expertise do they have, how many partners do they work with, and do they have demonstrated return-on-investment results that they can share, are there references that they can speak to. There’s a number of things that you definitely wanna keep in mind as you are looking and exploring options.

0:27:00.1 JB: And then the last but not least is internal and external communications. Obviously, there’s a lot of communication that was happening on your behalf from OPM to prospective students, but also thinking about, again, logistics behind that and who’s gonna keep control over communication and delivering some of those maybe not so good news conversations that you may be having with your OPM partners. And when we think about who the key stakeholders are when you are building this out, so again, going back to your working group or task force, definitely wanna involve your legal counsel. VP of Online Learning, for sure, you wanna involve them. Your Dean or Provost of whatever unit it is. If you don’t have a VP of Online Learning, typically, it’s a Dean or Provost that you’re pulling into the conversation. Chief Marketing Officer, certainly wanna involve them. And then your Program Manager and Program Directors, because they are going to be then taking a big step up in thinking through program design, program features, changes to programs that we need to be thinking about, and then also what that admissions process looks like, once someone’s been admitted, who handles that admit-to-enrollment conversation. And so those are all important players in an overall transition plan when you’re thinking about breaking ties with your OPM.

0:28:34.5 VF: So this is a really complex…

0:28:35.2 JB: I don’t know if we…

0:28:36.8 VF: Yeah. Really complex, multi-stakeholder initiative that spans many, many divisions. I can understand and appreciate that. Wearing an enrollment and enrollment marketing hat, I think that sometimes the obvious place people look like, “Well, how are you gonna make this automatically happen? Where’s the next class coming from me?” And I guess… I would say that before… If someone charged me with that, having been in that role, I think this is a really good opportunity for Enrollment and their Marketing colleagues to really bring their teams together and have honest conversations about where the gaps exist between what they need and where they are today. That can be where they are with their existing partner or where they are as a team. So this kind of a gap analysis, it does a couple of things that creates internal alignment on the current state and then the desired future state of the work that you wanna be doing to recruit prospective learners, what operational activities are critical and needed, and then you can kinda rank the gaps. “Are these minor gaps? Okay, maybe with some training, we can get to a level of proficiency here internally. Maybe these are major gaps.” This is work we cannot absorb in-house, and it’s too significant. That’s a major gap. We need to outsource that to somebody else.

0:30:14.6 VF: So something that… I’ll share an example. Everybody in the industry, if you’re working with an OPM or trying to do this in-house, the marketing and recruitment capability would most certainly be running ads on paid search, like Google or Bing. Everybody is doing that today, I’d say. And so for that one line item or capability, you’d wanna get specific about… You’d have to break out who’s doing keyword research, who’s doing page search campaign management, who’s doing paid search, landing page creation, who’s tracking performance. Each one of those should be line items with, Are these minor gaps, moderate gaps, or major gaps? Can we do this in-house, or do we need a partner who can come in? And as the end goal in a few years that that partner can then transition it to us in-house, or do we always wanna outsource it? So that’s the kind of thinking we need leaders to be doing during this ramp… During this transition phase. So I guess with that, Jennie, you’ve been onboarding new partners for many, many years now. How… You talked about sometimes they don’t have access… They don’t know what’s been happening behind the curtain, if you will. Maybe give us a quick high-level view of what should they be thinking about as they prepare to onboard with a new enrollment marketing partner.

0:31:45.3 JB: Yeah, it’s a great question. So I would say some of the things that they need to be thinking about is, first and foremost, what are their goals, what are their enrollments, how are they planning to achieve those goals in terms of what programs they focused on for growth, because that’s a really important conversation to be having. It’s an important conversation to have because that has implications on marketing spend. So if you were limited to a handful of programs and you wanna expand that knowing that, “Gosh, it’s gonna take us some time to ramp up. We also wanna be growing these other programs,” you need to be thinking about that and then communicating that with your potential partners that you’re looking at courting for this important decision.

0:32:34.2 JB: You also need to be thinking about what sort of data or creative or assets, period, that you can obtain from the OPM and keep. So if there are data, if there are leads, if there is creative or some sort of content that you’re able to retain, that’s really helpful information. Ultimately, what you wanna prepare for your partner, if it’s a marketing partner that you’re looking at working with to help support marketing and recruitment efforts, then you wanna make sure that you’ve got all the details on your program, what terms those programs are admitting for, what’s the latest you’ll take an application, what, again, program features or value propositions you have for all of your programs individually, but then also collectively as an institution, “These are my value propositions for why a prospective student should choose my institution.”

0:33:36.3 JB: And then you also wanna understand too, the deadlines for applying. Now, we talked about the latest you’ll take an application, but what are the deadlines that you are putting on your website, that you are communicating to prospective students that your recruiters, counselors, Enrollment team, Admissions team is communicating to your prospective students. All of those data points, all of those bullet points, content pieces should be collected and prepared and packaged to then deliver to your new partner. And then I would also add too, that any sort of branding guidelines, any sort of imagery that you have, chances are that you created a similar package for your OPM when you started working with them, but if you’re like many of our partners, started working with them 5-10 years ago, so the content is probably a little outdated. So worth kind of refreshing all of it. And I would definitely incorporate that into your transition work plan that you are partnering closely with MARCOM and Admissions teams on building out.

0:34:42.7 VF: That’s really… That sounds to me like “Leave no stone unturned.”

0:34:48.0 JB: That’s right. [chuckle]

0:34:48.1 VF: All right. It doesn’t sound like these partners are gonna get sleep over the next few months. We don’t wanna scare anybody away, but, yes, start gathering your library of data.

0:35:00.1 JB: That’s right.

0:35:02.3 VF: I would say in summary, what are… If there’s a takeaway or two that we can leave people with, it’s that we have some great resources on our site. You can search for “Transitioning from your OPM.” There’s a blog post, and we will post some links in the show notes. And we’re here as a thought partner for you, whether it’s working with us or just starting to consider what you need to think about in line-up, because maybe this decision isn’t for another six to 12 months, I think we’re here as a resource partner. Jennie, what would you like to add?

0:35:36.2 JB: I would just add, as we think about this decision, it’s not one that, again, can be made lightly. And there are several institutions that I work with that still have some OPM partnerships. So it is… There are many different flavors to this. It is a big decision to make. But certainly look at EAB as a trusted advisor on this decision. We’re here to be as helpful as possible, and we have a ton of tool kits as well to help you with these decisions. So definitely think about EAB as you’re making these decisions, and pull us in as you need us. Val, anything else you’d add before we wrap up?

0:36:24.2 VF: No. Thanks so much, everybody, for listening. And stay tuned. We will be looking for feedback. If you’d like to learn more about this topic, let us know, and we will tee up more content. Thanks so much. Jennie, it was great to see you.

0:36:39.8 JB: Great to see you too, Val. Thanks for joining us.

0:36:42.4 VF: Take care. Bye.

0:36:43.2 JB: Bye, everyone.

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