International student recruitment & the power of agents
At the internationally active University of Nottingham in the UK, Vicenzo Raimo, Director of the International Office, shares his views:
“In an ever more competitive international student recruitment market, UK universities are increasingly relying on the use of student recruitment agents to meet targets. Not only are universities failing to appreciate the full costs of international student recruitment but some are also in danger of failing to meet ethical standards in their work overseas.
Despite the significant increase in international students coming to the UK in recent years I am concerned that as a result of increasing competition and the more difficult environment resulting from the UK government’s changes to visa requirements, recruitment agents have become too powerful and the balance of power between universities and agents has shifted increasingly towards agents.
One would have expected that with the volume increases our institutions have experienced the margin on international students would also have increased. I think the opposite is the case. One of the reasons for this is that in our competitive fervour we’ve let agents become too powerful.
“I am concerned that recruitment agents have become too powerful”
With the exception of a minority of Russell Group universities the vast majority of UK universities which are active international student recruiters make use of student recruitment agents.
The reasons for using agents are clear
The reasons for using agents are clear: they’re effective in helping universities to meet volume targets, they give access to markets that are sometimes difficult to operate in directly, and because in some markets it’s a normal expectation for a prospective student to use an agent or educational counselling service.
Many universities, including Nottingham, look at agents as another distinct market segment and market directly to them. We give them privileged access to internal university resources and there are dedicated staff whose sole job is to support the agents – account managers if you like – so that agents chose to direct applicants to Nottingham over our competition. And, of course, we pay agents commission on results. Some universities offer other financial incentives to win the agents’ business over the competition – retainers, performance bonuses, higher tiered rates of commission, trips to the UK, and more …
“We give them privileged access to internal university resources”
The role of the student recruitment agent has changed significantly over the past 10 years or so. Initially, most agents worked directly for their University partners – the University brands were key and the agent was simply an extension of their usually small number of partners’ brands.
Their services to prospective students were generally free with the universities making a direct contribution to agents’ marketing costs and paying commission on students successfully recruited, traditionally 10 per cent of the first year’s tuition fee. Universities needed agents and agents needed universities – it was a partnership but where it was clear that the Universities had the upper hand – they owned the brands being promoted through the agents and the agents were therefore nothing without the universities.
Becoming brands in their own right
We and agents have come a long way since those early days to such an extent that many agents as we call them, or educational counsellors as they might see themselves, becoming brands in their own right (for example The Chopras in India or UKEAS in Taiwan – or now cross region agencies like IDP).
In addition to direct student recruitment agents now offer a whole range of other services to prospective students – from student counselling and placement services to pre-departure briefings, English language classes, standardised tests, flight and accommodation bookings, even SIM card sales for mobile phones, and careers guidance and job placement services on their return home.
Agents now earn their income from commission (at various levels), incentive and target bonuses and increasingly on the range of other services they offer students. Some even charge the prospective students for whom we then pay commission for the ‘counselling’ they are given on our behalf in the first place. And of course many agents now represent lots of universities rather than just a select few and provide study options in a range of countries rather than acting as specialists just for the UK.
“We all know that the use of agents has increased significantly since 2005”
According to the Australian Universities International Director’s Forum annual benchmarking exercise for 2010 (The Alan Olsen report), 57.6% of all new international student enrolments to Australian universities came through agents.
The equivalent figure across those UK universities which took part in a similar benchmarking exercise in the UK was 33.4% but that was for 2005 and we all know that the use of agents has increased significantly since then, partly driven by us and the need to achieve higher targets, partly pushed into agents’ hands by the British Council which no longer offers direct counselling and by the UKBA because of the need for greater in-country handholding through the visa application processes.
In Nottingham’s case the percentage of students recruited through agents has increased from 19% of the intake in 2005 to 25% in 2011 with an annual commission spend well in excess of GB£1 million.
In addition to the volume and percentage growth in students coming through agents our costs have further increased by the Inland Revenue’s decision to charge VAT on commission payments (the so-called reverse charge) – so an automatic increase of 20% on our commission costs which, as far as I can tell, most, perhaps all UK universities have simply swallowed.
“Our costs have further increased by the Inland Revenue’s decision to charge VAT on commission payments”
We need to rebalance the relationship
So, where do we go from here? We continue to recognise that agents are an important part of the marketing mix and who need to be valued. But we need to rebalance the relationship between agents and universities and above all we need to avoid the arms race escalation in commission costs.
If we continue on the current recruitment cost trajectory (marketing costs, agent commission and specialist support) International Office directors are going to do themselves out of jobs as the margin on international students decreases.
More important though than the costs is being sure that the way we work with agents and others to whom we pay commission is undertaken in a professional manner and is consistent with both the UKCISA Code of Ethics and the QAA’s guidance on international students studying in the UK.
We need to ask ourselves some simple questions:
• Is our work with agents consistent with the values of the UKCISA Code of Ethics?
• Does it meet the requirements outlined in the QAA Guidance on international students?
• Would you be happy to publish on your web site the names of all of those organisations and individuals (agents, school counsellors, schools, etc.) to whom you pay commission? • • And if not, why not.
• And for those that pay commission to schools and school counsellors, how would you feel if your son or daughter was at a school where the advice on university applications was influenced by which universities pay that school a fee rather than which was the most appropriate university for them?
• How far are you willing to go and how much are you willing to pay to beat the competition?”
Vincenzo Raimo has been director of The University of Nottingham’s International Office since 2007.