Revised Curriculum

The folks at Northwestern University's Kellogg School of Management must be auditing direct marketing classes at their parent school.

For starters, they've overhauled Kellogg's DM program, cutting mail volume in favor of e-mail and other forms of online marketing. Results have been impressive.

“On a program basis, we probably cut our marketing expenses by 35% and enrollments have stayed up,” says assistant dean Eric Fridman.

Why less snail mail?

“We invested a lots of money in our direct mail strategy and we were not seeing the kind of return we would like to see from it,” Fridman adds.

Last year, the school sent out about 2.3 million pieces, but that number will be trimmed in 2006 to “somewhere between a third and a half of that.” Fridman says the 2005 mail budget probably was more than $1 million with postage included.

But Kellogg also is mailing smarter. It has, for example, pulled back on the number of sequential pieces in its campaigns.

“We had a three-touch direct mail program where we would send out a postcard, a brochure package with a cover letter and reminder postcards for programs with soft enrollments,” Fridman explains.

These days, Kellogg sends out just one paper mailing, and it's replaced the reminder postcards with e-mail. On top of that, the school has simplified its basic mailing package.

“We used to send a cover letter targeted to a particular segment, a copy of the brochure, a hard copy of the application and a business reply envelope,” says Fridman.

In contrast, the basic package is now a self-mailer containing a short letter from the dean.

The school also decided to change its promotion schedule. Instead of mailing for every session, “We only mail out once a year for every program, promoting each of the two or three sessions,” says Fridman. “We've significantly reduced our costs by moving in that direction.”

Is the strategy working?

“We were frankly concerned we might be shooting ourselves in the foot because we weren't sure how all this was going to play out,” he says. “But we were doing OK.”

So yes, it's working. The school is pulling a conversion rate of 9% from its informational brochure requesters compared with 7% last year. And its conversation rate from past program participants has risen to 3.25%, compared with 3% in 2005.

For these mailings Kellogg relies on its database of 90,000 past participants and inquirers. It also uses subscriber lists from magazines like the Harvard Business Review and Business Week. And it tries “composite lists from several different publications with title and company selects,” Fridman says.

Kellogg typically targets executives at their business addresses. But he concedes there are some exceptions. “When we rent [lists] from The Wall Street Journal or Harvard Business Review, some of those solicitations go right to their home; we don't have any control over that. And sometimes when the stay-at-home party gets to the mail first, they'll discard the stuff before the other party gets home.”

And those baby steps into e-mail marketing?

“We started e-mail just this year and the reason we were so slow was that we wanted to wait until the system infrastructure was in place to do it ourselves,” Fridman says. “We didn't want to hire a third party.”

Kellogg got its e-mail software up and running at the end of last year. It's since run some tests to the house file, which contains e-mail addresses of roughly 60,000 past participants and requesters of brochures and other information.

Fridman is avoiding rental e-mail lists right now. “We don't want to bombard these folks with e-mail,” he says. Under certain conditions, e-mails from Kellogg might be viewed as spam and the school doesn't want to risk being blacklisted.

Kellogg's other big initiative is online marketing.

“We're doing two things online,” Fridman says. “One is banner ads and rich media ads on sites like Businessweek.com, Fastcompany.com and Yahoo!'s News site.”

In the search area, Kellogg is buying keywords like “executive education” and “executive programs” and bidding on other words like “executive MBA” and “e-MBA.”

Kellogg also has made a “significant investment” in Google and Yahoo! search engine optimization “because we're finding that almost everybody gets to us via search,” Fridman says. The best results have come from Businessweek.com, which is producing a clickthrough rate of 5.2% and a conversion rate of about 5%.

“It's really, really important that we be on page 1, along with all the other big boys like Harvard, Wharton, the University of Chicago and Stanford,” he says. “We also advertise on the online versions of Crain's Chicago Business and the Chicago Tribune.”

Kellogg still uses print ads. It runs two in every issue of the Harvard Business Review “because we really need to be there,” Fridman says. In The Wall Street Journal, Kellogg runs a one-eighth-column calendar ad every week listing upcoming programs.

“We're pretty careful about where we advertise,” he says.

Kellogg offers a variety of non-degree management courses for executives in large corporations. A typical three-day program costs nearly $5,000 — or $1,650 per day. Fridman notes this rate is fairly consistent with those of the other top business schools.

Most participants are midlevel to senior execs who work for Fortune 500 corporations. Probably a third come from a five-state Midwestern region that encompasses Illinois, Wisconsin, Michigan, Ohio and Indiana. The rest come from elsewhere in the United States or from overseas.

“I'm guessing that 22% to 25% of our participants are international,” he says. “Some of the states that we do particularly well in are Texas, Florida and New York. We [also] do well in countries like the United Kingdom, Brazil and India.”

“Short-form courses are the biggest part of our business,” Fridman says. “We've actually kept the number of discrete programs pretty consistent with where we were a couple of years ago.”

But Kellogg has had to eliminate some programs due to low enrollment levels. Case in point: a course on strategic crisis management.

“It really pained me to drop it because we had some of the best faculty in the school teaching it,” he says. The program was designed to help prepare senior executives for any kind of a crisis they might encounter. They were given pointers on how to handle the media, prepare shareholders and deal with employees.

“I think the reason we dropped [it] was because no manager wants to imagine himself or herself as having to deal with a crisis,” Fridman says. “They certainly want to know what to do when they're in the middle of a crisis, but they don't want to anticipate one.”

What's next on the marketing front? “We're going to be doing some experiments with word-of-mouth marketing,” he says.

The school also is tossing around the idea of creating Web sites for each of its programs and allowing them to accept comments and insights about management issues (such as blogs).

But most likely none of these initiatives will surface tomorrow.

“Universities are very conservative institutions and we're slow to get around to this stuff,” Fridman says.