[Deck] Don't be a hostage to fixed agent terms

Fewer than 10 universities in the UK & Australia account for >$400M in commission annually. The global commission total is likely far larger than $10B AUD ($6.5B USD).

The global student market has been forecast to be 50% bigger in 2030 vs 2023.

Agreeing terms can take a very long time - eating providers' finite, precious team resource and failing to account for external factors which may disrupt operations during the life of the contract.

It is not possible to predict future supply needs, or future market behaviours. Yet all providers attempt to do this when they sign 1-3 year contract terms.

The challenges facing providers (and agents) are significant and many.

These are being felt in multiple ways, including voluntary and mandatory severance schemes. This applies to both providers and agents.

It is critical to understand the impact created by agreeing terms in a fixed, analogue way. 

(1) The education sector is one of the very few billion dollar sectors with no wholesaling. Instead, all providers attempt to recruit at the same time, driving up acquisition cost.

(2) Pipeline control is an illusion for most providers; instead the market decides what applications will be received, and these may not map to desired subject areas and/or required volumes.

(3) The lack of capability to vary commission price in real-time, by market and subject, means overpayment occurs at scale.

(4) Agents today are actively incentivised to collect as many partner contracts as possible; this drives down conversion for any single partner.

Few options exist for providers to remain competitive. Each involves paying or doing more, or both.

Coventry University (UK) spent £1 in every 9 on agent commission in FY23 (£54.9M).

This increase in acquisition cost will continue unabated under this way of agreeing agent terms.

Pareto (or worse) normally applies in any provider's agent performance pool.

Lengthy tails are costly to maintain, deliver little, and cannot be easily optimised in a system where load commitment is not guaranteed and where agents have been incentivised to collect dozens or hundreds of partner agreements.

It's crucial for education leaders to recognise that commission terms underpin all subsequent recruitment activity in regards to agents. Without optimising terms, it is not possible to optimise later tactical spend areas.

Most effort and investment in international recruitment occurs in these tactical areas, yet almost no investment occurs in optimising terms agreement.

This real-world, simplified example from a Group of Eight provider shows how agents are not today incentivised to deliver what is required by providers.

Agents pursuing the far harder to source Creative Arts prospects would earn 14% less than they would for placing the more plentiful - thus easier to find - Business/Commerce students.

The provider will mitigate the challenges caused in each case, bloating average acquisition spend for scarce and abundant prospect types.

A dynamic terms agreement process with granularity would lower overall cost of sales and increase agility.

Universities continue to try the same tactics, investing ever-greater sums.

A new approach to framing terms is required.

There is no monolithic impediment to any provider changing the way it agrees its agent commission terms.

No legislation against this. No great technical challenge.

It just needs the acceptance that digital can bring competitive advantage, as it has done in all other global sectors.