Industry insiders are warning that the sales incentives, bonuses and time-limited deals being offered by agents to their sub-agent network could breach consumer protection laws and hollow-out quality.
News and business analysis for Professionals in International Education
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‘Black Friday’ pressure-sales tactics in sector
Pressure selling tactics are being used to get applicants to pay tuition deposits, stakeholders have warned. Image source: Pexels International education has become a lucrative industry and competition is fierce amongst agents and aggregators to generate and convert quality student applications for their university partners.
But as prospective students and their families prepare to make one of the biggest financial investments of their lives on university fees, accommodation and maintenance – agents are increasingly being incentivised to convert applicants faster by encouraging students to make deposit payments.
Under standard consumer protection law in all of the major study destinations, students have a legal right to a refund if they believe they have been mis-sold a product or unfairly pressured into making a decision or payment.
Also, students who have been rushed into making a payment are more likely to cancel their university place at the last minute and ask for a refund.
Vincenzo Raimo, who regulrly advises UK universities on agent management, explained “data is good for consumer protection”.
“We need better and transparent data on agent success rates. This would make life easier for HEIs selecting agents and would help inform and protect prospective students,” he said.
Conversion rates in the UK are declining for some institutions, even after students have paid a deposit and been issued a CAS for visa application.
Historically, deposit payments have been seen as a measure of intent that that a student will enrol. Erosion of this key indicator will be a cause for concern and will majorly disrupt accurate forecasting for future intakes.
Mirroring the ‘Black Friday’ retail culture of offering discounts to shoppers – one agent aggregator has been offering an additional £400 (C$680) commission bonus for every deposit paid in just a four day window – November 24-27, 2023.
Image: Aggregator Black Friday campaign
The deal was open to approximately 10,000 sub-agents working in this aggregator network.
Eddie West, speaking about agent management at The PIE Live North America, spoke of his concerns around the cost of acquisition per student and increasing commission rates.
“I think it’s a very dangerous and slippery slope right now. It’s a race to the bottom. If we get too much pressure from an agent partner [to increase commission to pay for recruitment incentives] we will just diversify the network. You might call it an ‘arms race’ and where does it stop?”
In the accommodation sector, a trend of agents and students paying early deposits to hold rooms, only then to cancel at the last minute, has been observed and could be a consequence of students changing their minds.
Daniel Smith, founder of the Student Housing Consultancy, explained the problem saying, “We saw the results of early pressure selling from marketplaces in purpose-built student accommodation last year and I’ve seen more of the same this year.
“Students are being encouraged to book multiple accommodation options before they’ve finalise their uni choice. This leads to a huge number of late cancellations which is a nightmare for operators.”
“We saw the results of early pressure selling from marketplaces in purpose-built student accommodation last year”
In recent years, demand for university places in English-speaking destinations has been extremely high.
Students searching for edu-immigration pathways have been happy to invest money to keep their options open before processing refund requests later if needed.
This culture of cancellations is not only associated with students and agents.
Universities themselves have been guilty of oversubscribing courses, only to force students into accept deferred places or refunds at the last minute if capacity or limits on a sponsor licence have been exceeded.
Are you an agent operating within an aggregator/master agent network? Do additional financial bonuses or sales incentives motivate you to convert students in a certain timeframe or for a certain institution? Have your say in the comments below or email editorial@thepienews.com
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