The Auxiliary Services That Make Colleges the Most Money

The Auxiliary Services That Make Colleges the Most Money

Prospective college students and their parents take many factors into consideration when they’re choosing between competing universities. They consider the university’s national rankings, its location, the level of prestige it holds, and how well the university fits into their career path.

The list could go on and on, but one area that students and parents don’t typically consider is rapidly becoming a keystone of many universities’ financial health: auxiliary services. During difficult economic times, these can generate a great deal of revenue, even amid the stark reality of increasingly tight budgets.

The Potential Boon of Auxiliary Services

Quite simply, universities simply cannot afford to ignore the impact of their auxiliary services. It’s not simply a matter of losing customers to off-campus vendors and service providers. It’s an issue of retention.

Increasingly, student satisfaction hinges upon the perceived quality of auxiliary services. Sadly, dissatisfied students tend to drop out at higher rates, tearing at the fabric of the campus community and further decreasing revenue.

Research has shown that when universities are able to determine what keeps their students satisfied, attrition is limited, resulting in a more sustainable campus environment.

What’s more, satisfaction levels are often set almost immediately. Once students become acclimated to their new university setting, they quickly begin to use and evaluate the school’s auxiliary services. If those services fail to offer convenience, support, and a high level of value, students will not only spend their money elsewhere, but may also end up with decreased levels of overall satisfaction with collegiate life.

Auxiliary Services with Highest Profit Potential

Auxiliary Services supply the ‘necessary extras’ that universities offer students to fulfill their non-academic needs on campus. They provide support for campus communities in a variety of important ways. Auxiliary services help transform campuses into actual communities and can help foster a more student-friendly environment. When successful, they generate repeat customers and decrease the costs of core academic programs.

The auxiliary services that tend to generate the most profit include the following:

  • Campus Housing
  • Dining Services
  • Campus Bookstores
  • Event hosting
  • On-campus hotels
  • Parking and Transportation Services
  • Vending Machines

These services are wide-ranging and significant. The significance stems from at least two reasons. First, they offer opportunities for profit that supplement revenues generated by a university’s core academic programs.

Second, they go a long way toward defining students’ college experience and can either improve or damage a university’s reputation. College administrators can benefit from keeping tabs on the current state of auxiliary services and the competition they face for student dollars.

Auxiliary Service Success Stories

It’s apparent that auxiliary services are an absolute necessity on college campuses. But the reality universities face is that these necessary services often have a negative financial impact on the campus community. This occurs when auxiliary departments fail to be self-sufficient and require financial support from core university programs.

This situation is becoming intolerable for today’s universities. Tighter and tighter budgets for everything from technology to faculty salaries to research have become the norm. Universities can’t afford to keep funneling profits into auxiliary services. At the very least, they need these auxiliary departments to break even and become self-sustaining.

Of course, the ideal situation is one where auxiliary departments are profitable enough to export money to the core academic programs that attract students and generate the highest revenues. As impossible as this may seem, there are many success stories out there. These stories can serve as models for future revenue-generating campaigns for colleges and universities looking to improve student satisfaction with auxiliary services.

Success Story #1: University of Texas at San Antonio’s Peanut Butter Parking Campaign

In 2016, the University of Texas at San Antonio implemented a campaign to reduce the cost of student parking citations. A campaign that reduces revenues might seem to run contrary to the purpose of reducing the university’s financial burden. However, UTSA’s Peanut Butter Campaign more than made up for the few thousand dollars it lost in citation revenues.

Similar to most college campuses, parking has historically been a big problem at UTSA. A major part of the problem was the onerous cost of parking tickets for students who didn’t fully understand campus parking policies. This led to a pair of negative outcomes — reduced willingness on the students’ part to spend money on campus and a disgruntled population that threatened to diminish the school’s reputation.

The Peanut Butter Campaign was an innovative way to address the parking problem and have a positive financial impact on the university. It also improved relations between the university, the student body, and surrounding community.

In brief, the Peanut Butter campaign allowed students to donate jars of peanut butter to local food banks in lieu of parking citations that often cost up to $100. It also provided in-depth instruction on parking policies and invited the student government to participate.

The end result was happier customers (students) and improved community relations.  Needless to say, USTA Parking Services plans to continue the Peanut Butter Campaign indefinitely. The lesson of the Peanut Butter Campaign is that innovation is required for the success of auxiliary services.

Belmont University’s FlexMoney Dining Services Program

Another instructive example of innovative auxiliary service initiatives is Belmont University’s FlexMoney program. On campus, this program is called ‘Bruin Bucks’ and gives students much greater flexibility than dining halls can offer.

The program works in the following way. First, Belmont dining services developed mutually beneficial relationships with surrounding restaurants. Students purchase their Bruin Bucks on a dollar-for-dollar basis and can spend them both on and off the university campus.

The FlexMoney program at Belmont has proved to be highly successful. By giving students more dining flexibility, dining services programs have become more attractive to students and increased revenues significantly.

The Keys to Higher Profits: Better Service, Better Products

An emphasis on good service and quality products is central to the success of campus auxiliary services. It’s imperative that these departments focus on these aspects of their services if they are to remain viable.

Take dining services for example. By offering flexibility, healthy food, and friendly service, university programs can better compete with off-campus alternatives and increase revenues substantially.

Vending machines present a similar case. When these machines are maintained properly and offer a wide variety of products — including items like phone chargers and other non-food items — the vending revenues soar and students have an improved campus experience.

Similar improvements can be made across the entire range of auxiliary services. In fact, universities that place greater emphasis on innovation, quality, and service of their auxiliary services are able to compete with the glut of off-campus alternatives and remain viable.


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About the author

Johann Leitner is the founder and president of Touchwork, a marketing management software company.