One of the recent trends in the Childcare Industry is the oversupply of childcare places with only the slight increase in demand. The two major reasons that has led to this current position are;
Oversupply increases competition to attract new customers starting their childcare journey and to retain current customers. This is because centres are offering substantial incentives to attract new families. The decision to leave a centre is not just based on price or incentives, the number one priority is the level of service provided to children. However, given the substantial investment that parents are facing each week, the extra incentive is enticing. In light of this trend, this article will discuss the childcare lifecycle for the average family.
After working in data analytics for the childcare industry, the customer lifecycle in childcare was analysed stringently. The benefits of improving your customer retention strategy is paramount to success, especially with the size increase of childcare centres. For the numbers people, a new centre with 100 places needs to retain over 150 children to meet 80% occupancy, the benchmark to ensure a profitable childcare centre.
From my 15 years of experience, I have found that the average lifecycle for a child in Long Day Care at a childcare centre are as follows:
|Age Group Start||Average Lifecycle Attendance|
|6 weeks to 1 year||18 months|
|1 – 2 year||17 months|
|2 – 3 year||14 months|
|3 – 4 year||10 months|
|4 – 5 year||9 months|
The above is only an average because every centre is different. But when we review data the above provides a breakdown of the length of a child’s journey at your childcare centre.
If we consider a child that attends a childcare centre at 6 months to 5 years of age, the following could provide a timeline of an average child’s movement from Centre to Centre.
|Centre||Average Age Attended||Average Age Left|
|Centre 1||6 months||24 months|
|Centre 2||24 months||41 months|
|Centre 3||41 months||51 months|
|Centre 4||51 months||60 months|
Based on the above, a child could move between 4 childcare centres. How do you ensure that they don’t leave your centre or stay with you longer than the average family? Every Centre has the opportunity to ensure that they retain their families longer.
As outlined above, the goal is to retain customers longer. Below are 4 benefits to improve child retention strategy:
It is well known in the childcare industry that the average operating costs for the care of a 0 – 3 year of age in Long Day Care are substantially more than children aged 3 to 5 years of age due to the ratio requirements.
If you are Centre 1 in the example above and only retain the child until the age of 2, you are have incurred substantially more costs for that child. The fee structures are generally the same across all age groups. The loss from the younger age group is subsidised from the fees collected from the entire centre. To maximize the return on investment, you need to retain the child for longer than 3 years.
By retaining the child at your centre, you are ensuring that all children receive the best environment to obtain the best consistency of care for themselves and the community.
Retaining families ensures that your business also has the consistency of staff. Low staff turnover is important to manage the quality of care and costs of recruitment and training. Some parents see low staff turnover as an important criterion to ensure care quality and will be more willing to continue to attend a centre that has a greater ability to improve a child’s continuity with carers.
Attracting new families requires substantial time and money invested. The marketing budget needs to be expanded, staff need to spend more time doing centre tours and completing administration requirements for new enrolments. The difficulty to settle a child is not only stressful on the child, but the peers and staff also.
With this in mind, wouldn’t it be better to invest the time and money it takes to attract a new customer into retaining families for longer?
Every centre knows that they need to offer GREAT service to their families to even have a running chance of retaining a family. But, in the current market conditions, the key objective of every marketing strategy is to obtain a new customer. But what about your current customer? While you provide the same great service to every child, the new customer is provided greater incentives. Is this fair? Do you think this is a good customer retention strategy if everyone is doing it?
An example of this is the 2-week free promotion used to entice parents to try a centre. But this doesn’t ensure that parent continues at your centre for any longer than the average life cycle.
Other incentives like flat-out ‘cash back’ is not compliant within the spirit of the childcare legislation. Again, it only benefits brand new customers, not current customers.
Previously, the fee policy provided a reduced fee for greater than 2 days attended or a discount for an additional sibling. This reduced fee was available every week and didn’t reward loyalty, simply the number of bookings each week made.
Childcare centres still provide holiday discounts. The basis of this discount is that your spot could be rebooked for a casual spot. Unfortunately, the parent still has to pay the holiday discount fee and do the parents really see any real benefit from this offer as the average family only uses 50% of the holiday discount days available.
Nurch, Australia’s first childcare loyalty program ensures any rewards given go to your most loyal families. Not only that, we are an attractive bonus to any new families considering our partners centres.
In the previous example, A child who attends at 6 months of age for 4 days a week would be approaching Gold Status at the childcare centre after 18 months. With Nurch, this parent will receive 50% more points on childcare payments made. This is a substantial bonus and the parent will need factor this in because they would lose their gold status if they left your centre.
Let’s talk about the pesky public holiday day vacancies AKA a Monday or a Friday. If you rewarded parents for booking a Monday or a Friday, you would ensure that your business has a chance to reach occupancy levels and have a profitable well-established childcare centre. This seamless and automatic ability to provide rewards and give something back for loyalty is our niche. We care about the consistency of care for our children and we want to see your business thrive. It really is a win-win.
If you are interested in knowing more about Nurch? Please visit nurch.com.au for further information.