The two services are not at an equivalent stage of development. The newly introduced learndirect service has been concerned with raising its profile while nextstep is more established. Whether the marketing costs of nextstep reflect its marketing budget at the outset of its delivery has not been explored.
The media selected by learndirect for marketing has specific implications. While television advertising offers the opportunity to reach a very wide community, it also has huge implications on the extent of spending since it is costly both to develop and broadcast adverts.
The ‘best’ estimate suggests that each new client generated by learndirect required a marketing spend of £30, while nextstep has had to spend very little to maintain its supply of clients. However, there will be some cost in terms of time and resources attributable to the referral process that this evaluation is not able to capture or estimate.
An issue for policymakers to consider is whether learndirect will require this level of spending throughout its lifetime to generate clients for the service. A further
consideration must be whether the 20 per cent increase in the numbers of clients accessing guidance nationally as a result of the introduction of learndirect, makes this marketing spend worthwhile.
A question raised by this is whether the generation of demand would be made more effective if both services operated beneath the same brand. There were indications from the nextstep contract managers that they felt the separate marketing of
learndirect had been an opportunity lost. Without a shared brand joined-up working was felt to be more difficult and led to a less seamless experience for guidance clients. The separate campaign also meant that without its own equivalent marketing budget, nextstep had been unable to benefit from the spending in this regard.
6.6.2 Costs compare with evidence on the costs of guidance elsewhere
An initial question arising out of this analysis is how far the cost findings presented above fit with what is known about the costs of guidance from other sources. In their study, Tyers and colleagues (2003) found that the spend per client variedconsiderably between pilot centres from £100 per session to over £2,000, but that the average cost of guidance per client was £220. Against this background, learndirect guidance and nextstep can be viewed as cost-effective since in each case the cost of guidance is less than £100. However, it is important to note that the pilot evaluated by Tyers and colleagues aimed to supply guidance to disadvantaged groups such as people with disabilities or learning difficulties, people with basic skills needs, refugees and asylum seekers, and offenders. A key finding was that the needs of these groups were greater and that this was likely to result in higher guidance costs.
The nextstep contract managers gave information about ‘per client’ funding to
subcontractors at the local level. This was a fixed price, with advice sessions reported to attract between £35 and £50 per client, and enhanced sessions attracting between £50 and £70. One contract manager reported that different subcontractors might
Jobcentre Plus had received less because of the ease with which they would gain referrals.
While neither source of evidence provides a satisfactory base from which to compare the costs of nextstep and learndirect, both suggest that the costs findings are within the bounds of costs for guidance found elsewhere.
6.6.3 Interpreting cost-effectiveness
The cost-effectiveness findings have presented three ways of looking at the differences (and similarities) between the costs of the learndirect and nextstep services.
However, which of these presents the best set of indicators, is to some degree, a matter of choice. Whichever approach is accepted, the difficulties outlined about the ‘input’ data require consideration. In addition, the extent to which the services work with different client groups, and how far the content of face-to-face differs from telephone guidance, need to be considered.
In reaching conclusions on the basis of the cost-effectiveness data there is likely to be some debate about what presents a significant difference in costs between the
services. The two services spent £10.5 million between them in the quarter under consideration, servicing 125,000 clients nationally. The analysis assumes that an amount of £10 per client does not represent any difference.
When comparing the costs overall:
■ The cost of delivering a ‘guidance’ session through learndirect is currently roughly comparable to the costs of nextstep provision.
■ The cost of generating an action plan is greater for learndirect than nextstep. This indicator is negatively affected by the proportion of learndirect service users who do not take up an action plan.
■ Learning output costs are higher for learndirect than nextstep (ie cost per entry into learning), while employment output costs (ie cost per entry into employment) are lower.
■ It is not clear whether any differences in the cost between learndirect and nextstep are the result of cost-efficiencies or differences in the nature of the two services. nextstep provision is different to that provided by learndirect, and is generally provided to a different client group. Furthermore, as it is larger and more established and receives a greater number of referrals from other organisations, nextstep provision benefits from economies of scale and lower marketing costs. Taking these points into account we consider that, overall, learndirect had delivered cost-effective telephone guidance. Furthermore, over time it is likely that the costs of learndirect provision relative to nextstep will fall, but not substantially. The
learndirect costs presented in this analysis include some element of set-up costs, (eg telephony and systems, staff training and recruitment, and raising brand awareness) and it is, therefore, likely that greater cost-efficiency in the supply of telephone guidance will be evidenced over time. In addition, calculation of the number of
advisors required to deliver the service at any one time will become more accurate. At the outset, the software used to make these calculations had only evidence relating to the supply of advice on which to base the calculations. As information about demand and capacity to deliver guidance is generated, this calculation will become more refined. This is likely to improve estimation of the required staff resource, and again
lead to greater cost-efficiency. Similarly, as the learndirect guidance service brand becomes more familiar the number of referrals from friends, colleagues, and other organisations is likely to increase which will have a positive impact on learndirect costs.