To apply or not to apply? That is the question facing many candidates when coming across a job application for a position with your company. Seven Step internal data shows that up to 40% of applicants that start the apply process don’t finish the apply process. It’s an interesting phenomenon, but why does this drop-off occur? In order to explain why this might happen we broke the candidate’s decision process down into the following formula:
Application Completion Threshold = Application Cost - Perceived Value of Application
The Application Completion Threshold is the point at which a candidate does not complete their application. Essentially what this formula states is that if the cost of an application is greater than the value a candidate perceives the application to hold, then they will not complete the apply process. So first, how does the candidate value their time? Next, what value does a candidate assign to the particular application?
To further understand the formula we can look at the variables that impact both the application cost and the perceived application value. Here’s a breakdown of the variables:
Factors that Impact Application Cost
As Adam Smith said in The Wealth of Nations, "The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."
The same could be said about the effort it takes to complete a job application. In our instance there are costs to the candidate (labor) that must be worth the value of the completed application. The following variables impact the total application cost.
1. Application Labor Cost
This is representative of the value of the time required for a candidate to complete an application.
2. Availability of Time
Scarcity of time can certainly impact the application cost. Many candidates may only have a couple hours to complete job applications each week, which drives up the value that a candidate may place on the time they spend on each apply.
3. Length of Apply
The length of a job application has an obvious link to application cost. Simply put, the labor cost on a 15 minute application is 3x the labor cost of a 5 minute application. Therefore, the opportunity cost of 1 application that takes an 15 minutes is equal to 3 applications that each take 5 minutes.
Factors that Impact Perceived Value of Application
Economically speaking, this is the market value of the application. In fact, typical supply and demand principles apply here as well. For instance, below are some of the factors that impact the perceived value of a job application.
1. Supply
Scarcity of jobs, just like scarcity of a product, can drive up the market price. If you would like to apply to be an astronaut, the supply of job providers is very low. NASA, for decades the single provider of these jobs, would have a very high application completion threshold.
2. Intrinsic value / Employer brand
Take two pair of identical sneakers. Write Air Jordan on one pair and instantly the market price for those sneakers increases. This is the "intrinsic value" effect, and also how we ascribe value to the "brand name" of your employer. So too, the perceived value of a software engineer job application at Google may have a higher perceived value than an identical job at a no-name startup.
3. Advertising
Simply having an intrinsic value may not be enough. Advertising is also a factor.
This is a factor of how well the intrinsic employer value has been spread. A company may have a truly differentiated product, but within the job market that message has not been spread well enough. If so, a candidate may see an appropriate job and pass it by in favor of a company with name recognition.
4. Qualification match
If an advertised job is a direct match to a candidate's skill-set, or to the desired job type sought by the candidate then there can lead to an increase in perceived apply value. Let's imagine we are advertising IT jobs at a local technical college. If the jobs posted are executive level jobs, a student's perceived apply value decreases. If these are entry-level IT jobs (aka their dream job) then the perceived value goes up.
5. Urgency to get the job
This is basic demand principles at work. Of course if the candidate truly wants the job in question it will drive up the perceived value of the application. If a candidate has increased demand for a job they will naturally assign a higher value to a completed application.
6. Quality of after-apply service / Candidate experience
This is a factor that affects demand after the apply. Essentially these are the "repeat customers" that are now contemplating another job application with your company. Depending on their past candidate experience, how willing is a candidate to repeat the process?
Are you measuring your application completion rates? What is your Application Completion Threshold?
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