A Further Education Development Agency report urges colleges to plunge in with "experimental" strategies for keeping students, a move it says could be the key to improving institutions' performance.
The usual methods colleges use to record why students withdraw do little or nothing to prompt them to sort out the problem, says the report.
The study looked at four colleges' approaches to tackling dropping out. It follows a FEDA report on retention last year which found causes were highly complex.
The colleges highlighted in the latest report, due for official publication in September, all came up with different solutions to stem rising numbers of drop-outs. The study found that all four colleges got results without investing substantial new resources or bringing in any new staff.
The report adds: "Action in conditions of partial and incomplete information is preferable to an endless search for perfect information."
The data generated by new work proves more of a catalyst for change than the information generated by standard systems for monitoring dropping out, the research revealed.
A report by Further Education Funding Council inspectors earlier this year found a majority of colleges had no clear idea what happened to students who dropped out or finished their courses. More than half had no data at all on drop-outs.
The four colleges, in Walsall, Knowsley, Cambridge and the Isle of Wight, all transformed themselves as institutions in order to tackle retention, says the FEDA study. All took a "hearts and minds approach" involving staff as much as possible and taking risks.
Knowsley Community College faced losing Pounds 1 million of FEFC funding because a quarter of its students dropped out in 1992. Retention rates have been made top priority - student research has been carried out, targets have been set and an action plan has been drawn up of almost 60 projects devised by staff.
Targets have been met so far, and the college estimates the increased numbers of students completing courses has generated about Pounds 200,000 extra FEFC income per year.
Long Road Sixth Form College, Cambridge, saw just 12 per cent drop out in 1995-96 but successfully took action, including research and improved support for struggling students.
Walsall College of Arts and Technology devised a free orientation programme to support returning adult learners, while Isle of Wight College used research by two tutors as a basis for improvements including a new student tracking and monitoring system, better guidance and advice and a new tutorial system.
The FEDA study compared the strategies with those used in American community colleges and found "in all cases there was an acknowledgement of the need to transform the college".