They’re the most direct route to both more money and more impact (and the best sales tool out there from what I’ve seen), yet value propositions are often misconstrued or borderline ignored in the strategy of social enterprises and nonprofits.
Yes, most social impact organizations absolutely give their best to serve many different stakeholders, but giving their best isn’t always as strategic or deliberate as it can be.
This totally baffles me sometimes, as we in the social impact sector exist to solve huge ****ing problems, yet we often don’t really know as much as we could with some intellectual elbow grease about the problems we’re trying to solve!
And because our problems involve people, we need to know people! And value propositions is how we do that.
Think of that nonprofit you once sat on the board of that seemed to be pulling teeth with fundraising, or a social enterprise that’s employing local artisans but can’t seem to sell many products. Or, just as bad, one that sells plenty of products but isn’t sure of the impact it’s making with its local artisans.
For whom do you need to create value propositions?
First off, your entire job as a social entrepreneur is to create value. That’s really any organization’s job, right?
Yet in organizations that need to both make money and deliver impact, the value gets trickier. Often, it’s imperative to your organization’s success that you create value for at least two very different sets of people: those who pay for your work and those you ultimately serve.
- If you’re getting grants or donations, you need value propositions for your funders.
- If you’re earning income, you need value propositions for your buyers.
- if you do work with a certain population or community and they’re not the buyers, you need a value proposition for them.
- Finally, you need a value proposition for whomever influences all the above.
When I break these down for my clients, I use the four following customer segments (these aren’t from any existing framework out there; I created them for my work in this sector):
- Who financially supports your work? Your Most Valuable Financial Supporters who financially support your products or services including investors, funders, donors, in-kind suppliers, and volunteers.
- Who pays for your work directly? Your Most Valuable Paying Customers who directly pay for your products or services.
- Who directly uses your work? Your Best Fit End Users who benefit most from your products or services.
- Who influences all the above? Your Most Valuable Influencers who positively affect purchase, funding, and use of your products or services, including partners and your team.
How to maximize revenue and social impact potential.
In figuring out how to maximize both revenue and social impact potential, social entrepreneurs and leaders of nonprofits and social enterprises need to intimately understand the needs and wants of these four customer segments that they are uniquely positioned to meet.
Once you’ve figured this out, challenge yourself to use it as a tool, not a roadblock. This tool can do one or both of these two things: it can (re)chisel away at your product or service, or it can shape your marketing and messaging.
Here’s an illustration of what I mean by that. I’ve worked with umpteen ed-tech companies at this point, and – no offense to IT managers and CTOs of school districts out there – but the tech peeps in a school or district are generally noted as a huge barrier to sales of these ed-tech products.
The reasons are generally pretty much the same; the tech managers don’t want to manage more tech. Makes sense.
And here’s what I always say to these clients:
“Amazing! You just identified your Most Valuable Influencers! Your product is obviously not going to have long term revenue potential or impact if you’re constantly pissing CTOS and IT managers off. So let’s figure out if it’s really going to piss them off and if so let’s think about redesign so it can make their lives easier. Or maybe your product actually does make their lives easier but your messaging is all about student achievement or whole child, and those things are the principal and superintendents’ priorities, not theirs. So let’s create a second set of messaging that focuses on them.”
Now, instead of CTOs and IT managers being a huge door shutter to many prospective sales, they’re banging on their superintendent or principal’ doors saying “you’ve GOT to buy this thing.”
That’s it. That’s a value proposition. There are thousands of templates and methodologies and frameworks out there that help with value propositions, but they all essentially get to the same thing: understand Customer Segment X, make their life easier, and figure out how to articulate that for them in your messaging. And I challenge you if you’re in the position to do so, to start rejiggering your value propositions for the four customer segments above today!
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