Customer focused value proposition
Social Impact Business Modelling Principles: no. 1
There is often a lot of confusion around value propositions in the social sector. This is due to the fact that whilst market principles are similar to those of the for-profit sector (for the differences, read this article), both the product sold and the customer fulfillment process have some specifics that we need to keep in mind.
First, the value exchange is between donor and service provider (the impact organisation)*. The main principle of value propositions is that they are always between two parties only: one provides a promised service to the other who paid for it. The interest of third parties might come into consideration for various reasons; but the decision to enter in the exchange and the responsibility to deliver are always between those two parties. Consequently, value propositions in the social sector need to focus on value provided to the donor.
[*I wish I could say I pointed out this first, but here is an excellent article from 2017]
Second, the product sold is a life improvement opportunity offered to potential beneficiaries. An opportunity is a complex product wrought with moral implications — by some it is actually considered bad taste to call it a product, as we tend to think of it as social duty. The sensitivity around the issue can make conversations between donors and service providers difficult, leading to an unclear value proposition; which, further down the line, can end in mismatched expectations.
Third, customer fulfillment is indirect. The product donors purchase is an opportunity for someone they might never meet, potentially on the other side of the planet. On the emotional level, this is an incredibly humbling and touching experience. On the practical level, it leads to many complexities. With any regular product or service, delivery itself is the lion’s share of fulfillment. In the social sector, if delivery of the opportunity is not visible to the donor, a second layer needs to be added: delivery of proof of delivery. If this is de-prioritised, customer experience suffers.
If we keep the above principles in mind, we can build and deliver solutions that are more valuable to beneficiaries and also make the donor experience more engaging and rewarding.
How to build a strong social value proposition
A value proposition is what an organisation offers to prospective customers in exchange for their time and money. To build a great value proposition, you have to gain clarity on your customers’ needs, wants and pains.
As clarified above, the customer of a social enterprise is the individual or entity who gives them money so that the enterprise can create life improvement opportunities for those who weren’t born into them. The more value they see personally in the opportunities you offer to create, the more they will support you.
Focusing on donors might seem counter-intuitive first, but it is where you have to start. Your donors are considerate, caring and generous people who try to make the best decision on how to invest their resources (1). They want to invest in projects that make a real difference. They will hold you accountable, but they will accept your expert guidance and advice on how it should be done.
This means that the better you use every penny you receive, the greater and more easily visible your impact is, the more supporters you will have. By focusing on creating value to your customers, that is delivering the best product for their money, you are actually focusing 100% on your mission to improve the human condition.
Building the best value social impact product
Re-focus your value proposition and business model to delivering value to your customers. I recommend trying Strategyzer’s Value Proposition Canvas (the page also includes a how-to video). Remember that the customer is your donor/supporter. Your job is to enable them to make the world a better place — with your help and coordination, they can achieve a lot more. Think how and why your solution is the one that makes a crucial change to important issues your customers care about.
Creating added value for customers
Relatability of certain social issues, unpredictability of flow-on effects and difficulties in producing proof of delivery and impact are common challenges when it comes to creating social value propositions. Some organisations might try or tried in the past to get around these challenges by simplifying the value proposition (for example, World Vision’s child sponsorship campaign).
I believe that by using such workarounds, we miss out on important opportunities to create added value for customers. Here are some other options:
Educate donors who seek to make their money go further. Instead of simplifying, engage donors with the complexity of social issues. Most donors just want to give back, share their good fortune — they will be grateful if you treat them as partners, give them options, call their attention to issues they might not have known about before. By understanding their values and story, you can then pick the project best suited for them. Some donors are interested in a specific cause, but might not know that there can be different solutions to the same challenge and some might be more efficient. Build an efficient, high impact business model and demonstrate its superior efficiency — your supporters will appreciate it.
Consider offering direct services if it fits your organisation’s profile. As I mentioned before, it is humbling to see how many people would readily part with their resources to make someone else benefit. However, nothing stops you from expanding your thinking and asking if you could provide direct value to your customers as well. These could be paid services that fit into your capability profile (Arrival Education is a good example). Direct services create a closer relationship with donors, offer them more value whilst also improving skills in your organisation and making your business model more sustainable.
Provide respectful and meaningful ways to engage. Delivering to your customers proof of the opportunities you created and their impact is the bare minimum you have to provide to hold up your end of the value exchange. But if you can make the exchange more meaningful than a financial transaction, why wouldn’t you? Of course, money doesn’t purchase access to the lives of beneficiaries — that could easily end with the disrespect of someone’s human dignity, even if unintentionally. But you can engage supporters with the cause. There is a lot we can do by raising awareness, advocacy or working together to solve problems, which are all respectful and meaningful added value exchanges.
