How can a company that targets underserved communities be profitable? originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Vielka Hoy, Founder and CEO at Vielka Hoy Consulting & Bridge To College, on Quora:
My aunt arrived in this country during the revolution in Nicaragua. After a few weeks, she felt that she discovered the greatness of the United States: “Everyone can afford Corn Flakes!” She could have been a brand ambassador for Kellogg’s. She did have a point: as broke or as disengaged as anyone may seem, King Capitalism reigns supreme.
I get this question a lot from potential investors or other people interested in working with underserved communities. The larger question is, how does one make a business that targets underserved people a profitable one? There are a number of assumptions there that makes the question a bit misdirected, so let’s start there.
My definition of “underserved” is fairly broad. My businesses are situated in a fairly large space of college access. Having worked in education for nearly twenty years, I have a pretty clear vantage point in defining who does and does not have access. For my businesses, this means I target students of color, students from public high schools, girls interested in STEM, first generation students, and low-income students. There is a lot of variety in there and structuring campaigns around all that variety can be difficult, but the trick has been to understand what they all have in common: They have assumed that they already have whatever it is I am trying to introduce them to. I think about this as the premise that something like Birchbox operates from – consider how many people out there could benefit from what you are selling, if only they knew the thing existed.
My family is from Central America and my parents still live there. There were a lot of things that my family taught us, and many of those things are unique to that immigrant experience. But one of the things they did not know about is wealth. My cousin who is a doctor here in the Bay Area once mentioned that he learned about retirement and certain savings accounts by listening to other doctors’ conversations in the break room. I recently hired a wealth advisor; I didn’t know that person existed until a month ago. The point is, there are a lot of things that support people in getting to where we need to go, but the people who most need to know, have no clue these supports exist. So the first step in marketing to them is to make that first introduction, with the understanding that they would not know you or what you do.
The second thing is: just because someone knows you exist, doesn’t mean they think you are necessary. This reminds me of when I was pregnant and everyone came up with a ton of things I supposedly needed. I couldn’t survive without all this stuff. My kid would never survive without any of it. And I would never sleep again if I didn’t just get this other thing. I’ll tell you what I did get: a library card and a book that told me all I needed to know about getting my son to sleep. It included directions for swaddling so I think I bought two swaddling blankets. And that was it. The boy would sleep at least twelve hours a night.
The point I am making is that just like any other pitch, you have let customers know why this thing is necessary. In education, I would add that you also have to convince people that whatever it is, isn’t part of the problem and actually helps. At my firm, we also use a process of continuous enrollment: with every interaction, we remind clients of the necessity of our services.
The last thing to consider is what it means to be underserved, or specifically low-income. In the Bay Area, specifically San Francisco and Marin, public school teachers are considered low-income. It’s a real shame. But they certainly would not be considered poor and that is an important distinction.
But there are people who simply cannot afford what we are providing, and that is very real. We use a formula to determine the number of pro bono clients we can take each year and have a goal to increase that number each year. We also continually scale our services so that we can continue to provide the same level of service, to more people, without it costing us more (and hopefully costing us less). So the trick there isn’t in marketing to underserved people; it is in marketing to people with the means to buy the product or service knowing that we are making it as cost-effective as we can for them, so that it can be free for someone else. I think about a company like Toms in this case. There is something about mission-driven companies that can be difficult, especially in this time period: You feel like you don’t want to alienate potential customers by taking too strong of a position on issues. But I’ve found that knowing my “why” is the largest reason why clients come to us. They know why I’m passionate and why I will do all that I can for them and their students. Besides, if taking a stand seems like the wrong thing to do, take a look at the NFL, NBA, Amazon, Facebook, Tesla and the large string of enterprises, large and small, that have taken a stand (or knee) recently. It feels like if you are not, in any direction, you are being more fake than what the president claims the news to be. And honesty is the best sales tool there is.
One of my college roommates always wore these J. Crew sweater sets and talked about her shopping trips to Canada. She seemed very posh and put together, and seemed to turn her nose up at me and all the scholarships I depended on so that I could attend NYU. So imagine my surprise when she came running into our suite shouting that Corn Flakes were on sale at the Kmart on Astor Place. I didn’t have much time to dwell on that though; I had to give the homies a heads up. And we all convened in the cereal aisle to stock up on those little golden flakes… and a lot of Parmalat. Wealthy, underserved, unaware… King Capitalism still reigned supreme.
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