Nonprofits, by definition, aren’t driven by the need to generate quarterly or yearly surpluses like for-profits, or to keep stock prices up, but they do have to pay the bills and, ideally, bank money if they’re to have a vibrant future.
Many nonprofits must keep diverse revenue streams healthy: earned income from sales of products and services; contributed income from individual donors, foundations, the government, and corporations; and funds generated through sponsorships and partnerships.
To be successful in each (and all) of those endeavors, nonprofits have had to develop approaches and skills that for-profits can learn from to improve their competitive position, their customer relations, and their long-term health and value.
1. Connect on a deeper level
A nonprofit’s mission and vision give people a reason to engage with an organization and to believe in it. Successful nonprofit value propositions go beyond fulfilling daily tactical needs; they fulfill emotional ones. That connection, when nurtured and sustained, engenders loyalty, creates advocates and ambassadors, and, when needed, provides some margin for forgiveness if things go awry. Customers, participants, board members, donors, sponsors feel they are part of a shared enterprise.
For a business, forging this sort of deeper connection can add value both to offerings and to the enterprise, provide differentiation, and move offerings further away from being evaluated as a commodity. Price is less of an issue if a customer or prospect believes in an organization’s mission, identifies with what its brand “means,” or feels included in a promulgated culture. Big companies like Apple and Starbucks connect in these ways; loyal customers feel that these brands enhance, or at least align, with their “personal brands.”
Forty years ago, Tom’s of Maine brought out toothpaste that people could believe in, and their user-advocates became a huge unpaid sales force. More current, the New York Times, an organization that was historically fueled by single-paper sales, subscriptions, and advertising revenue, now earns money from events that carry its imprimatur—and, importantly, from contributions from those who believe the value of the Times (particularly in these times) should be made available to those who would otherwise not have access.
2. Focus on relationships, not transactions
Nonprofit organizations with something to sell (museums and performing arts organizations, for example) know that selling single tickets will never generate the earned income they need. Subscriptions and memberships can deliver increased revenue; however, for those vehicles to be successful, people have to want to have a relationship with an organization. Subscription buyers may focus on programs they want to attend, but they also sign up for events they’re less knowledgeable about because they trust the organization to provide a worthwhile experience.
And though membership status generally confers some benefits (a shorter line, preferred parking, discounts), it’s clear to all that the dollar outlay for membership is higher than what the benefits add up to: Becoming a member is really a decision to form a relationship.
For businesses, a focus on relationships encourages repeat customers, lowers the cost of doing business, increases margins, and facilitates cross-selling; moreover, again, it is instrumental in building a corps of ambassador-advocates. I may not have an emotional relationship with Amazon, but as an Amazon Prime member I’m more likely to go first to Amazon when I need, well, anything. In the same way, I subscribe to a select number of video streaming services not because I have my mind set on watching this or that particular program, but because I see them as trusted curators and resources (as opposed to my cable provider).
3. Know your customers and prospects
For nonprofits, getting to know their current and prospective constituents has never been an elective. Because no one has to go to the ballet, visit nature sanctuaries, or even care about hunger in neighborhoods one may never visit. It’s imperative, therefore, that nonprofits get to know their current and prospective clients, customers, and donors––and understand the rational and emotional drivers that connect, or could connect, these people to the organization.
Through quantitative and qualitative research, nonprofits can identify the different “ways in” to their organization. For example, customers and donors to a symphony orchestra may care about preserving and presenting the time-honored orchestral cannon; a smaller segment might be interested in advancing new music; others are enthusiastic about educational initiatives for kids; some take pride in the performance space; and still others value the social opportunities the organization affords. All are valid ways in.
With that type of knowledge, an organization––for-profit or nonprofit––can develop targeted, values-based messages and themes to move the conversation to the intersection of what the organization does well or wants to advance, and what constituents will engage in. They can meet people where those peopel are.
4. Understand the ‘distance’ constituents are from you… so you can move them closer
Nonprofits (again, because they have to) learn the “distance” constituents are from the “center”––so that they can move them further in. To return to our orchestra example: the organization’s success depends, in part, on moving a single ticket buyer to become a subscriber, then annual fund donor, then major donor.
A for-profit’s website becomes a good place to implement “know where they are and move them closer” thinking, through the creation of appropriate paths for different visitors. Someone coming to a site for the first time needs a welcoming handshake and, often, general information before they get into specific products. The “why” and the “who” behind a potential purchase is as important as the “what” you’re offering. On the other hand, a repeat customer just needs product specifications and an order page––ideally already populated with a current profile.
5. Invest in the master brand
Nonprofits can’t build a diverse raft of offerings, initiatives, or names (especially non-self-explanatory ones) into meaningful, recognizable brands: They haven’t the time, money, or opportunities. Instead, they must sell from the top down (master brand > offering). Investing at the highest brand level ensures that buzz and equity of successful initiatives flow “up” to the master brand to build trust and loyalty.
For businesses, selling from the master brand on down lowers the cost of introducing offerings, fosters cross-selling, and builds connections that transcend a particular product. German automakers have always gotten this concept: the Audi A3, A4, A5, A6, A7, and A8 are different cars, but they are all Audis—and thus infused with, and so reinforce, the overarching value of the Audi brand. Model numbers easily map to features, benefits, and expectations. On the other hand, the relative positions (and value propositions) of Ford’s non-intuitively branded car offerings––Fiesta, Focus, Fusion, C-Max, Taurus, Mustang––are more complex to parse and connect.
6. Run a tight—and motivated—ship
Nonprofits are often efficient because they are forced to do more with fewer resources. United by a common cause, nonprofits have staff who are engaged and motivated beyond the paycheck they receive—and their volunteer boards raise capital, take on tasks, and serve as ambassadors.
Nonprofits also have to stretch every communication dollar. For them (and for businesses), the integration of print, digital, environmental, and social communications is the only way to ensure that every communication dollar reinforces every other one. Shared typographic and color palettes, along with approaches to design and imagery, build brand recognition, meaning, trust, and participation.
Nonprofits have learned a lot of best-practices from the corporate world: They have become more businesslike. And now, in today’s noisy, complex brand environment, they have much to teach. Smart for-profits would do well to absorb as many lessons as possible.
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