Many Not-For-Profit groups ruin their business models when they focus on selling to the wrong person. Income drops, fingers are pointed, panic ensues.
This generally occurs when their attention falls on the beneficiary of their work; i.e. the person or cause that is better off because of the NFP’s efforts. That sounds lovely, but it isn’t sustainable.
Successful business models are created when the entrepreneur or executive team is hyper-focused on serving and delighting a customer. Keep solving problems for your customers and they’ll stay with you, which in turn ensures your financial sustainability. The problem is, your customer and your beneficiary may not be the same person…
There are three people to focus on: The Customer, The End User and The Beneficiary.
(If you’re a Not-For-Profit, swap the word Customer for Donor, it’s pretty much the same thing)
The Customer: This is the person with influence over the purchase decision, either because they’re paying for it, or because they can persuade whoever is paying. They make an active choice to support you, so we need to delight them.
The End User: The person who ends up experiencing your product or service.
The Beneficiary: The person whose life improves because of your product or service.
Sometimes this is actually the same person in each category (e.g. I am hungry, I buy lunch, I eat it, I feel better)
However, it can sometimes be two or three separate people.
They’re all important, but the customer is number one.
Let’s use the example of education.
· For a primary school, the Customer (the person who pays you) is the parent, and the state government.
The End User is the five-year-old kid, who has to wear the uniform and go to class.
The Beneficiaries are numerous, we’ve agreed that society is better because every child gets a primary education.
· For high school, there’s a small shift. There are now three Customers to appease; the parents, the government, and the student. Although the student isn’t paying, they get an important say in where they go, and parents know that it’s worth picking a school that makes the student happy. Therefore, schools now sell themselves to prospective students.
The End User is still the student.
The Beneficiaries are still numerous.
· For University and TAFE, the shift is complete. There is one major Customer, and that’s the student. They’re paying, they’re attending, and they get the benefits. Parents can still have some influence, and the government still has to be happy with the academic institution, but now 90% of the sales effort is aimed at the student.
This may not feel like a fun topic. Working with your donor base is hard.
They also fuel all of your good work, and empower you to serve your beneficiaries.
That’s why it is so critical that your future business models be designed around how you can offer something to your customer (or a new customer). Something that delights them, something that relieves a pain point. If you do this well, people will happily help fund your work, and will keep coming back.
So who’s in each category for your business?
Which Customers require more of your attention?