For employment social enterprises, every activity can seem like a balancing act between business and mission. Marketing and communications, far from an exception to this rule, can be uniquely perplexing. Organizations may feel as if they have phones pressed to both ears, trying to speak to two (or several) people at the same time, in different languages. Many end up focusing on one of those conversations to the detriment of the other, or forcing everything into a single stream of thought. The practical way to deal with this situation—and to really stretch this metaphor— is to hang up and schedule separate calls. This allows you to slow down, listen intently to each audience, and create real and engaging communication, which translates to providing more value, whether the conversation is with buyers, donors, participants, or staff.
Employment social enterprises, and transitional jobs programs in particular, tend to have their center of gravity more firmly situated in the traditional nonprofit realm. Because of this, the sales generating side of the marketing mix can inadvertently end up treated like an unwanted stepchild. More broadly though, research suggests that nonprofits are often lacking in core marketing competencies, which affects both sides of the business/mission equation. Luckily the solution is not as expensive and all-consuming as, say, implementing a new case management system. There are free or inexpensive concrete steps that can be taken to move in the right marketing direction.
But before delving into specific tactics (coming up in the following learning guides), it will be useful to reflect on the bigger picture—the cultural and conceptual factors that lay the foundations for effective or ineffective marketing. Having these in mind as you move forward can help you direct the narrative within your team, and better utilize your marketing budget. This learning guide will examine:
- Reasons marketing tends to be a challenge area for employment social enterprises
- What kind of culture really supports effective marketing and healthy sales
Reasons marketing tends to be a challenge area for employment social enterprises
Although social enterprises, broadly, run the gamut between corporate and philanthropic backgrounds, the clear majority of employment social enterprises with transitional jobs programs stem from nonprofit organizations. Nonprofits typically spend significantly less of their budgets on marketing than for-profit businesses do. Gartner Research and the American Marketing Association estimate that, on average, for-profit businesses spend 10% of their budgets on marketing. Where the corporate world sees a crucial investment, the nonprofit world, and especially funders, see something tangential to getting the job done.
While perceptions may be changing, marketing is still not a cost many funders want to pay for. Nonprofits tend to either group marketing into the 10-15% generally allocated to fundraising, or hide these expenses away in program allocations—the latter contributing to funders’ lack of awareness about how much marketing actually costs (see the nonprofit starvation cycle). Regardless of classification, spend tends to be much lower than in for-profit companies, as the pressure of keeping to standard program allocations and cutting costs in general place marketing expenses as some of the first on the chopping block.
Social enterprises understand that marketing is important but may face the same pressures and negative perceptions that often constrain traditional nonprofit marketing efforts.
Nonprofit employment social enterprises must further stretch these scarce talent and capital resources to cover targeting both customers and donors (transitional jobs programs also need a constant inflow of participants, which is often a third major target). Spending less on marketing may mean that the focus becomes narrower and more reactionary. Marketing functions may end up limited to things like creating promotional materials or website administration because these needs are more visible and are often a cost of doing business. Outward-looking functions such as market analysis may not be recognized as key priorities because their absence is not as tangible as, say, unsightly or nonexistent sales collateral—yet the effect can be much more detrimental to sales growth.
Studies show that while growth in the nonprofit sector has been accompanied by greater support and interest concerning the importance of marketing, they do not use key marketing approaches to a great degree.
Besides low budgets, nonprofits and social enterprises may suffer from negative cultural attitudes toward marketing. Researchers Andreasen and Kotler found three common negative perceptions about marketing from nonprofit staff:
- “Waste of money”
- “Intrusiveness” – Don’t want to pry into people’s lives
- “Manipulation” – Don’t want to mislead
These attitudes may be historically rooted in societal divisions that linked the nonprofit industry with what were perceived as higher-minded pursuits than the traditional business market.
These two key issues, budget and internal cultural attitudes, tend to coalesce to foster a more inward-looking perspective that is not as effective at understanding how to serve customers.
Recognizing this sort of mindset is a great first step towards remedying it. For earned revenue-generating enterprises dealing with the uniquely competitive nature of markets for goods and services, developing an externally-oriented culture carries added existential urgency. Developing a sound marketing strategy is not a nice-to-have, but essential for survival and growth—the people you serve, and have yet to serve, depend on it.
What kind of culture really supports effective marketing and healthy sales?
A great paradigm to help clarify what an externally-oriented approach looks like is the framework known as market orientation. While market orientation may sound self-explanatory, it will be helpful to examine the idea in a bit of detail. First, we want to distinguish ‘market orientation’ as a kind of organizational culture, as opposed to a set of tactics or techniques used by marketing teams. It is an organization-wide mindset, when properly adopted.
Market orientation is the organization culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers, and, thus, continuous superior performance for the business
Narver & Slater “The effect of a market orientation on business profitability”
Market orientation consists of three behavioral components:
Having a strong customer orientation means really understanding your target buyers so that you’re able to create superior value for them on an ongoing basis.
- Value equals the total perceived benefits minus the cost of acquisition.
- Superior value means greater value than one’s competitors.
Understanding your target customers involves reaching out to them through interviews, surveys, or other means, to find out a number of factors that shape their experience and purchasing criteria. You want to understand who these people are, in a variety of ways. What factors do they care most about when buying a product or service like yours? What problems are they having? These insights allow you to improve both what you provide and how you market it. It is an ongoing process; customers change, your enterprise changes, and new problems and opportunities will probably never stop arising.
In addition to helping you understand how to improve your product or service, developing a customer oriented culture is a step towards making customers feel that you are committed to them. Consistently asking for feedback shows that you care about your customer’s experience. Additionally, things like having a customer-friendly/customer-relevant website, and a policy of overcompensating for mistakes, are all manifestations of putting customers first. Displaying customer commitment develops trust and loyalty, which are essential for sustained growth beyond individual ad campaigns.
Understanding the competition is just as important as understanding your customers. More specifically: understanding the strengths, weaknesses, capabilities, and strategies of key current and potential competitors, such that you can understand how to provide more value than those competitors on an ongoing basis.
Competitors are invaluable resources for helping you improve your offerings. Their strengths can show you where to improve. Their weaknesses, or lack of certain offerings, can show you where you might stand out and provide something uniquely valuable. Their missteps can help you avoid making the same errors.
Interfunctional coordination is the essential cultural component that allows an organization to actually use its knowledge of a market. It involves coordinating all departments, not just the marketing department, in using the knowledge gained from customer and competitor analysis– towards the goal of increasing value for the customer.
Creating value for buyers is much more than a “marketing function;” rather, a seller’s creation of value for buyers is analogous to a symphony orchestra in which the contribution of each subgroup is tailored and integrated by a conductor—with a synergistic effect. (Narver, J.C and Slater 1990)
While a marketing team initiate a survey, or conduct market research, management needs to be committed and able to act upon the insights gained. That means being willing to make changes to any aspect of the business. Acting on market research could mean changing staff responsibilities, investing in website improvements, changing a design, dropping a product line, or reimagining the entire company brand. This can only happen if an organization is committed to using insight from the market to improve, and making sure customer insights are actually making their way to the right decision makers. When insights come into the organization, where do they go from there? Who makes sure they are acted upon? What are the lines of authority and is everyone committed to changing when change is needed?
Although various factors may negatively impact how many social enterprises initially approach marketing, fostering a market-oriented culture does not need to be costly.
Becoming attuned to your customers and competitors is partly about shifting mindsets. That process may require time in the form of meetings, but is essentially free. There may be valuable, actionable insights to be had simply by initiating a dialogue about market orientation. There may be customers in your personal network (or coming into your store if you have one) that you haven’t asked for constructive criticism. There may be successful competitors right down the street that you haven’t earnestly sought to learn from.
To complement this learning guide, we have developed a Market Orientation Worksheet that is meant to help you think through what you currently know about your customers and competitors, so you can reflect on where more information may be needed.
In addition to using this worksheet, a great next step is to work out a plan to have more communication with your customers. Feedback from customers not only helps you understand their needs, but can also bring you insights about competitors. The next article in this series will go into detail on how to conduct customer surveys and interviews, two generally free options for gaining valuable feedback.