When running any business, you need to know how the business creates value. In a social enterprise, it becomes even more important to understand where the value comes out of the operation because we’re trying to make value beyond the sale. The first part of finding your value is producing a solution that you’re confident will work.
When customers first look at buying from a business or social enterprise, the first thing they will see is how the products and services are presented. If the person selling the solution isn’t confident in what they’re offering, the customers will pick up on it. If the sales person doesn’t seem confident in their products, customers will turn around and you’ll never hear from them again.
Next, you need to know that different people will see value differently. Many social enterprise managers are familiar with the non-profit world where price is the first thing evaluated. Many non-profits have the mindset of needing lower prices or getting elements for free. Businesses often think of services based on the benefits that they will receive such as the amount of money or efficiency they will get out of using a service. Consumers on the other hand most often are looking to buy products and services based on how they will make them feel.
Each of these stereotypes have different driving values, and it is by no means an exhaustive list.
When you’re developing a product or service, you have to think about how your customers will value what you’re producing. If you’re only selling to people who are like you, then it’s easy to see what they will value. If you’re selling to people who are not exactly like you, (and I expect you are,) they you will need to look outside of yourself to see what they will value. How you present the value and benefits of your product and service will depend entirely on the target market that you’re selling to.
This is especially important when you’re also trying to sell the social part of a social enterprise. Some people will care, and others won’t.
If you present the products as doing good for society, then you will lose some customers who would be interested in the solution you’re offering. If the only thing they see about the product is that it has a positive impact on the social mission, then they will miss the possible benefits that they could receive from purchasing your product.
If you only present your products and services with the benefits that the customer will receive, then you might lose some people who are looking for a socially conscious brand. For some customers, the values of a company are enough to push them over the edge from being interested to becoming a customer. Beyond this, introducing your existing customers into the social mission gives you and opportunity to invite them into something bigger than themselves.
All of this to say that different customers will determine the value of your product in different ways.
As you’re evaluating how different people will value what you’re selling, you should adjust the price accordingly. This is especially true as you look at different scales of customers.
An individual will be willing to pay a different amount than a small business, which is different than what a large business will be willing to pay.
Here’s an example. Imagine you’re working at your computer and it flashes the dreaded blue screen. The computer is dead. It doesn’t turn back on anymore. How much would you be willing to pay to recover the data from your now dead computer? If you had family pictures of your vacations over the past 10 years then you might be willing to pay for the data recovery. If the computer was instead the lead accountant’s computer with all of the financial information for a 25 employee business for the past 10 years, then I would imagine the recovery of the data would be worth quite a bit to that business.
While the act of data recovery is the same, the value in these two scenarios is very different.
The value of what you’re offering can also be based on what kind of problem people have.
Another example. Your faucet just broke and there is water pouring onto your kitchen floor. You call a couple plumbers, and the first one charges $100, but they can only come in 2 weeks. The second plumber says it will cost $350, and I’ll be there in half an hour. Each plumber here is providing a different service, and they’re providing different value.
The first one is providing the discount service, for those who value money more than time. The second plumber is providing rush service for people who value functioning faucets and want to prevent water damage to their home. Based on what the customers value, they will be willing to pay a different amount, and businesses should try to find unique elements of value that they can offer to differentiate them from their competition.
In most cases, customers don’t care how much a solution costs for the business to provide. What customers do care about is that they feel like they have paid a fair price for the value they’ve received.
For social enterprises, this issue of where the value comes from is extra difficult. Social enterprises are trying to solve complex problems. Complex problems that don’t have a primary customer to pay for the solution.
The more complex a problem, the more it will cost to solve. This includes paying for the people with expertise to build new solutions. The cost of developing new products and services. The cost of conducting new research and proper evaluation to ensure the social problem is actually being addressed.
With every extra element of complexity, the cost to your social enterprise increases.
How can you take these complex problems that your social enterprise is working on and build them into how you present the value you offer? How can you present the value of the products and services that you sell in order to earn enough to pay for the mission?
Breaking the Time Barrier is an excellent free resource that outlines how individual freelancers can start to see their value outside of selling time. The examples that are used can help see how different organizations and companies can provide different levels of value and adjust their pricing accordingly.
Exercise: take 10 minutes and list the core element of your social enterprise that makes the most value, and/or ties the business practices to the mission. Think about how you can present that value to the people who care about what you’re offering. Think about the many different ways that you can make value through producing various products and services. If this exercise is helpful, please email me your results.
Recorded by: Kristin Hicks at the Story Studio – https://www.icya.ca/storystudio
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About the Author:
Matthew Rempel is a social enterprise development coach, with a focus on marketing. He helps social enterprises focus in on the core values of their business, and present them in clear language for their customers and clients. He has also connected and interviewed many social enterprise leaders in his hometown of Winnipeg, Manitoba. He is also a lifelong nerd, and will gladly use analogies from games and movies to explain complex topics.