Business professionals often speak a language foreign to many nonprofit practitioners. To be able to connect with them so they easily understand you, you need to become familiar with common business jargon. You want each side to understand the messages you send to one another.
You also want to be familiar with common business measures of performance so you know what is important to them. Knowing what performance measures they value will help you craft your offer to them. The common business term for this is Key Performance Indicators (KPI).
A company’s brand, roughly put, is their reputation in the community. That is, how the public perceives the company’s products or services live up to their promises. Having a good brand means there is highly unified, positive, public opinion of the firm’s products or services. Brand awareness measures how well known the brand is across a given target population. In for-profit accounting, a brand can have a monetary value attached to it. This value can show up in the company’s financials as an asset, and thus affect the company’s worth.
Your nonprofit has a brand too. How well do you deliver services? How effective are you in meeting your clients’ needs? How satisfied are your clients with your services? What level of quality do your clients expect? How do you know? What proof do you have? How does a business executive know that your perceptions of who you are to the community align with what the community thinks? Do you validate your perceptions through any type of surveys? Results from community and client surveys combined with organization growth statistics can all be used as objective evidence of your nonprofit’s brand value.
Market Demand and Penetration
Market demand measures how much demand exists for a particular company product within a defined target market. Market penetration measures the percentage of a specific target market that is consuming a particular company product. For-profit companies have professional marketers help them calculate total market demand and market penetration. All you need to know is that your nonprofit can also speak to market demand and penetration, even without the professional marketer.
Think of it in terms of need. How much need exists for your nonprofit’s services? Calculate rough numbers based on the needs assessments in your grant proposals. You can base your market demand calculations on the percentage of the population with the defined need. If you want to find out about needs in the U.S. population, look at the census data. If you have U.S. or state data and you need local data, multiply the national or state percentage by the population of your community. Yes, it’s a lot of work. And, yes, it’s a lot of math and you may need help with your calculations. No, you’re not going to be able to figure out a precise market demand number. But you will have an objective measure of rough market demand, and something more concrete to say other than, “we can’t keep up with demand for our services.” You want to give assurance that the issue truly is community need, as opposed to bad management or inefficiencies in program delivery.
Defining market demand and penetration can help with more than just fundraising efforts. It can also inform your agency’s growth and strategic plans. So, make sure to share your results with agency leadership.
Value Proposition and Unique Marketing Position
A value proposition defines the benefits a company brings to its customers. So that the product or services meets the needs and preferences of the ideal client, value propositions tend to be very focused for a narrowly defined target market. Remember, businesses know that the smaller and more defined a target audience is, the greater the chance of success.
Because companies compete against other companies offering similar products, they need to find a way to differentiate themselves, or stand out from the competition. The value proposition must be unique in some manner. A unique marketing position defines the benefits that the company singularly bring to the market. A unique marketing position statement is developed by looking at the value proposition in light of company’s perception of the company, the competitors’ perceptions of the company, and the customer’s perceptions of the company.
You, too, can develop a unique marketing position statement for your nonprofit. Capturing your value proposition and defining your unique marketing position give you a way to differentiate from other nonprofit agencies like yours. These statements can then be used as a basis for your messaging. And consistent messaging leads to strong branding. Which increases your perceived value. Which makes you a desirable partner to well-branded for-profit businesses. Which, if you play your cards right, leads to funding. You will find unique marketing position statements not only helpful in garnering business donations, but also in grant writing, annual appeals, and capital campaigns.
Customer Journey and Experience
You may relate to the customer journey and experience as the donor journey and experience. Your program staff may relate to it as the client journey or experience. A customer journey, simply defined, is the culmination of steps it takes to find a company and make the decision to buy. A donor journey is the culmination of steps a donor makes to find you and make the decision to give. A client journey is the culmination of steps a client makes to find your organization and make the decision to enroll in services. The customer, donor, and client journeys define the pain points a customer, donor, or client, experiences, before making their decisions to proceed to the next step. Outlining the customer journey is helpful to decide when and how to reach out to your target market.
The customer experience is the series of interactions customers have with a company once they decide to buy or buy again. The donor experience is the series of interactions donors have with your agency once they decide to give or give again. Likewise, the client journey is the series of interactions clients have with your organization once the decide to enroll. You generally analyze the customer experience in terms of customer satisfaction and ease of process. High customer satisfaction leads to repeat sales, greater market penetration, and a higher brand value. Donor satisfaction and ease of use affects the amount of your donations. High client satisfaction and ease of enrollment speaks to good program marketing and rising demand for services. As you can see, outlining the donor and client journeys and experiences not only helps you speak business jargon, they can also help your nonprofit in obtaining more donations and reaching out to your own target population.
One of the big differences between a for-profit and nonprofit is that for-profit businesses are generally concerned with one external target market in product delivery – the customer, whereas nonprofits have two external target audiences regarding program delivery – donors and clients.
Common Business Performance Measures
Knowing common marketing and financial measures of performance will help you better understand the business perspective, communicate your nonprofit’s value to the for-profit sector, measure your own nonprofit’s effectiveness, and strengthen your agency’s fundraising and outreach endeavors. You can then show a company through objective data that you are moving forward as an organization.
Measures of Market Performance
Specific market performance statistics that a business executive will want to understand when determining whether or not and how much to invest in your nonprofit (think of their contribution as an investment in you) are: number of event invitees and attendees; number of social media likes, followers, and number of engagements; number of website visitors; number of unique website visitors; number of people on your mail and email lists; and email open and click through rates. If you are going to post flyers, let them know how many you will print, where you’ll post, and how often you will replenish.
In addition to number of contacts, they will look at frequency of contact. Don’t only tell them how large your email list is, tell them how often you send out campaigns to specific audiences. Don’t only tell them how many website visitors you get, tell them how often you update content. Do some of the math for them. Let them know how many impressions their dollar will get. Make it easy for them to see the return on their investment is high.
They will also want to know the annual growth rates of all these measures. They want to know their investment is safe and will grow over time. They want to know their relationship with you is worth the resources they put into it. If you have negative rates of growth, that is your performance has declined over time, then let them know what issues you have identified that resulted in the decline and what actions you have put in place to turn them around.
Measures of Financial Performance
Before partnering with you, business executives are going to want to see your nonprofit’s financials. They want to assess financial stability. They may ask for your agency’s audit or 990. They may ask for a cash flow statements. And they may want to see several years’ worth. Your agency’s financial officer should be able to provide you with any requested financial documents.
The business executives will be looking at not only net income, but also assets, net assets, receivables, liabilities, liquidity, and debt ratios. All these values can either be found on or calculated from the numbers on your financial statements. To get a sense of organizational financial trends, they may ask for several years’ worth of data. And they will look at the footnotes in the audit. They want to see objective proof that you are as stable as you say you are.
Although knowing the ins and outs of financial statements is out of the realm of fundraising (even we don’t know how to calculate all those ratios), it is imperative that you understand how to read and interpret a basic audit and 990 and that you understand your nonprofit’s general financial position. Understanding your agency’s financials gives you a big leg up when it comes time to financial negotiations. And you will stand out from your competition. You will make a positive impression, which engenders confidence and trust, a key factor in sealing the deal. Your agency’s auditor can help you interpret and understand your nonprofit’s financials.
Wrapping It Up
Understanding common business principles helps you and business executive reach a mutual understanding. Knowing your brand, defining market demand, developing a unique marketing position statement, outlining the customer journey, and evaluating the customer experience also helps you improve your own nonprofit’s performance. To get the most money, know their priorities and what is important to them. Know how they evaluate their own performance. Make a powerful impression by speaking their language.