What for-profit businesses can learn from nonprofits

by Roger Sametz with Mark Volpe for Forbes.com

Having learned best practices from the corporate world, nonprofits have much to teach.

For the last few decades, the prevailing wisdom has been that nonprofits should learn from for-profit enterprises to “get their act together” and become “more businesslike.” And nonprofits have learned: many have embraced best practices in branding, marketing, service delivery, money management, and leadership. Successful performing arts organizations have box offices with excellent customer service, easy ticket exchange policies, short phone hold times, and so forth. Their development offices are run like businesses: staff know follow-up is key, and operational excellence is as important, if not more so, than a list of contacts.

The need to connect to constituents at a deeper level to keep diverse income streams healthy—from sales, sponsorships, partnerships, and philanthropy—has required nonprofits to develop approaches and skills that for-profits can learn from

While nonprofits, by definition, aren’t driven by the need to generate quarterly or yearly surpluses, or to keep stock prices up, they do have to pay the bills and, ideally, bank money, if they’re to have a vibrant future. And they must keep diverse revenue streams healthy: earned income from sales of products and services; contributed income from individuals, foundations, government, and corporations; and funds generated through sponsorships and partnerships. To be successful in each (and all) of these endeavors—has required nonprofit to develop approaches and skills that for-profits can learn from to improve their competitive position and long- term health.

Connect on a deeper level

A nonprofit’s mission and vision give people a reason to participate and a reason to believe––that’s deeper, and longer-lived than any specific offering. The value proposition goes beyond fulfilling an operational need—to fulfilling an emotional one. And that connection, when nurtured and sustained, engenders loyalty, creates advocates and ambassadors, and, when needed, provides a margin for forgiveness. Customers / participants / board / donors feel they are part of a shared enterprise. For a business, forging a deeper connection can add value to offerings and enterprise, provide differentiation, and move offerings further away from being evaluated as commodities. Price is less of an issue if you believe in the company and what it’s selling. Customers can connect to an organization’s mission, want to be aligned with what its brand “means,” or seek to be included in a promulgated culture. Apple, Starbucks, Volvo, and Ikea connect in these ways. Tom’s of Maine, forty years ago, brought out toothpaste that people could believe in; user-advocates became a huge un-paid sales force. Internally, connecting deeper aids in staff recruitment and retention and improves staff performance.

A non-profit’s mission and vision give people a reason to participate and a reason to believe—that’s deeper, and longer-lived than any specific offering.

Focus on relationships, not transactions

Looking across Boston Symphony Orchestra, Boston Pops, and Tanglewood, BSO Inc. sells over 600,000 tickets annually. But because the organization is focused on building relationships, there are many fewer transactions. The costs of marketing and sales stay low and the BSO continues to move people closer to the organization: from first-time, single ticket buyer to regular attendee, to annual fund contributor, to major donor. Even modest donors to the annual fund are encouraged to see themselves as investors and partners. (The most significant donors routinely say that the BSO “feels like home.”) For businesses, a focus on relationships encourages repeat customers, lowers the cost of doing business, increases margins, facilitates cross-selling, and, again, is instrumental in building a corps of ambassador-advocates.

Know your customers and prospects

For nonprofits like the BSO, this has never been a choice. Because people don’t have to buy a ticket or subscription—or become a donor or sponsor—it’s been imperative that the BSO get to know its prospects and customers, understand the rational and emotional drivers that inform their decisions, and engage them in an ongoing dialogue. Quantitative and qualitative research is important, but direct interaction, listening, and customized communications, are key. A focus on relationships encourages repeat customers, lowers the cost of doing business, increases margins, facilitates cross-selling, and is instrumental in building a corps of ambassador-advocates.

Communicate with, not at, your customers

Knowing your constituents, allows nonprofits (and for-profits) to craft different “ways in” to the organization. At the BSO, some people care deeply about performances of music they’ve loved for years; others care about advancing new music; many care about keeping up Symphony Hall and the Tanglewood campus; some are passionate about educating kids; for some the “way in” is civic pride. They’re all right. With this knowledge, an organization can develop targeted, values-based messages and themes to move the conversation to the intersection of what the organization does well and wants to advance—and what constituents care about and are willing to support. Further, BSO communications acknowledge the “distance” someone is from the organization and engage them appropriately. A long-time subscriber / donor needs a different conversation than does a first-time attendee—or a prospect who might find classical music and the experience of attending a concert intimidating. For all, there are common over-arching messages, but for each there are additional messages to progress a dialogue and move customers and prospects closer. Benefit-focused writing, connecting each “what” to a “so what” serves both non- and for-profits well.

Invest in the master brand

Nonprofits can’t afford to build a raft of offerings, initiatives, or names (especially non-self-explanatory ones) into meaningful, recognizable brands; they must sell from the top down (organization ––> offering). Investing at the highest brand level leverages limited communication resources and ensures that buzz and equity flow “up” to build the trust and loyalty that enables an organization to take risks. For businesses, selling from the top down lowers the cost of bringing out (or discontinuing) offerings, fosters cross-selling, and builds connections that transcend a particular offering. The conversation becomes: “I believe in you; what solution do you have for me?” Unless you can marshal the resources to really build a non-self-explanatory name into a brand (Nike, Vonage, Starbucks), invest at the top and link to self-descriptive offerings. For both for- and nonprofits, investing in the master brand also helps to build the meaning and “brand halo” that attract partners, sponsors, and investors.

Integration of print, digital, environmental, and personal communications ensures that every communication dollar reinforces every other one to build brand recognition, meaning, trust, and participation—quickly.

Run a tight—and motivated—ship The nonprofit segment is often efficient because it is forced to do more with fewer resources. United by a common cause, nonprofits have staff who are engaged and motivated beyond the paycheck exchanged—and devoted boards and volunteers who raise capital, take on tasks, and serve as ambassadors. Nonprofits have to make every communication initiative count; for nonprofits (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 to build brand recognition, meaning, trust, and participation quickly––and sustain it over the long term. At the BSO, focused approaches to language, imagery, color, and design inform communications that both build continuity and look fresh, year-to-year, when they land on a kitchen table. And for both nonprofits and businesses, leveraging un-paid communication channels, the pride felt by ambassador-advocates, and media coverage—extend the reach of every communication dollar.

Looking forward, one can foresee a convergence, where successful nonprofit and for-profit organizations will be run very similarly.

Nonprofits have learned a lot of best practices from the corporate world; now they have much to teach.

Mark Volpe is the Eunice and Julian Cohen Managing Director of the Boston Symphony Orchestra