Recently I, together with Acumen’s Global Fellows, had the chance to spend the day in a training session with Bob Dorf. Bob, together with Steve Blank (who writes a must-read blog), is the author of The Startup Owner’s Manual: a step-by-step guide to Building a Great Company. Steve, in turn, was an investor in Eric Reiss’ (author of Lean Startup) startup IMVU which I blogged about here.
Bob, Steve and Eric have done incredible work in demystifying and breaking down what it really takes to create a startup – yes drive, vision, tireless devotion, but most importantly it’s about finding customers, talking to those customers, figuring out what they really want and how they’ll really behave with your product. It’s the opposite of sitting in a garage, having a eureka moment, investing time and energy and way too much money in that idea and then figuring out if people want the thing that you’ve built.
I learned a ton from Bob, and am still processing most of it, but there was one piece that really jumped out at me as being hugely important in the nonprofit space, in particular to fundraisers.
One of the stories we tell ourselves is that our work is different and hard(er) because the beneficiary of our work and the customer from whom we are fundraising are rarely one and the same person. It’s this disconnect that can make everything so tricky, because just because you deliver transformative impact for your beneficiary doesn’t mean your fundraising goes through the roof.
Bob made the simple point that there’s nothing particularly new about this. Google, for example, is free to you and me and anyone as customers. We get the best search in the world served up instantly with an ever-improving suite of accompanying products. The service that pays for it all is Google AdWords which has a completely different customer set. In Bob’s language, Google needs two separate business model canvases, one for me (user of Google Search) and one for whoever buys Google AdWords.
“But wait!” you protest. “That’s different! Google AdWords only works because Google Search works. Their growth goes hand-in-hand. Not so in the nonprofit world where I can deliver a world-class product/service and it has no connection to whether or not I can raise another dollar from a funder!”
Perhaps.
But also perhaps not. True, funding decisions are not typically made as objectively or in a data-driven way, whereas Google Adwords purchases surely are.
Then again, when was the last time we really rolled up our sleeves and found a way to monitor how good our nonprofit service delivery really is, how satisfied customers really are. When was the last time we presented clear compelling metrics from the front lines – metrics that proved out hypotheses, metrics that drove to real insights? And when was the last time we took those metrics and showed them to our funders and said, “THIS is what we’re doing!”
Sure, it’s not exactly the same, but it’s also not so different. And it’s nice to know that we’re not so special, that having two (or many) customer sets isn’t novel. And it’s a helpful reminder that building a value proposition and finding customers (aka “funders”) is just as core to everything we do as whatever service delivery work we do.
Until June this year, I worked exclusively with nonprofits, and regarding just the paying customer set, this has been my theory. Recurring donors give because of a Why. One-time donors because because of a What.
Some recurring donors give because, while your overhead might be higher than the next org, your effectiveness per dollar spent on programs and services is also higher. Why do they give? Because you’re more effective. Other recurring donors give because your mission aligns with their values – religious, environment, social, etc. Why do they give? Values.
One-time donors on the other hand will say they give because of a Why, but really, it’s the What that drives them. What is your your overhead? What is your focus?
Someone that asks and thinks about Why is easier to keep long term and to have a conversation with. You can tell them the effectiveness of your programs. Someone that asks and focuses on What only wants the numbers and the surface level information. They don’t care as much about the stories as they do about how good things look initially.