I made a big mistake

I made a crucial mistake when I started my first social enterprise. I was so in love with the social impact it was created to bring about that I failed to realise that most buyers would not view my cause as their main reason to make a purchase.

We had the most beautiful baby products, and 100% of profits were to go towards charities caring for sick children. We knew the price was higher than our competitors’, but no-one else was giving away all of their profits. To cut a long story short, we didn’t sell enough to cover our costs and had to close the business.

I never understood why the start-up didn’t take off until a respected marketing director explained to me the two steps of getting a person to buy a product (no doubt he was keeping it simple for me). Step one he called “propensity to consider,” and this is the example he gave. Feeling hungry, you walk into a store where you are met with a choice of at least 30 different chocolate bars: Mars, Snickers, Bounty, etc. When confronted by a large range of products your brain automatically filters the options down so that you end up deciding between a select few. You literally don’t see the other products when you stare at the sweets rack. You make what you feel is a rational choice between a limited number of options that your brain has shortlisted for whatever reason. It’s often as simple as being the only black jellybean in the bag. It’s different, so people want it.

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What does this automated filtering of options mean for your impact business?

Obviously, you should use your social mission to be different, to stand out from the crowd. A strong marketing campaign should emphasise all the mouth-watering qualities of your candy bar (as your competitors’ campaigns do) while highlighting the additional benefit of contributing directly to your social goal. This impact-driven mission will help survive the filtering process.

But…

Most people don’t care enough about your positive impact to make it the deciding factor!

Congratulations, you have made it through the filtering process. When I walk up to my local shop looking for a candy bar my brain now registers Mars, Snickers, and your warm-fuzzy Worthy Bars. But remember, the buying process consists of two steps. After step one, “propensity to consider” you have to get me past step two, “propensity to purchase”. Let me explain.

Imagine that the Worthy Bars are only 1/2 the size of the other bars and you are really hungry. Would you buy the Worthy Bar? Well, maybe because you a switched-on social entrepreneur and you believe in what the company stands, but most people will decide to go for the larger bar because it meets an immediate and inherent need. The consequences of the social action of saving the world by buying the Worthy bar are simply too far away to compete with a mainstream customer’s craving for chocolate and lots of it.

Yes, a growing number of people care about positively impacting the world and using your social goals as a key differentiator can really work to your advantage, but worthy social goals alone will not win you enough customers to maximise your impact.

Your offering must stack up

In my experience if you want to achieve scale your social mission doesn’t matter in step two, you must compete head on. Not enough people bought our products because we had a higher price. Everyone loved what we stood for and praised the quality and design of the products, but when push came to shove, they still bought from our competitors.

Take a company like Munch Bowl (https://www.munchbowls.co.za/). They produce edible bowls that are an eco-friendly green alternative to plastic food containers. Would I buy this if I was running a food outlet and replace my plastic containers? Probably not, unless you can counter my concerns: does it break easily or go mouldy, can I buy the product at a competitive price, and can I buy it from the wholesaler I normally go to? You will get my attention with the value proposition (step one) but there is a lot of work to do before I will buy the product (step two).

Some customers will pay its higher price tag because they strongly support sustainability and they can use the product as part of their own value proposition. Sustainable retailer Tap and Cork, which stocks the munch bowls, is such a company. However, if Munch Bowl wants to be in the game of maximising impact, the trick is to get companies like McDonald’s interested.

If you level the playing field your social goal will give you a much sharper edge

Your social or environmental mission can be the deciding factor for the mainstream, if you make the consumer’s decision easier. If I had found ways of lowering our price to match that of our competitors, I am convinced that the baby product start-up would now be running as a thriving social enterprise.

If I go to my local supermarket and the munch bowls are stacked next to the plastic version with a very similar price I will probably buy them. If Mcdonalds sees the munch bowls as a superior product compared to the Styrofoam and plastics they are using, they will consider switching. It may sound like a ridiculous proposition, but McDonald’s has committed to making its packaging 100% recyclable by 2025, so they are looking for alternatives… Now!

Consider the impact business Humanitix. They offer a superior service to their competitor Eventbrite, and 100% of their profit goes to closing the education gap. That gives me a powerful reason to use their platform to ticket my next event.

Having a social aim will never substitute for the weaker points in your value proposition, unless you want to stay a niche player. If you want to maximise your impact you need to be as good as your competitors and use your social goal as your secret weapon to get people’s attention and make them switch. I have since applied this valuable lesson to other organisations with great success.