First written as a guest blog for Browning York - internal communications specialists for charities and higher education - https://www.browningyork.com/
As the funding environment for charities continues to get more competitive, the sector is increasingly looking to diversify its sources of income in order to be more sustainable. This includes trading, selling products and services, becoming a social enterprise.
It’s not something that sits comfortably with many in the sector – after all making ‘sales’ feels like a big departure from the charitable culture. But, for an organisation to generate income in this way, it is important to have staff and volunteers on board.
Common concerns and questions
So how can you communicate this change with your staff and volunteers so that they are engaged, and able to talk to others about what you are doing? What can you say to help adapt the culture internally so that this new stream of income has the best chance of success?
It helps to pre-empt concerns of people faced with change – and so here are some of the most common questions that I hear from staff and volunteers in organisations introducing sales.
1. We are a charity – charities should give things away for free.
Charities are expected to provide free services – it’s even surprising to many that there are people who are paid to work for charities.
But, in order to be sustainable, and continue to provide services for their beneficiaries, charities need a diverse range of income. Relying solely on grants from government, trusts and foundations is high risk – and rarely leaves any money for development or those all-important overheads.
2. But they won’t buy it when they’ve had it for free!
If you’ve offered a service for free and are introducing a charge, you will almost certainly lose some people, but you will also bring in new customers (who didn’t know it was free in the first place).
You’ll probably find that those who do pay are those who really value your services, even more so now they’re paying for it – and so you’ll end up with a committed group of customers. Think about how much more attention you give to communications from a subscription you’ve paid for, than a free one.
Those you lose will be from two main camps – those who really can’t afford it (and you might work with them to see what you can do to help), and those who didn’t really value it anyway.
3. How much should we charge?
This is a bit of a dark art. But, with some market research and some trial and error, it is possible to find a price point and fee model that works. Understand how the budgets of your customers are set, and what their priorities are. And be sure to promote the benefits of your products and services – not just the features. That is – how will your offer solve their problems and make improvements to their offer. Focus on what difference it will make, not what you will do.
Have a commercial mindset – know the FULL cost of selling your product or service, including the cost of rent, equipment, support staff, etc and work out what the minimum price should be. Don’t forget, you can charge more than it costs as this is unrestricted income – so, as long as you are at least meeting your costs, think about the value or what you’re selling when setting the price.
4. What if it doesn’t work?
If you apply for funding and don’t get it, usually the work doesn’t get done. With earned income, you need to make an investment upfront. But don’t be scared to try it out. Be entrepreneurial and accept that it’s ok to fail – as long as you learn from it, review and try again. Understand your market and design your offers around what your customers want and need – not what you want to offer.
Also, try marketing them before you create them, and see what makes people bite – you can always develop them after they’ve registered an interest.
5. But I don’t know how to sell
This is a big concern for many staff in charities – but many have the most important foundation for sales – a passion for what they are selling!
Use your existing networks to avoid having to ‘cold call’. Match the skills of your staff to different parts of the sales process: Are they good at building rapport with new customers? Or would they be better at presenting the case to decision makers?
Encourage your staff to talk about partners as ‘customers’- it helps to create the culture of a market-oriented organisation.
6. We don’t have the systems in place to keep track of sales
It helps to have a CRM (customer relationship management) system or database for marketing and tracking your sales pipeline. But for it to work, you will require everyone to use it – and ditch the stacks of spreadsheets.
So, it’s important to make sure it’s useful. Build the specification with your team so it does what they need it to do and makes your processes quicker.
7. But are we legally allowed to do this, and still be a charity?
Yes – but for tax purposes, it depends whether your trading is primary or non-primary purpose (i.e does it further the organisation’s mission in a way other than just financially), and how much you’ll turn over each year as there is a small-scale exemption. If it’s higher than the limit, then you could set up a trading subsidiary (a separate legal entity) so that all profits made from trading can be paid to the charity – excluded from corporation tax.
There is more information about this here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/592404/CC35.pdf.
Find out more about developing a sales mindset in your organisation - drop me a line through this website, or to firstname.lastname@example.org.