Why social enterprises in India need to build powerful brands like startups?
Professionals working in the social sector understand the various categories of organisations among non-profits, NGOs and social enterprises. Social enterprises face a common challenge where on one side, returning the promised amount to investors/ funds committed over a period of time and on another side, delivering social impact to target beneficiaries. It is not easy and often we see that social enterprises have to compromise in one of the areas or pivot or shutdown. They follow various structures of raising money through grant, impact investment or debt (on rare instances) and complex routes to survive. In this process, they lose sight of the purpose of creating a social enterprise in the first instance.
A social enterprise needs to be a growing business focused on an under-served market or need for target customers that have a lower disposable income than an urban middle class household.
This in itself can be social impact which usual commercial start-ups won’t go for (need to primarily maximise returns to investors/ shareholders). If the primary goal is to deliver social impact, then a non-profit model is much better but it is a much-debated topic in the sector.
Social enterprises have to gear up to compete with start-ups that might target common customer groups. It is imperative that social businesses operate and execute like start-ups to not just compete but also capture a bigger market share with an impact story to build that emotional connect with its customers as a brand.
Why build a brand like start-up?
Aspiration & customer
One of the biggest insight we had while working in social sector with target customers in under-served market is that these customers (from rural & urban household) are as aspirational as customers in urban middle or upper-middle class. They do not want products or services exclusively designed for the poor (cheaper, not aspirational, non-elevating in lifestyle). Their aspiration is as high as you and me. Hence, our approach to designing the product or service needs to be based on an aspiration which positions itself well in terms of minimum pricing that target customer is willing to pay for it. And on the backend, the production and delivery of this product or service can give healthy margins to the business.
As aspiration of target customers is common across certain income groups, the market is also common for a social enterprise to build its traction. A billion-people under-served need or market doesn’t operate in isolation, and we need to still push marketing or sales through the same channels of customer acquisition as other commercial businesses. An example, a local grocery store or retail stores serves customers across income irrespective of the frequency or total amount customers are spending on a product or service. Hence, a social enterprise is also competing with a local commercial business or start-up in the same region, locality or target customer.
Experience driven consumer
Consumers irrespective of income or background seek new and engaging experiences. Social enterprise like a start-up needs to also create a brand and customer experience that is aspirational and engaging to build a recurring and growing customer base. This means that the social enterprise being frugal needs to still invest in building memorable experience for its customers. An example was a series of ads by Airtel 4G that covered regions and communities from lower income families that have access to same quality services as an affluent urban Indian with Airtel.
Impact is not enough
Social enterprises might raise capital with better terms, can negotiate better deals with vendors or partners compared to commercial start-ups based on their social impact story. But impact story is not enough, customers will always pay for a product or service based on quality, price and experience (brand & customer) irrespective if you a start-up or social enterprise. Hence, the approach and operation of a social enterprise must be like a start-up and they can leverage the impact story only as a bonus to acquire more customers and grow the business.
Barriers among social enterprise
Leadership & Approach
The challenge is that the founders and team lack a “start-up mind-set” or awareness to hire and build their social business with relevant skills which can compete with commercial business. The founders need to build the business operation and its team with an aggressive start-up mode while retaining the social impact goals and values. This will require a leadership commitment to maintaining an organisation culture and operation that blends both business targets and social impact goals.
Talent & Marketing
Often the leadership of social enterprise unable to commit towards social impact goals while achieve business targets, and it is really tough. The leadership team needs to recognise and adopt a similar approach to start-ups by hiring quality skills and talent that help them grow the business. They should ideally aim for talent from the for-profit or commercial sector that understand accountability, agility and business growth. The other area of barrier is that social enterprises need to embrace aggressive marketing and brand experience like start-ups. Social enterprises across sectors underestimate the effectiveness of strategic brand building and marketing (not burning cash) and still unwilling to invest in it consistently to reap the benefits.
Social enterprises similar to start-ups need to do more research, observe and analyse their target customers and engage them strategically. Consumers in India are spoilt by choice irrespective of their income and engaging them across multiple touch-points in critical for business growth. As mentioned before, social enterprises and start-ups target sometimes the same customer group and social enterprises need to know what their customers want and how to deliver the experience.
I strongly believe that social enterprise need to operate like start-ups, a strong team, robust business model and operations, aggressive marketing and sales plan to deliver a quality customer experience. Without this, it is clear that there is little chance of survival. Keeping this approach in mind,
a strong brand led business is as relevant to social enterprise as a start-up.