The reality, of course, is quite different. The nonprofit marketplace is crowded, and the role of different organizations is often unclear. You may work in partnership with a group one week, and compete for the same donor dollar or grant opportunity the next. Cooperation has evolved into “coopetition,” and the role of marketing has in fact become more important. 

Marketing encompasses all of the elements required to build the strategy around the organization’s purpose, identify potential supporters and develop effective ways to communicate your message.

Whether dealing with a national, billion-dollar nonprofit or a citywide group struggling to break six figures, three areas always deserve ongoing attention:

Clarify your Brand
Chances are other groups work in similar spheres of influence. Make it easy for people to understand why they should support you. Don’t make the mistake of believing that adding to your services or programs will generate more support. The more cluttered your offering is, the less likely people are to “get it” and support it. Prioritize your efforts.

Expand the Funnel of Supporters
Awareness alone doesn’t translate into money or time. Engagement does. Don’t be the wallflower - find ways to get people involved in your organization at any level (volunteers, donors, participants, etc.) so they can see the difference you’re making. Identify current supporters and find a way to expand that circle. Move people along the ‘engagement curve’: Apathy - Attention - Action - Advocacy.

Communicate a Sense of Urgency
Supporters act based on two key variables - agreement with your mission and belief that their support makes a difference. Supporters want to have an impact; people gave during Katrina & the Tsunami in record numbers because they felt they were needed. Don’t create false deadlines - that misses the point. Instead, help people to realize their support can have an immediate impact. Give them a clear call to action.

Obstacles to implementation always exist. Time, resources and staff are continually stretched. Even so, don’t wait to move forward. Marketing does matter, and developing effective strategies will ensure that your organization can increase it stability and sustainability.

This article available in pdf format: Does Marketing Matter for Nonprofits?

Manufacturer control. Improved profits. Dealer consolidation.  It’s been bubbling up for years, but these issues and the declining economy have recently forced manufacturers to take a long, hard look at their distribution systems and reliance on the “middleman.”

Or maybe not so recently.

In fact, the scenario outlined above is based on an incident that dates back more than 100 years, involving a dispute between coal companies and wholesale coal dealers. Read all about it: 
http://query.nytimes.com/gst/abstract.html?res=9B0DE5DE1438E233A25753C2A9659C94639ED7CF&scp=1&sq=middlemen+a+necessity#

Not old enough for you? Try this: Historians can point you back thousands of years to the ancient Lebanese town of Byblos, which successfully navigated waves of political change and competition by serving as the middleman for Mediterranean trade.

All of which just goes to show that when it comes to figuring out how to get goods from the manufacturer to the end user, there really is not much new under the sun. And, just as important, no matter how much you hear people debate the value of dealers and distributors, the truth is that the middlemen have been here, they are here, and they’re going to be with us for a long time to come.

Why? Because they provide an essential service.

The temptation to go it alone.

Relationships and access remain key to the process of selling and providing products. And whether motivated by issues of consistency, loyalty, service, or margins, the desire for manufacturers to maintain control over the entire distribution process is strong.

But before moving in that direction, each manufacturer must carefully weigh the true costs and benefits specific to their situation. Selling direct through corporate-owned distribution is not going to be the right answer in every case - or even in most cases.

And even assuming that one of those choices is the right answer in a particular case, there are still existing dealer or distributor relationships with whom to compete.

The reality is that while technology may speed up the transaction process and consolidators may reduce the number of outlets to deal with, the importance of the distributor process will very likely remain relevant and essential to growth for the foreseeable future.

Making both ends meet.

Throughout recorded history, manufacturers have faced the inevitable dilemma of how to grow their customer base beyond the local market. Geography, cost, and access limit a manufacturer’s ability to reach farther-flung customers.

Enter the middlemen - in modern times, dealers or distributors - who specialize in taking manufactured goods and delivering them from point A to waiting hands at point B, C or Z.

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True Fact:The captains of Byblos distributed numerous items including papyrus. The Greeksimmortalized the city’s name by calling the paper like product sold “biblion”.  In time the term was applied to any book written on papyrus, and early in the Christian era came to be reserved for the Christians’ most important book-the Bible.In the end, the middleman was remembered more than everyone else.Based on John Ballantine’s, Byblos: Middleman Of History, Saudi Aramco World, September/October 1964, Volume 15, Number 5

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It’s by no means a perfect system. Manufacturers have always struggled with finding the ideal balance of control, reliability, flexibility, and growth for their delivery chains. Not to mention making sure that they maintain contact with, and an understanding of, the customer at the very end of that chain.

So rather than wish they’d go away, manufacturers have to find ways to work with dealers and  distributors, and fully embrace the opportunities they present. In the (not-so-distant) past, this may have been as simple as providing rewards and trips. But those days are long gone.

Now companies must offer their dealers long-term value and market-based reasons to expand their product line and actively grow revenue for the manufacturer’s brands.

Fortunately, there are several proven, effective strategies that manufacturers can implement to minimize headaches and maximize rewards when working with dealers and distributors. See for yourself in Part Two of this article.

PART TWO 

In Part One of this article, we looked at the central role middlemen (dealers and distributors) have always played in getting goods efficiently from manufacturers to end users. Now that we know they’re not going away anytime soon, it’s time for manufacturers to figure out how to build success into the dealer and distributor relationships.

Start with the basics: seven things manufacturers should keep in mind as they develop and enhance dealer or distributor networks.

1. They are not going away. (And you probably don’t want them to.)

Technology and direct sales methods may be expanding their roles, but distributors and dealers will remain a key element of the sales process - as they have for thousands of years. What’s in it for you?

An economical way to garner wide distribution

Access to a wider set of prospects

An in-depth understanding of individual market conditions & needs

Support for managing and distributing inventory

Assistance in building and maintaining a customer base

The ability to concentrate on R&D instead of sales

2. Don’t lose sight of your real customer.

While many invoices may be generated along the distribution chain, there is only one true ‘buyer’: the end customer. Don’t fall into the trap of focusing all of your attention on the dealer, and ignoring the ultimate check writer.

Dealers and distributors are only interested in your product if they can see how it can be of interest to their customers. They don’t need to be ‘sold,’ but to be informed on how to best sell to and support their customers. And to tell them that, you need to understand those customers inside and out.

3. Freebies and trips are no longer enough.

There was a time when you could buy loyalty and motivate salespeople by offering trips for dealers. No longer. Oh, they still want the trip, but now they also want a manufacturer who can help them build a brand and generate growth. 

Manufacturers need to find ways to offer substantive benefits that help dealers and distributors effectively build business. These can include traditional approaches such as brand awareness, emerging technologies such as geodemographic mapping and other tools that can help increase the return on investment for marketing efforts.

For example, manufacturers could help their dealers/distributors improve their own marketing by providing more information on the surrounding geography than would normally be available to a smaller business. An example is the dashboard developed by MarketVue (http://www.mvue.com/) which manufacturers are able to offer their retailers and dealers. The more unique the insight, the more its access could be linked to increased dealer loyalty or performance.

Implement these things properly, and dealers and distributors will generate enough profit to take their own trips.

4. Viva la difference!

Not all dealers and distributors are the same, or have the same needs. Some may be on a fast growth path; others may be satisfied with their current size and profits. Some may want to feature their own brand; others may like the support of a more well-known manufacturer’s brand. Some may be want to represent multiple manufacturers; and others may want the benefits that come with a higher degree of loyalty. 

The bottom line? Programs aimed at the distribution channels should be flexible, so individual engagements can be adjusted based on a range of motivating factors.

5. There’s more than a widget in that box.

When you sell a product, you’re really selling a lot more than something in a box. You’re selling all the other elements that come along with it - support, services, availability, awareness, logistics, supply, financing, etc. Find out what’s really most important to both the intermediaries and your end customer, and then structure both the offering and the communications to reinforce those areas.

  6. Remember who’s in charge here.

Consolidation is alive and well in this arena. The late 1990s and early 2000s saw tremendous rollup of distributors and dealers across a variety of industries - from funeral homes to HVAC dealers. As middlemen grow in power and influence, they represent more opportunity for manufacturers - and potentially a greater threat as well.

If manufacturers work only with the consolidated groups, the balance of power may shift. And manufacturers can find themselves forced to bend to the will of the distributor. So in addition to working with the consolidators, it’s important to continue to build business and relationships with small and mid-size dealers and distributors as well.

7. Keep it simple.

Many factors influence a dealer’s decision to carry a product, or a customer’s to buy it. Trying to address them all at once would be overwhelming - and paralyzing.

Instead, identify areas that provide the greatest competitive advantage or mitigate the greatest competitive weakness. Then develop a plan to directly address those areas, and thereby give dealers or distributors more and stronger reasons to do business with you.

And then? Implement the plan. And if things go well, prepare for some history-making sales growth.

© Copyright 2007.  All Rights Reserved.
Confidential Property of Group Newhouse, Inc.

 This article available in pdf format: Stuck In The Middle With You

Some years back, EDS developed an ad showing cowboys herding cats through the prairie.   The promise was that the company could “Bring together information, ideas, and technologies and make them go where you want.”   The task facing those imaginary cowboys is reminiscent of the challenge facing companies that try to manage multiple communication agencies - each with their own vision of how the brand should best be managed to achieve growth.  The outcome is often more of a turf battle than a productive exercise.  

Everything today seems to be getting more specialized and the communications market is no different.  The past decade has seen companies exchange the historical Agency of Record relationship for a set of niche firms that specialize in areas such as consumer, B2B, media, Hispanic, PR, internet, event, and a database marketing.   It is not unheard of to have seven or eight companies involved in communicating the brand to the marketplace.

While each situation differs, we have found that seven elements are always common in successful management of multiple agencies:  

1.      Set  a Tone of Mutual Respect

The phrases “you just don’t understand” or “I know more than you” are substantial threats to any relationship, and it is no different with agencies.  The incentive for any form of cooperation erodes if the participants do not feel valued. 

As soon as the agencies (or clients) begin to develop an attitude of superiority over the other partners, the incentive to help create a mutually beneficial solution begins to erode.   Clients must set the tone about what is expected and how the organizations should interact with one another.  

2.      Define Roles of Everyone Involved

Defining roles is a simple concept, but one whose importance is often overlooked. Within the world of sports, each team has different positions that must be filled and executed - the same is true when multiple agencies work with a particular company.  

The confusion of roles combined with the desire for agencies to increase their business with a client creates the tendency to overlap activities and enter into battles over turf.  Clients must articulate the primary task for each agency and how they fit into the overall scheme. 

We have been in situations where three different agencies are conducting research and, upon further examination, we find the same questions are being asked.  The end target for each of the firms is typically the same, so why not spend time working together on the effort that is underway.  If competitive intelligence is available, share it.  If research is getting ready to be done, talk about it.  In the end, it is the client’s resources (either directly or in agency fees) that are being expended, so efforts should be incremental, not duplicated.  This works best if a single client contact is responsible for managing the agencies and defining the roles of each entity. 

If each agency does not have a distinct and unduplicated purpose, then it may be time to eliminate some of the agencies.

3.      Enforce  a “No Poaching” Rule

A very quick way to undermine cooperation is to substantiate the fear that sharing among the agencies will result in the loss of business to one of the “partners.” It is a natural fear and one that can only be overcome if the client sets forth a clear expectation that they will not award business to one of the other firms.  The client has to set the vision and the agencies need to have the confidence that it won’t be violated.  If that is not the case, self-interests will begin to overwhelm any desire for cooperation.

Let the business for agencies grow by overall business improvement, not due to shifting billings between partners.

4.      Encourage Active Communication

Poor communication creates mistrust and misunderstanding.  Proactive efforts must be put in place to ensure ongoing communication from the client, as well as between agency partners.  During major initiatives, conversations between agencies may need to happen weekly.  Other times, monthly or quarterly interactions may be sufficient.  Conversations should focus on sharing current productivity, learnings, research, timelines, etc.  

Work to transform the agencies with independent goals into a team that in essence becomes the “Brand Stewardship Council” - each with responsibilities for a different part.

5.      Take the Point of Leadership & Ultimate Accountability

In the end, it is the client who has to set the objectives, approve the strategy, and be accountable for the results.   Clients should seek input from the agencies, but should always require that the recommendations from their partners fit with their own understanding of the marketplace.   A simple point that is often overlooked is that the client has the accountability and it is the client who should lead the strategic choices.

The presence of multiple agencies is complicated when those agencies work across multiple divisions.  Even if there are multiple divisions or regions using agencies, it is beneficial to appoint a single individual to oversee the agencies. This person is not responsible for all of the execution, but is responsible for encouraging cooperation and ensuring that the relationships are maximized.  If the clients can’t work together, why should the agencies?

While there may be multiple firms involved, communication with the target must be seamless, integrated, and consistent.  That requires setting the tone from a single point. 

One firm should have the responsibility for setting the tone and identity for the brand.  Once agreed upon, the client needs to insist that each agency take their queue from the tone and approach set by that creative.  This is not always easy since each agency has their own creative team and wants to put their fingerprint on what is implemented.  Agencies can be creative in their implementation, but they should maintain a consistent identity across the different vehicles.  

The ability to increase control over consistency improves if a single person within the client is accountable for the agency relationships.  Take ownership of that responsibility.

One would expect that those in the realm of marketing and communication would not have a problem in developing and managing relationships.  Unfortunately, the tendency is to sometimes create more tension versus proactively resolving it.  Specialty agencies offer substantial advantages if they can be managed.  In the end, this entire effort can be addressed in the same way we were taught to deal with one another in grade school — respect each other, play fair, and remember that the teacher is always in charge.

© Copyright 2007.  All Rights Reserved.
Confidential Property of Group Newhouse, Inc.

This article available in pdf format: Managing Multiple Communication Agencies

The common good may be the ultimate goal - but that requires individual success of many organizations.   This has always been an issue, and with the addition of almost 500,000 charities in the past decade, the art of being a charity and being competitive has become more of a challenge.

The  growth in “competitors” is compounded by reports that suggest a declining trend in the number of donors which was masked by the rally in giving during Katrina and the Indonesian Tsunami. For the short term, this decline has been overcome by increasing the amount of giving per donor. The combination of these events is intensifying the competitive marketplace.  

Being competitive does not mean focusing only on financials or wishing for the demise of other nonprofits.  In fact, there are numerous situations that call for the collaboration of nonprofits to propagate a particular cause or issue.  Being competitive means recognizing the need to focus on the strategies required for sustainable growth. 

We have worked with multi-billion dollar national groups as well as very small local organizations and the issue remains the same - growth is getting more difficult and it requires some new ways of thinking. Typically, three primary issues have prevented organizations from investing in growth:  1) undercapitalization of staff and resources; 2) lack of expertise; and 3) the ubiquitous fact of the urgent overtaking the important.  This new environment requires that organizations work to overcome these obstacles and create a new focus on building engagement and funding.

The situation facing organizations now requires a more intense focus on issues that in prior years could have been overlooked or improvised. 

Successful nonprofits that have done well in this environment have built a more competitive approach and addressed the following key elements:

1.  Managing through Budget Cuts

Charities clearly understand the importance of their mission. It is the cause that drives involvement of the staff, volunteers, and supporters.  Unfortunately, more and more organizations are experiencing the reality of undercapitalization and how that can easily translate into cutting staff.  The result is a “death spiral” where cuts in staff make it more difficult to raise money which requires more cuts in staff.  While the mission is still of paramount importance, it is the funding or “margin” that fuels sustainability and growth.  Without an active strategy to drive revenue, the altruistic elements of the organization will quickly grind to a halt. 

Budget cuts are a reality, but it does not mean that the organization must forego the key elements associated with planning and developing future growth initiatives.  In fact, it is in the times of crisis that some of the greatest opportunities appear.   Even when budgets are slim, it is essential to continue to invest in activities that directly and indirectly drive revenue.

2.  Research the market

While for-profit companies may spend substantial amounts on market research, it is often seen as a luxury for the non-profit marketplace.  The greater cost, however, is making large investments in campaigns or other activities based only on intuition or guesses.   Isn’t it better to have a fairly assured understanding of what targets may respond better to in the next mailing or which messages are most likely to motivate action? Research does not have to take the form of six figure investments into sophisticated decision models.  Over the past few years, more and more insight can be accessed by using information gathered from existing databases.  By using data provided by companies such as Claritas or Acxiom, organizations can begin to use existing data on donors as a tremendous asset.  With the proper guidance, information from these firms will enable companies to model their donor base and then use that information to prioritize and map out future potential partners.  This will enable an improvement in return on investment from marketing which can create an immediate improvement in funding - both from increasing revenue and reducing wasted expenditures. And it all can be done with data that may already exist.

In addition to the internal analysis, organizations need to spend the time to understand the decision criteria of stakeholders and gatekeepers.  This can be done by staff or by third party teams to ensure impartial synthesis of the information. 

Information on donors is essential to creating an organization that reflects the needs of the market versus the internal desires of the current organization.  While staff desires are important, they can only move forward if it is consistent with that of the donors.  Take the time to understand the market - it is difficult to move forward while wearing a blindfold.

3.  Define the Position & Value Proposition

Those with the most passion for an organization have the greatest understanding about how it is different from other groups and why it needs ongoing support.  That core, alone, is not able to fully fund the charity and for groups with less direct involvement, differentiating elements of the group become less clear.  The remainder of prospects must be informed of the mission and positioned through shorter, but compelling methods.

For example, when people think about humanitarian relief, they know the names of organizations such as United Way, American Red Cross, Salvation Army, Samaritans Purse, or Catholic Charities.  However, when pressed, many people may not be able to articulate the difference in how these organizations serve the community.  Without that level of clarification, it becomes more difficult to motivate donors and increase their level of engagement.

If an organization has trouble defining its difference, then so will its supporters.

4.  Develop the Strategic Plan

What is the overall mandate for the organization?

What types of needs do donors want solved?

What are they willing to support?

Where do we have the greatest competencies?

Where can we outperform the competition?

Non-profits are excellent planners — they just don’t always carry that strength through to all parts of the effort.  They plan disaster relief efforts, conduct major research, organize events, etc.  The problem is that charities don’t spend the same amount of effort planning their own growth.  The lack of planning is not due to lack of desire, but often to the fact that resources are limited and the more tactical elements of the day take over.

Effective teams need clear direction and leadership.  The strategic planning process offers the opportunity to set the direction for the organization and designate the priorities that will be in place for the coming years.  It should address areas related to the offerings, targets, appeals, initiatives, metrics, partnerships, etc.

Too often this process is seen as a burden rather than an opportunity to truly position the organization in a way to create innovation that propels the organization to the next level.

The great temptation in any planning process is to look within.  Instead, the effort should be donor-centric.  The plan, at a minimum, should assess the market situation, set objectives, define growth strategies, establish implementation timelines, and develop metrics.

For-profit companies may spend months or years developing their plans, but nonprofits are not able to dedicate that level of resources.  In some cases, the approach of simply having an annual one-to-three day planning session and then implementing a series of monthly “check-points” provides the initial jumpstart required to propel the organization forward and ensure accountability.

Even organizations with small budgets and limited staff can have effective strategic plans.

5.  Set up Metrics and Monitoring

Did the campaign work or not?  Which message generates the most return on investment? While crystal balls are a bit hard to come by, there are definite ways to improve the odds of performance. 

The first phase of any effort should be to establish the objectives in clear and precise terms and establish ways to track performance.  For example, some groups will use different response phone numbers or post office boxes to determine which campaign generated the greatest return.  Metrics should be established to track the success of a particular campaign (return rates, target market, etc.) as well as the overall health of the organization (trust, preference, awareness, etc.)

It is also important to work to prevent the strategic plan from becoming one more book on the shelf that collects dust.  Instead, develop a series of specific initiatives that will be implemented during the year and identify what is required to make those ideas come to fruition.  For each major initiative, there should be a point person who is its champion.  With larger organizations, this may be a paid staff; for smaller ones, it might be a volunteer.  In either case, someone needs to be held accountable.

By having periodic “vision checks” the organization can avoid the scenario where the goal originally seen as important becomes overtaken by the more urgent, yet less critical  tasks.  In some cases, the executive can provide this accountability and in other situations, it makes sense to have an outside third-party to help moderate and facilitate the process.

Know what worked so that it can be replicated and know what did not work so it can be avoided.

6.  Manage the Donor Relationship

A good friend and client of ours once said that we need to manage the target from the “cradle to the grave.”  His goal was to try and make sure the group was able to offer a benefit throughout their life - either as a recipient, volunteer, or donor. While the choice of terms may be a bit strange, it is actually a lofty goal and one that more organizations should embrace. 

Too often, we put the burden of the relationship on the donor/supporter to remember how they have been involved with the organization.  The result is that the people sometimes get lost in the shuffle - this is especially true with larger organizations that do not have the direct relationship with their donors that smaller groups do.

Research has shown over and over again that the best donors for one organization are usually the best donors for another group as well.  This increases the potential competitiveness for donations, especially during times of economic downturns when disposable income is less available.

Organizations must segment and prioritize their market to have a clear picture of which markets offer the best opportunity and what activities generate the greatest result.  Donors are the lifeblood of the organization and it is essential that the strategy is clear and precise.  It is more than getting the latest database, but means having a defined approach to prioritize donors, articulating the different ways to interact with the different groups, measuring the performance of fundraising efforts, etc.

Manage donor information and relationships as if they were the most important element in the organization’s survival — because they are.

8. Collaborate Carefully

As competition among charities continues to increase, an organization’s brand becomes essential.  It represents the promise to both the donor and the recipient. Constant opportunities arise to join with other nonprofits to support particular causes or events.  However, direct partnerships should be treated with great care. 

Corporations protect their brands very carefully and non-profits should do the same.  Whether it is an offer from another charity or from a potential corporate sponsor, carefully evaluate the offers before committing.  The law of unintended consequences is always a threat.  In the 1800s, the Red Cross licensed its brand to Johnson & Johnson.  That decision resulted in severe limitations on what Red Cross could do with product licensing and was the foundation for a lawsuit between the two groups in 2007.  Who would have expected that a decision made 150 years ago would still have an impact today?  While that is an extreme example, there are many organizations that regret decisions made only three to five years ago.

Partnerships between charitable groups are positive and should be supported whenever possible.  However, they should also be entered into carefully and with an understanding that both organizations benefit equally.  Even now, many organizations rely on their partnership with the United Way as a primary vehicle for fundraising.  However, as the United Way suffered damage to its trust, it also had a direct impact on the partner charities. Partnership offers opportunity, but also creates vulnerability.

Accepting a partnership offer simply because revenue is attached is a bad idea. Make sure it is good for the long-term health of the organization.   Set thresholds and criteria and make sure each offer is measured against them.

The non-profit marketplace continues to evolve.  Those shifts, combined with overburdened staff and increasing requirements, create a difficult situation for charities.  With the right mindset, guidance, and focus, charitable organizations will be in a much stronger position to succeed. 

© Copyright 2007.  All Rights Reserved.Confidential Property of Group Newhouse, Inc.

This article available in pdf format: Competition in the World of Altruism