November 14, 2017

How Some Nonprofits Build Sales Teams on a Budget

Start by realizing that a “build-it-and-they-will-come” mindset often fails to reach people in need.

By: Matt Plummer, Vlad Nedelea

“Nonprofit” and “sales” are two words that rarely appear in the same sentence. But that’s changing—and for good reason. A growing number of nonprofits are discovering that without a sales team, their programs struggle to reach large numbers of intended beneficiaries.

Many nonprofits go begging for program participants because they subscribe to a “build-it-and-they-will-come” attitude that seldom pans out. In our 2016 article, “Selling Social Change,” which encouraged nonprofits to develop a more sales-driven approach to filling programs, we called this the “need-equals-demand” fallacy and contrasted it with the demand-focused sales so deeply entrenched in the corporate arena. 

Yet, some nonprofits have ventured into sales. To understand how they are faring, we interviewed leaders of 10 organizations that have put salespeople on the payroll. Half have done so in the past five years, an indicator of the nascent nature of this approach. Nonprofits in this set varied significantly by field and target beneficiary as well as operational culture. They employed a variety of salesforce models. But all had prioritized developing a focused sales strategy to reach more people with their programs. Across the 10 organizations, three common denominators surfaced that helped each to keep a lid on the expense of getting started: they prioritized hiring people with program knowledge over those with professional sales experience; they relied on intrinsic motivation to drive sales rather than bonuses; and several cultivated relationships for business referrals rather than investing in cold-calling.

Tapping into program expertise

Experience counts in sales. But sometimes intimate knowledge of a nonprofit’s program trumps a professional sales background.

For this reason, Nurse Family Partnership (NFP), chose to hire program alumni as part of its sales team. NFP empowers first-time moms to create better lives for themselves and their babies by pairing them with a trained nurse from pregnancy through the second year of their child’s life. The sales team focuses on recruiting high-risk young mothers.

Benny Samuels, NFP’s chief marketing and communications officer, told us that alumni can “naturally tell the story of the benefits of the program.” The value of insider knowledge also led NFP to hire sales people with nonprofit experience in community health.

Other nonprofits, like Playworks, an organization that provides safe, fun, and healthy play for schoolchildren during recess, encourage program staff to move into sales rather than hiring outsiders with private-sector sales experience. This approach ensures that those promoting the organization’s services have a deep understanding of, and appreciation for, the very services they are selling. Playworks learned this lesson the hard way. Its first sales team arrived with for-profit backgrounds, but they proved to be a poor cultural fit. Elizabeth Cushing, Playworks’ president, eventually expanded the sales team with insiders. “I think we were too afraid that sales was something we didn't know enough about, when we actually did,” said Cushing. “It was more that we lacked experience in structuring a national sales team.”

Increasingly, smart marketing organizations are tapping into social selling strategies. “Building trust with your customers by leveraging social networks of your sales people is powerful,” explained Chuck Slaughter, founder of Living Goods, a global NGO that employs a network of health entrepreneurs to sell lifesaving health products door-to-door to young mothers in Kenya, Uganda, and Myanmar. “What matters is the ability to connect to those you are selling to,” he said. For this reason, Living Goods hires women in their 30s and 40s: “Our target customer is a 26-year-old mother. Is she going to listen to a teenager about contraception? Probably not.”  The salesforce is trained in basic selling skills like listening, overcoming objections, and following up.

College Summit, a nonprofit dedicated to transforming the lives of low-income youth by connecting them to college and career, also hired experienced private-sector sales people at first, but ran into issues, explained Sean Murray, vice president of partnerships and marketing. “The biggest challenge in hiring corporate sales people is that they are primarily motivated by financial incentives that nonprofits cannot afford,” he said. “Although both of my current salespeople do happen to have private-sector sales experience, we were lucky that they had experience with our program and were deeply committed to the mission. This combination is very hard to find in the nonprofit space, and one of the primary reasons that so few nonprofits pursue a sales strategy.”

Of course, there are also instances where traditional private-sector sales people may still be the best way to help advance your mission. Take, for instance, nonprofits selling services to the private sector, where experience selling to the target market pays off. Health Leads, which works with leading healthcare organizations to connect patients to community-based health resources, sells its services to health systems, such as hospitals and clinics. “We started out by looking for veteran sales executives who knew healthcare,” said Zach Goldstein, Health Leads’ innovation and product development leader. “We found folks who had been in medical devices or pharma.”

Year Up, which provides low-income young adults with a year-long intensive training program to prepare them for corporate IT or finance positions, also hires experienced sales people. “We want to bring youth from urban settings to work at corporations, so the obvious place was to look for people who already sold staffing solutions to corporations,” said Jeff Artis, national director of corporate engagement.

Don’t fret over bonuses

Sales bonuses, standard practice in the private sector, haven’t taken root among those we interviewed. In fact, bonuses struck some nonprofit leaders as a cultural mismatch for a sector where people are motivated by mission, not by money.

Playworks and Year Up tried and abandoned performance-based compensation plans. At Playworks, culture weighed most heavily. “I don't believe that people who come to Playworks to sell services are driven by a bonus,” said Cushing, noting that while everyone appreciates a bonus, the data at Playworks showed that it didn't change staff behavior. “It doesn't fit with us culturally,” she continued. Instead of offering bonus compensation, her organization now incentivizes employees with salary increases.

Year Up opted to move away from bonuses largely to ensure that salespeople always acted in the best interest of beneficiaries and in a way that is consistent with the organization’s mission. Maximizing sales to generate bonuses ran counter to Year Up’s commitment to prioritize the interests of the students they train and corporate clients they serve, said Artis, the national director. Year Up on one occasion turned down a large corporate sales opportunity because it didn’t align with their mission. “It was tricky for some of our salespeople to wrap their heads around this,” Artis said.

Meanwhile, some nonprofits that sell directly to consumers have found it useful to incentivize salespeople through commission-based pay. This type of pay structure empowers salespeople to operate essentially as entrepreneurs, growing their own micro-businesses by selling products and services to beneficiaries. In these instances, sales staff receive a percentage of the consumer purchase price.

Take for example One Acre Fund, which works to reduce hunger and poverty in East Africa and supplies smallholder farmers with asset-based financing and agriculture training services. Or take BRAC, a rural development agency dedicated to alleviating poverty by empowering the poor in Asia and Africa through microfinance, employment, and health care. Both organizations incent their salespeople to generate their own income via commissions on the volume of product or services they sell. (One Acre also pays a base salary and a performance bonus.) Living Goods, too, with its Avon-like salesforce, pays its team commissions.

Building referral networks

Rather than building large sales teams to increase time on the phone or in the field making cold calls, some nonprofits have found a cost-effective strategy in referral networks. Such efforts aim to build a relationship with an association or even corporate entity that has reach and influence with a large swath of prospective clients and will make introductions for the nonprofit.

As BELL (Building Educated Leaders for Life) seeks to expand to more school districts in communities across the United States, it is not only engaging districts directly, but also building relationships with like-minded organizations to serve as lead generators. These organizations might be local foundations, national nonprofits, or a local education intermediary, said Dan Dobin, vice president of partner engagement. “This kind of linchpin organization can potentially get you into a warmer conversation with a local school system or with other potential clients.”

Technology also helps build these relationships. A number of our interviewees use client relationship software, such as Salesforce or Microsoft Dynamics. These systems allow you to track leads at different stages of the sales cycles so that you can pick up conversations where they left off, set accurate revenue targets for your organization, and manage relationships proactively. They also provide tools for data analysis that can help your sales team figure out which sales techniques work with respective clients.

Playworks has used Salesforce for more than a decade and considers it “critical” to its sales team’s success, said Cushing, Playworks’ president. “We can track activity of the salespeople, not just results,” she said. Salespeople log calls, emails, and meetings—data which is easily used to manage relationships. “Our business development officer is now calling on clients to get a sense of why they bought or why they didn’t,” said Cushing. The software even allows the organization to track program delivery logistics. Such attention can turn customers into promoters.

Nonprofits are used to selling proposals to funders and yet relatively few have experience selling their programs to beneficiaries. The 10 nonprofits we surveyed provide practical insights into how to others can proceed as they, too, find fault with the “build-it-and-they-will-come” mindset.

Matt Plummer (@mtplummer) is a former manager in The Bridgespan Group’s Boston office and coauthor of “Selling Social Change.” He recently left Bridgespan to launch Zarvana, a digital training program that helps individuals get more done in less time.

Vlad Nedelea is an associate consultant in Bridgespan’s Boston office.

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