For Profits versus Not-for-Profits – Competing for Clients
Many for-profit businesses – consultants, seminar and workshop providers, and a host of other businesses are finding their toughest competition is coming from “not-for-profit” entities. Commercial businesses that provide services to other businesses (and individuals) are finding it tough to compete against the “free” or “discount” offerings being provided by the not-for-profit sector – including business associations, community colleges, and other organizations – both privately and government funded.
The not-for-profit status creates a two-fold advantage when it comes to positioning “products” like courses, seminars, and workshops and services that includes advising and consulting. First, the not-for-profit offerings are often supplemented or paid for by private foundations. So if a commercial business is competing on price for the same clients/customers, then they too must give away the goods. The problem is that for the commercial entity, what they give away is truly given away – no one is reimbursing them for the costs. Second, the not-for-profit organizations have the ability to use “incentives” to gain support for the programs – donations, contributions, in-kind services, etc. to build alliances; they can harness the spending power and recognition of more than their own operation.
How does a commercial enterprise compete with governmental agencies and not-for-profit entities? It has to be based on content and results, differentiation and “branding”. It isn’t easy and it isn’t cheap.
For the small enterprise that goes head to head for customers, it is an uphill battle to make sure the target market can see a clear difference between you and the FREE services. It is also critical to recognize you will need to leverage every dollar spent to its maximum. Getting the message right and delivered to your prospects is the make-or-break of your business.
If you have only recently started receiving competition from the not-for-profits, then the time is now to hone your weapons for the battle for customers. When price erosion and increased supply begin to affect your business, there will be no time to waste to get back on track.
Here are some tips:
1. Don’t compete on price – you can’t win.
2. Reevaluate your marketing strategy and tactics
3. Consider establishing a referral relationship with the not-for-profit organization (if these are allowed under the funding and operating guidelines)
4. Volunteer or join the board (do so only if this doesn’t create a conflict of interest for your business)
5. Sponsor or exhibit at events held by the not-for-profit
From another perspective, not-for-profits are established to provide support and resources that foster economic growth and market expansion. When you are competing with a government funded agency, state funded agency, educational institutions, or a private not-for-profit, understand that each of these entities have limitations and restrictions on the type, scope, and nature of the services and products they can provide. Limitations may include amount of time or degree of involvement. For instance, an agency may be able to review existing documents and advise where gaps are in the content, but they aren’t allowed to produce information to fill the gaps.
Understanding what your not-for-profit competitor can and can’t do will help you formulate your best strategy and possibly redesign or repackage your service or products to be downstream of their offerings. If you compete strategically with the not-for-profit, you can continue to grow your business and leverage your competitor’s actions to your advantage.
Copyright © 2004 F.O.C.U.S. Resource, Inc.