Social Enterprises Closing the Deal

Social enterprise—which often involves selling life-changing products and services across the “last mile” to the poorest people on the planet—has become an extremely popular way to try to create sustainable, positive social change. However, in our experience, it’s in the last yard of the last mile of distribution—reaching the right customers and closing the deals—that the race is won or lost.

As sales consultants in the developing world, we deal with “last yard” problems every day. We work with talented and visionary social enterprise leaders, but the fact is that many of them have very limited sales experience. And, critically, most of them (used to) buy into three commonly held myths about selling to the poor:

Myth 1: “Poor people don’t have money.”

This myth has created a huge mental block for people at almost every organization with which we have worked. The truth is that poor people don’t have much money, and so they tend to be very careful with what they have. Social enterprises make really bad decisions based on belief in this myth, such as setting prices at unsustainable levels, relying too heavily on microfinance, or subsidizing purchases. These are all dangerously flawed strategies, because they are seldom–if ever—sustainable and often result in fatal financial stresses. If you subsidize prices or offer microfinance, for example, what happens to your business if the source of subsidy or loans goes away or can’t scale with your business? If you set prices too low, you can’t pay your employees well enough and will likely experience unhealthy turnover.

Consider one organization we know that wanted to scale from 10,000 to 70,000 buyers. The company was selling its product—a cement latrine—with a full package—including the platform, pour-flush ceramic pan, containment box, connecting tube, below-ground cement silo, and lid—for $35. The problem? The price was too low. Sales people, who worked on commission, earned just $0.50 per sale, or 1.4 percent of the cost of the unit. Unsurprisingly, sales team turnover was high, and the organization was constantly spending valuable time and resources—more than it could afford— to attract and train new salespeople.

Realizing that it would need to improve compensation to stabilize the sales force, the organization’s leaders swallowed hard and increased their prices. Much to their surprise and relief, sales didn’t drop. In fact, they increased. Clients saw the value of the product and didn’t balk at the $45 price. And salesperson turnover decreased, because the math worked. With a more reliable team in place, the organization made 143,000 sales in the subsequent 30 months.

Myth 2: “Selling is pitching.”

Inexperienced (or poorly trained) salespeople often present the features and benefits of a product when they talk to prospective customers, but fail to demonstrate how the product meets a customer need. They assume a need and then try to talk customers into buying. That’s “pitching,” but it isn’t “selling.”

Consider the experience of one major player in the solar energy field that wanted to accelerate sales. Over the course of six hours at one trade fair in Jinja, Uganda, the sales team participated in more than 100 interactions with prospective customers. Shoppers would stop at the booth, pick up a lamp, and marvel at the technology. Within seconds, a salesperson would start ‘talking at’ them, taking the product out of their hands, launching into a full description of it, and then continuing to talk, describing each of the seven products on offer in exquisite detail.

The result? Lots of interest, lots of phone numbers, brochures and business cards exchanged. Zero sales.

Subsequently, the sales team adopted a problem-led approach to selling, which calls for spending 70 percent of the time with prospective customers finding their genuine need. Within 18 months, the organization had achieved an eleven-fold increase in orders, worth tens of millions of dollars.

Myth 3: “We sell to anyone, anywhere, anytime.”

Those were the words, proudly spoken, of one social enterprise leader in Laos. But “selling to anyone” is not a sales plan. It is too reactive. Sure, you want to say yes to people who want your product, but not at the expense of building your business. Sometimes no is the right answer.

One water-filtration social enterprise we worked with used to try to find customers anywhere. As a result, it sold its products everywhere it could, at great expense. Payroll was high and the sales were low; it wasn’t a sustainable situation.

Then the organization’s leaders narrowed their sights and identified a more workable territory to serve—two provinces nearest their factory. They developed a strategy for territory penetration so that literally everyone in those provinces had the chance to buy. Specifically, they took a “D-G-D” approach: direct invitations to group presentations, then a group sales presentation followed up with direct sales calls to catch those who didn’t come to the group session.

That strategy might not work for everyone, but it was perfect for them. The result? Sales increased from 5-10 per day to 30-70 sales per day, per two-person team. The business is now selling so many units that it has exceeded its manufacturing capacity and is supplementing its inventory with wholesale purchases from a distributor in Cambodia.

A lead consultant trains local salespeople in Ethiopia on selling water-sanitation products. (Image courtesy of Whitten & Roy Partnership)

Those are three of the most prevalent sales myths we’ve seen holding social enterprises back, but they are by no means the only ones that organizations trying to effect positive change in the world need to dispel. Others include “Women don’t make purchase decisions,” “You can’t sell in the rainy season,”, “We can’t find good people to hire,” “You can’t go against local culture,” and “We don’t want to overpay our sales team.” Social enterprises need to question their assumptions about sales, investigate their behaviors vigorously, and replace all myth-driven practices with better mindsets, solid selling skills, and disciplined execution. The results will be sales targets achieved and—most importantly—organizational missions fulfilled.

Read more stories by Roy Whitten & Scott Roy.