Focusing on who your customers and beneficiaries are, and knowing the difference between the two, enables you to tailor to their needs and assure that your resources are used where they will have the greatest impact. Differentiating between these groups has been something we have seen groups struggle with time and time again. So we thought that a quick blog would help us outline our thinking.
We have taken the simple approach of saying that:
- The customer is the one who pays for the product and/ or service being offered (for example the cup of coffee or cleaning services); and
- The beneficiary is the one who derives the main benefits that are linked to the social mission of your organization (for example, the training associated with making that cup of coffee will provide them with the skills they need to transition into full-time employment).
As we mentioned in our previous article where we discussed the need to focus on both the financial and social parts of your venture, it is imperative in a social enterprise to understand both your customers and beneficiaries to assure that your offering is fulfilling their needs and achieving the impacts you have set out.
Let’s explore what this can look like through some examples of existing organizations that are using social enterprise as a tool to further their missions.
Example one: The beneficiaries and customers are different groups
|Organization Name||Eastside Movement for Business and Economic Renewal Society (EMBERS)|
|Business Model||A temporary staffing agency working primarily with construction companies that trains and employs individuals with the goal of them transitioning back into the workforce. The product offered to customers is temporary workers paid on an hourly basis|
|Beneficiaries||Thousands of people living in the downtown east-side of Vancouver are facing barriers to work including addiction, disabilities and criminal histories. These individuals benefit from the training, job placements and the salaries paid|
|Customers||Offering companies access to temporary trained and reliable workers to suit their job site needs. These companies pay EMBERS a competitive hourly rate (i.e. similar to that charged by the alternatives available such as day labour halls) and the majority of that rate goes directly to the workers|
Example two: The customer and beneficiary groups can be the same, meaning that each group pays and each group benefits from the offering (an example of this is using a sliding scale where one group pays a different rate based on various factors such as salary):
|Organization Name||Calgary Counselling Centre|
|Business Model||A social enterprise focused on improving the accessibility of mental health services and resources to Calgarians by providing counselling services affordably. They do this by offering counselling services (their product) on a fee-for-service and sliding scale based on gross income (those with higher incomes offset the costs of working with those with lower incomes)|
|Beneficiaries||While both the high income users and those who are subsidized are receiving a social benefit from the counselling services, the key social mission is provided to subsidized users that they would not be able to afford otherwise (the main benefit)|
|Customers||Both groups are also paying for the counselling services. However, the lower-income individuals are receiving these services at a reduced cost|
Example three: The customer and beneficiary are different groups as the beneficiary group receives the product/ service free of charge, but both the customer and the beneficiary share similar benefits from the venture (an example of this is using a buy one give one model where for every product sold a similar product is donated to a beneficiary):
|Organization Name||Lucky Iron Fish|
|Business Model||Iron deficiency affects nearly 3.5 billion people worldwide. To combat this issue, they have created an easy to use Lucky Iron Fish (their product) that can be boiled in water to enrich food and water with iron. For every fish purchased, they give one to a community in need|
|Beneficiaries||They distribute free Lucky Iron Fish to communities in need and provide training and education around using their product and nutrition. In this model, both the groups benefit from the offering as the product can be used by the customers, but the key social mission is to provide this product and the associated social impacts to those who cannot afford it. Interestingly, the founder of Lucky Iron Fish underestimated the social benefit to their customers. While he thought most Westerners would keep the fish as a ‘knick-knack’, instead, most are using it to fortify their drinking water in lieu of taking iron supplements. |
|Customers||The individuals who purchase the Lucky Iron Fish through their website and participating retailers|
One complicating factor is you also have to be aware of who influences the purchasing decision of the customer. For example, many children-focused products naturally target the kids but the customer (the person with the cash) is the parent.
If you are having a difficult time differentiating between the customers and beneficiaries within your own social enterprise we encourage you to think about who pays for the offering and who you are ultimately trying to impact (your “main benefit”).
Here are a few useful resources to help you work through your social enterprise model:
- Development Impact & You – Problem Definition http://diytoolkit.org/tools/problem-definition-2/
- Development Impact & You Worksheets –Theory of Change http://diytoolkit.org/tools/theory-of-change/
- Andy Horsnell- Exploring the Climate for Earned Income Development 1.0 http://www.socialenterprisecanada.ca/en/learn/nav/resourcelibrary.html?page=resourceDetail.tpt&iddoc=321022#sthash.BV6QVoRQ.dpuf
- Development Impact & You Worksheets – SWOT Analysis http://diytoolkit.org/tools/swot-analysis-2/
- Toronto Enterprise Fund- Market Research http://www.torontoenterprisefund.ca/resources/thinking/market-research
 “How A Social Entrepreneur Overcame His ‘Arrogant Failure’ And Won Kudos From Oprah” Robin D. Schatz, Forbes, http://www.forbes.com/sites/robindschatz/2015/10/18/how-a-social-entrepreneur-overcame-his-arrogant-failure-and-won-kudos-from-oprah/4/#2c60daa17b2f
 Thanks to “Disciplined Entrepreneurship” Bill Aulet, John Wiley & Sons, 2013, for this insight.