Step by step - How to sell a concept first, build a solution next (at least, how I did it)

It has been a wild journey of “entrepreneurship” over the last few years.. In one of those years, I spearheaded the launch of a new line of business.. and had a ton of fun doing it..

What do I hope you get from this post?

A lot of things actually..

But mostly – it IS possible to and (IMHO) advisable to validate your market first, build a list of your early adopters, get confirmed letters of intent BEFORE you spend time, money in building your service/product.

Net-net : I launched a managed services offering for nonprofits in India and had to shut it down because we didn’t want to chase them each month for paying their invoices (they couldn’t do credit card payments). BUT, we never wrote a line of code before we had 5 signed contracts … based on selling vaporware.. vaporware based on their email responses to our “pain discovery” emails..

Here are the nuts and bolts of the whole process.

On this page

Why did I consider launching a managed IT solution for nonprofits? (aka why I thought they had a problem that I could solve)

I had built an outsourced product engineering team for a nonprofit tech company. During that process, my team came in contact with a LOT of nonprofits.. and many of them were based out of India.. Over time, we found that most of the NGOs were facing similar challenges in …

Marketing their cause(s)
Hiring volunteers for their cause(s)
Raising funds for their cause(s)
Building potential donor lists
Marketing to their donor lists
Managing and maintaining their website and social media accounts
Leveraging technology to further their outreach and campaigns.

If you can read between the lines above.. you will note that none of these were operational problems per se. They had the “execution” part pat down.. they were not IT folks nor marketing folks.. They were all “operations” folks that somehow fell into the business known as nonprofit business 🙂

Yes, even nonprofits are a business.. DUH !

These are things that fit right into my sphere of (ahem!) expertise (?)

Almost every nonprofit that I knew wanted help in this regard..

But, I didn’t want to start a business by listening to folks that knew me well. It would only take me so far.. I would still have to sell to strangers..

So, that’s what my team and I did.. we decided to sell to strangers to validate our concept..

Market sizing

Before I went down this route, I knew that we were not a nonprofit and didn’t want to be a nonprofit. While we didn’t have to make a fat margin on this, we still needed to make a margin. Hence we tried to size the market first.

We found that there were about 31,00,000 registered NGOs in India but only about 26,000 + NGOs were active (i.e the NGO was verified with ngo.india.gov.in with verified PAN, Aadhar and taxation).

Whoa – 26,000? That’s a huge number..

Is there really a market? Forget the numbers..

So we decided to test the market and the need for our proposed services. OK, who exactly would we sell to?

It was easy to say… To nonprofits!! But that was too broad.. we broke it down further

Small size NGOs — Company Size: 10-50, Revenue: 10L-1Cr, Job Title: President, Vice President, Directors, Location: India.. These would most probably be our best best.

Midsize NGOs — Company Size: 50-100, Revenue: 1Cr-5Cr, Job Title:President, Vice President, Directors, Managers, Location: India.. These were sort of mid-range and some larger sharks already had them captive. We could try them.

Large size NGOs — Company Size: 100+, Revenue: 5Cr.+, Job Title: Directors IT, Head of IT, BDO, IT Manager, Communication Manager, Location: India.. These guys were all set.. they already had all the marketing and IT help they needed.

How we got our prospect database / list

OK, so we were getting somewhere.. that’s how we would build our list of folks to reach out to… all we had to do was to scrape one or more of those websites and build the prospect database from.

I also wanted an SMS campaign to be run – so, (if I recall correctly), I also paid for contact numbers for directors of these NGOs.

But we didn’t just start right there.. Next, we wanted to find out..

What are these folks using? What could they use if they were not going to use our solution?

We looked for CRM solutions and compared a few available CRMs for nonprofits

OK, so we have “software only” competitors.. But we wanted to launch a managed services offering.. Who’s our competition?

There were many in USA… We did our research in India and USA and found..

There weren’t a lot of competitors in the market but there were some IT solution providers for NGOs :

Symmetry ( symmetry-it.com ) Services offered- Enterprise Solutions for Non-profits/NGOs
ALC India ( alcindia.org ) Services offered- IT consulting for nonprofits
Serole ( serole.com ) Services offered- Consulting, Development & Operations, Infrastructure

We decided on launching in the Indian market.. Reasons:

For the first time in India, managed services for NGOs (aka brand new concept – pros & cons, of course).. we could use this leg-up from the competition.
India’s first complete IT solutions for NGOs (should help us get traction)
In-depth market research on nonprofits in India (that was a HUGE help as we hadn’t done the same for the market in western countries)

What’s our own SWOT Analysis?

Strengths : Experienced in the nonprofit Industry, we knew crowdfunding pretty darn well. No competitors/competition and our experience in the industry
Weaknesses : No clientele, We would have to build the market from scratch.
Opportunities : First time in India, 25,000+ prospects in India. New partnership deals starting with financial year
Threats : Non-tech prospects. New competitors entering the market.

Getting down to details… What would we “pitch” to these prospects?

We were sure that NGOs are facing challenges.. some could verbalize them and some couldn’t. There were a LOT of buzzwords in the industry… however, we also knew that all but a few of those NGOs even understood those buzzwords..

We came up with a list of questions that we would ask these prospects..

Do you believe that your nonprofit can create greater social impact by leveraging cloud computing/technology, thereby freeing you up to do what you love doing?
Are you tired of tracking your constituents across multiple systems? Want to connect those dots?
Do you have a membership program that you can manage easily across individuals and corporations?
Are you looking for a way to process and track contributions, send thankyous, and report on your data?
Did you ever try to run events? Are you looking for an easier way to manage that nightmare of creating event registration forms, register participants, sign up volunteers all in one place?
Are you looking for an easier way to manage advocacy campaigns with events, mailings, activities, and contributions?
Can your members and donors raise funds on your behalf easily? You realize that they are your best advocates, right?
Would you like to better understand your value and impact, and evaluate your performance?
Email marketing is imperative to stay top-of-mind with your donors. Do you have an easy way to do that AND understand what’s working, what’s not?
Are your funders and sponsors asking you for information, reports, and KPIs that you’re not able to provide in a timely manner?
Can you easily run advocacy campaigns? Can you track progress? Can you track events, mailings for these, contributions raised etc?
Can you easily recruit volunteers? Can you easily get on time, regular updates from your volunteers, from the job site?
Do you have a central way to manage all projects they are running? All the project updates, project media, report on those projects to donors regularly etc?
Do you have any membership program or are these one time donors? Can you run membership programs easily? Send reminders, allow members to update their info, pay etc?
Can you easily create events, registration forms, allow online or offline registrations, sign up volunteers for that event, spread the word etc?
Has year-end accounting/reporting been a nightmare for you?
Do you want to sell your products online to further your cause?

Further in.. how we can we really help our would-be-customers?

We figured that we would create an all in one CRM (constituent relationship management) solution for charities, social enterprises and non-profits. CiviCRM was already the well known CRM in the nonprofit world, so we decided to use it and customize that..

Our Services would help with the nitty-gritty (implementation)

Marketing
Maintenance & Support
Custom Development

How did we kick it off? Cold emails 🙂

Here’s how it looked..

subject line – {{nametoemail}}, Need your input for {{mumbai ngo’s name}} please

Email content –

Dear {{nametoemail}}, According to giveindia, {{mumbai ngo’s name}} seems to manage a team of {{team size}}. I worked with nonprofits like {{mumbai ngo’s name}} and noticed multiple common business & IT pain points that could easily be improved @ a fixed cost/month/year in the cloud. Since you’re deeply involved in this space, I’d LOVE your business inputs to launch this as a managed service successfully.

Are any of these a challenge for you?

Managing contacts, memberships, events, contributions etc… a single view across constituents.
Multiple systems for communication, documents, collaboration, data backups, security, email marketing, advocacy campaigns, P2P fundraising, reports, accounting etc.
Running campaigns on multiple fundraising platforms & promoting them.

Could you please respond with either A, B or C?

A) Yes, we @ {{mumbai ngo’s name}} could use help with this.

B) Nah, we are all set – other nonprofits could use this help.

C) This doesn’t provide that much value to nonprofits.

Thank you soooo much for your inputs {{nametoemail}} !

We used mailshake to send these emails out (try them out – they are awesome)

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We sent total 533 emails (including weekly follow up email) to 290 contacts
179 “opens” on the email
Out of them 59 people replied to our email. In the email responses we got mixed feedback from different NGOs.
Our positive reply rate was 85%. And some of them were very appreciative like below

We kept chugging away 🙂

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What we did after we sent out our first batch of emails

Setting up the pricing

In 85% positive response mostly everyone wanted to know about pricing. They liked the services and showed their interest but they were more concerned about pricing. So now our next challenge was to offer them the best and affordable pricing. This was one of the most difficult tasks for us.

Why? Because no small NGO had a predetermined monthly or yearly marketing and IT budget. So either we were leaving money on the table or they were going to squeeze us in and later regret it.. we didn’t want any part of either.

First, we decided to separate the task into two parts – monthly and one time setup tasks.

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First version of the pricing

After bifurcating the task into two parts, we created first version of our pricing module, see below…

It ended up being this

We were now ready with the pricing, what next?

Once we finalized the pricing, we moved towards our next plan – reach our target audience in mass. We were already prepared with our advertising and marketing strategy, now It was action time.

We knew that email would work. We wanted to see if Facebook ads, Adwords, SMS and other channels would work as well (there are costs associated with each channel and dangers/pitfalls of each)

Facebook Ad campaign: Audience, messaging, creative, and results

Audience Details

View how we defined audience on the Facebook
Location: India
Age: 26-65+
People who match:
Interests: Non-profit technology, Foundation (charity)
Employers: ‎‎Nonprofits on Facebook, Volunteering, ‎Humanitarian aid,‎Non-governmental organization‎‎‎ or Non-profit organization‎
Industry: Community and social services
Job title: Director of Alumni Relations, Director of Annual Giving, Fundraiser, Donor Relations Officer, Community Leader, Fundraising, Fund raising Coordinator, Community Organizer, Community Liaison, Outreach Coordinator, Non-Profit Director, Outreach Specialist, Fundraising Manager, Major Gifts Officer, Director of Community Relations, Community Relations Coordinator, Development director or Community Outreach, Owner and Founder, Chairman and Managing Director, Founder Member, Owner and CEO, CEO/Founder/Owner, Communication, Owner and Director, Secretary, Founder and Director, Gerente general, President and CEO or Founder

Audience Size: 6,000

Facebook Ad Messaging

Ad Version 1:

We are your perfect partner if you answer yes to any of these…

1. Are you a social enterprise, non-profit society, community-based or voluntary organization?

2. Are you using disparate paper-based systems or multiple spreadsheets, all performing different tasks?

3. Do you feel you’re paying too much for commercial software and not able to reap the benefits you feel you should be?

4. Would you like to better understand your value and impact, and evaluate your performance?

5. Do you struggle to find out your data from anywhere, anytime?

6. Are you spending too long managing volunteers, donors, staff and services?

7. Are your funders and sponsors asking you for information, reports, and KPIs that you’re not able to provide in a timely manner?

8. Do you need to secure more funding and be able to produce compelling, evidence-based applications?

9. Do you need to find more cost-effective ways to communicate with your members?

10. Do you want to make aware your audience about your upcoming events?

Ad Version 2:

What if you never had to worry about managing donors, volunteers, emailing them, managing fundraising campaigns, events, your website, reporting to donors etc… and could just concentrate on doing social good? With our managed IT & marketing services you can !!

Ad Version 3:

Spending too much time managing donors, volunteers, supporters, projects, events, registrations?

Want to spend more time doing social good? We can help.

Learn how NGOs cut down 80% of manual work by using our fully managed IT & marketing managed services.

These were the creatives we used

Ad version 1

Ad version 2

Ad version 3

And we were off to the races..

How did we fare? See below

SMS Campaign

Remember we had collected contact details before? We wanted to put this to use as well. So we launched an SMS campaign in parallel. Here are the results from that ..

YES, we were monitoring the KPIs of all that we said we would monitor 🙂

After analyzing this further, we found that cold email was our highest ROI channel and AdWords was the worst.

Cost per inquiry on Adwords was too high.

Results of our “launched” managed service advertising

As soon as we “launched” our managed services we started getting leads. Within 2 months of advertising we got 43 sales qualified leads out of which we closed 5 deals and total deal size was Rs. 11,60,054/-.

During this time, we found that NGOs had already registered themselves with other IT vendors and unfortunately were cheated by these vendors and fundraising agencies in terms of service, pricing, marketing.

This trust issue also stood in our way of closing a deal with them. They were afraid to pay in advance for managed services which lead to increased deal closing time up to 2 to 3 months.

What did we do after we closed these deals?

We actually started coding.. We didn’t develop a platform or a solution from scratch.. We proceeded with an MVP.. sort of hacking together things using CiviCRM.. We knew from day 1 that we needed a custom platform for our own team to be able to deliver on our promises, but we didn’t have time to build it yet..

We took CiviCRM, customized things, hacked things together with zapier, spreadsheets, automation, got things going 🙂

So why did we shut this down?

While we anticipated some of these issues, we didn’t anticipate all of them..

Here are the challenges we learnt when we went into actual operations.

1. Payment challenges

After paying the onboarding cost and two months advance, they failed to pay for further months. Due to their finance problem, and no budget for marketing they were unable to do so. In other words, our business model was to lower entry costs and make a margin on longer term contract payments.. the NGOs killed it by not making ongoing payments..

2. Expectations of immediate donations

They expected immediate donations from their fundraising campaigns. After finishing the onboarding process they started expecting donations from their marketing investment to the next month. That was simply not going to happen. As with anything, building a brand takes time.. and it would have taken us time as well – the NGOs didn’t “get this”.. and their expectations were out of sync with what we (or any marketing firm) could deliver.

3. Onboarding took more than 2 months

NGOs don’t have data in electronic format as much as we need them to have (they only had hard copies).. Our premise of using their amazing cause, their work in the digital world to promote them, fell flat on its face because they could not send us digital data.

Many NGOs had internet challenges (in the areas they served). This stretched our onboarding time for more than two months (again, a ding in our business model)

4. Extra involvement to collect monthly payment

To collect our monthly managed services payment, we had to send multiple email reminders, phone calls, follow up… not with 1 client, but with EACH client..

This simply could not continue..

Sadly, we had to shut this down.

What do I hope you get from this post?

A lot of things actually..

Go get them tiger.