Building Relationships with Aid Sector Customers
Building and maintaining relationships with each of your customers—buyer, user, and target impact (BUTI) segments—supports the sustainability of your business model and the ongoing impact of your digital solution.
The concept of BUTI segments was developed because traditional models of consumers do not cover many of the types of customer segments in the development and humanitarian sectors.
While the BUTI segments model depicts three distinct segments, it is important to note that each segment is not always distinct from one another. In the development sector, and to some extent the humanitarian sector, the segments might be the same. An NGO’s program team may be both the buyer and the user, and often members of the target impact segment will also be users of the digital solution even if they do not purchase it directly. For example, the mobile app introduced by SPARK Ignites Rwanda through its project Irish Potato Value Chain Financing (IpoVaF) helps farmers input their produce data to boost their creditworthiness, so they are both the Target Impact and User segment.
Since each digital product and service will have different BUTI segments, it is important to define what your relationship should be with each segment based upon their wants and needs and to determine what you can practically deliver.
Some key factors that you need to consider when developing your relationship approach with each of your customer segments are outlined below.
Understanding the needs of your buyers is critical to establishing a good relationship with them. Specifically, being aware of a buyer’s policy direction and budgeting method and aligning with their procurement system will help with the adoption and/or purchase of your digital solution.
Buyers are involved in the actual purchase and/or adoption of a digital solution. If your solution is adopted by an organization in one country or by a specific department within a government, that doesn’t mean it will be easily and successfully adopted in another country or by another department. Before buyers will consider purchasing your solution, you may need to run a pilot project in a new geographical location with the same organization or for a new department. This is because buying decisions are often made by a combination of global and local actors or departmental actors, and a loose relationship with one part of the organization, will not automatically mean that other parts of the organization will adopt your solution.
In many cases, if the solution is for project implementation and not enterprise-wide adoption, decisions will be weighed more locally. Enterprise-wide adoption is difficult to achieve and will take relationship building at multiple levels in the organization. It will also require stronger levels of integration of the software into enterprise-level systems, most notably legacy enterprise resource planning and project management information systems.
When buyers are also the users of your solution, they will usually have some form of contextualization requirements (both organizational and location). Therefore, they may ask for custom modifications before they purchase and adopt your solution. Unfortunately, these potential buyers may not pay for these modifications in advance and may not commit to purchasing until the changes are made, which leaves you with all the risk. This demand for bespoke digital solutions means that a completely virtual, automated, and impersonal relationship with them often isn’t possible. A common exception to this is off-the-shelf software purchasing for back-office or core (non-project-related) cloud-based digital solutions, such as accounting packages.
Due to these modification requests by buyers and users, there is often a long-term relationship-building period required with multiple people within a single organization. Getting to “yes” might take months or even years of relationship building.
Since the decision-making process is slow and contracting can take months, patience will be critical in building relationships with buyers. You should also ensure that you have predefined stage gates and decision criteria where you are willing to walk away from the relationship if the costs begin to outweigh the potential benefits.
In humanitarian and development organizations and local governments, the entry point for most customer relationships is often through potential users, or those who are facing the problem and seeking solutions. This will often be technical staff, and the more you can build a relationship with them to understand their wants and needs, the better. You will need to work with them as an ally to persuade other organizational staff in the decision-making process to consider your digital solution. Help them map out the decision-making process, identify the decision stakeholders in their organization, and work on a plan for how you will get to a “yes” decision. (See the tool below.) The decision-makers may be spread out across multiple levels of the organization—local, national, regional, and global—so this process may take some time.
There will often need to be significant hand-holding with the user in both advocating for your solution internally and for the organization to be able to run a pilot test. Since testing might need to go through a full field trial, you should make sure that you have a single point of contact, such as a key account manager in your organization, who can manage the relationship to ensure that it is as smooth as possible. It is also wise to set up a customer relationship management system, either using a spreadsheet or dedicated CRM system, to make sure that you are in sync with your approach to your users and buyers. As relationship building takes time, you should also prepare for key customer staff turnover by building relationships with multiple internal stakeholders in your prospective customer organization.
Case Study: Getting to “yes”: The Role of Trialing and Piloting for Adoption
Last Mile Mobile Solutions (LMMS) had a global contract with an NGO that came up for renewal. Given it was a renewal, both the LMMS point person and the point person within the NGO expected it to be relatively straightforward. However, it was not. The two worked together to create a business case for the NGO, and they completed hundreds of pages of procurement and IT security documentation. The LMMS team attended the NGO’s procurement committee meetings to carry out demonstrations and discuss features and pricing.
After more than six months of work, the NGO requested a different type of legal contract due to its legal governance structure. Each country office was a separate legal entity and wanted its own contract with LMMS, but they were all to be governed by a global contract. This was agreed to over months of work that included the World Vision’s legal team on behalf of LMMS.
When everything was agreed to and new contracts were being established with each country office, a fundraising office in the same NGO (part of the buyer segment as they were providing funding to the country offices) got in contact and wanted to restart the procurement process for the countries they funded. The LMMS team was required to pilot and test their solutions with these country offices even though this same NGO had already been using the software for years. It emerged that a person at the regional level had been left out of internal communications and engagement by the global team of the NGO, and they had enough influence to stall the process. In the end, the contract renewal took more than 12 months.
Target Impact Segment
When the target impact segment is not the buyer or the user of the digital solution, it can be more difficult to access members of this group to understand how the use of your digital solution impacts them. For instance, if you are providing an NGO with a cash or voucher assistance (CVA) platform, your primary relationship is with the NGO. After the initial pilot, you may not be working directly with the target impact segment, only with the NGO staff. This means that although you will continue to receive feedback from the NGO staff, you won’t receive continued in-person feedback from members of the target impact segment unless you have intentionally set up a system to do so.
It is important to follow good user-centered design processes in the initial prototype and piloting stage and involve members of the target impact segment in the development of your digital solution. After the pilot stage, when your relationship with the target impact segment is often mediated by the user segment, you need to ensure that you can maintain a connection to those who are most impacted by your solution. You should establish agreements with the buyer and user segments on how you can obtain data and learnings about the target impact segment so you can continually improve your solution and assess the overall impact of your digital solution.
Relationships that require solution modifications and multiple trials have significant impacts on two areas of your business model:
- Value Proposition - Core, Modular and Hackable: You may want to develop your solution so that it is primarily a core solution with some modularity. In reality, you will often find that the customer wants it to be hackable, but wants you to do the hacking, so they can get a customized solution developed for free.
- Revenue Model: Your aim might be to simply sell your software, but in reality the revenue from the purchase of the software on its own does not cover your costs. So you have to subsidize it through a consultancy and/or training service for the implementation of your solution.
Interactive Tool: Decision Stakeholder Matrix
- Methodology: Group or individual exercise
- Time estimate: 30-90 minutes
Use our interactive tool to identify the decision-makers who will influence the adoption, purchase, use, and support of your digital solution and where they sit in the decision-making process.Go to the tool
Trust is key to building relationships. Ensure that you are building trust in your organization and your digital solution in all your interactions with customer segments.
Building and maintaining relationships with your different customer segments supports the sustainability of your business model and the ongoing impact of your digital solution.
Your relationship with each customer segment will not be the same. Define what it should be for each segment based upon their wants and needs.
Complete the following in your Business Model Sustainability Canvas:
- Indicate the type of relationship with each of the Buyer, User and Target Impact Segments on a separate sticky for each one.