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Social and Market Norms: How to Sell Good Will and Good Stuff

Social and Market Norms: How to Sell Good Will and Good Stuff

Monday, September 15, 2014

My friend Colleen makes fabulous cakes. Every time one of my kids has a birthday, she makes a cake. The cakes are usually elaborate, themed and taste great. When she delivers a cake, I try to pay her, but she declines. This makes me feel horrible because I want to pay her for something that is very much valued. But Colleen doesn't want my money. She is making cakes because she cares about my kids and loves making people happy. Taking money for that feels wrong to her.

Colleen was operating under social norms, which means she was making the cakes because it was the right thing to do. I was operating under market norms. I wanted to pay her for a product that had value to me. Colleen and I have come to a compromise. She makes cakes, and I make a donation to a favorite charity. 

This story illustrates the difference between social and market norms, and what happens when they collide. Imagine a friend whipping out cash to pay you for dinner you served in your home. Or, imagine performing a service and getting a gift or thank you note in exchange. When we confuse market and social norms, it can be alienating to our audiences. 


Social norms drive fundraising.

As nonprofits, fundraising is our social norm. We ask people to donate money because it is the right thing to do. This is a gift-oriented, right brain transaction. We use social norm drivers like hope, belonging, collective impact, and yes, even guilt, to get people to donate money. And our donors give because it is the right thing to do, it makes them feel good, it makes them feel like they belong, and it relieves their guilt. Social norms are requests we make of one another to form a sense of community and goodwill. They do not require immediate payback. 


Market norms drive product sales.

Many of us also sell products either through a social enterprise, membership or a fee for service. Product sales are a cash-driven, left brain transaction. Whether you are selling bread, cookies, catering, tutoring or any other product, consumers will make a purchase because they think that product is the right value for the money. That the product benefits a nonprofit adds to the value, but it is not the only factor in a consumer's decision to buy. The product needs to compete in other areas as well. We won't buy a cookie just because it supports a charity. That cookie has to taste good too. 

So you may be thinking, "My donors want to know their donations are the right value for the money, which is a market norm."  And this is true, but our donors give to the charity that they connect with emotionally, and then they look at outcomes. Our donors need to believe in what we are doing before they will give a gift. Our fundraising messages should meet those social norm needs.


Meet your audiences' social and market norm needs.

Fundraising primarily operates on social norms and products primarily operate on market norms. Market transactions can have some social value but the primary driver is the right value for the money. Fundraising can have some market value, but the act of giving is primarily a social norm. Understanding and applying both can give donors and consumers a way  to enter into and maintain these relationships successfully. 


An example of how to balance social and market norms.

The YMCA of Greater St. Louis is an organization that manages both market and social norm relationships. I am a member of the Y because it is a good value for the money. But if the gym was run down, the pool in bad shape, and there were no good fitness classes to take, would I still be a member based only on the Y's social mission? Probably not, because the membership is a market norm contract. 

I also have a social norm contract with the Y. Because I value the YMCA and want others to have the same opportunity, I donate to the Y's Strong Community campaign. By separating and giving identities to each of these relationships, I can maintain both successfully. If you are a nonprofit primarily driven by market norms, consider creating a campaign or foundation for donors to have a social norm relationship. 


Want to learn more about how to sell good stuff and goodwill?
Contact Karen for more sweet information.