What’s more important for social enterprises: market or impact research?

We all know that market research is vital for providing businesses and social enterprises with information on their stakeholders, whether beneficiaries or customers. It enables us to better target, serve and support our intended audience. But are the impact evaluations of traditional charities relevant for social enterprises?

I am the Director of Research & Impact at SolarAid and I understand market research to be the collection and analysis of information about a market, about potential customers and their characteristics. I see impact research as the collection and analysis of information on an organisation’s stakeholders; about the changes or differences that come about as a result of the organisation’s programme/project. There is, of course, overlap but in this forum we want to discuss your experiences or thoughts on both types of research and how they can be integrated to help organisations reach their goals.

The dynamic between a donor/beneficiary is different to that of a supplier/customer and it’s important to address how this might change the information we collect when doing impact research as well as the opportunities this can offer for gathering detailed market research.

Please join us in discussing the following questions:

  • How can business driven market research integrate with social impact research, and should it when the goal is scale?
  • Do social enterprises use research findings more effectively than the wider international development sector, and do you have examples of where research has influenced programmes/projects?
  • How does hearing the customer’s voice change on-the-ground practice and delivery?

I will be joined by a great panel for this discussion. We don’t want it to be limited to the solar sector and welcome experiences or ideas from the wider development and/or enterprise field of work.

Steve, Chhavi and I have each written a blog that you might be interested to read to get a further insight on our thoughts and experiences of research.

Kat: What's more important: market or impact research?

Steve: Market vs Impact research: Does our goal to scale up compromise the social mission?

Chaavi: Market & Impact research: Benefits of a dual approach

Twitter: @Sunrise_Kat

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Hi there,

This is a great and really interesting topic - but I think there's another equally important question...

Surely without some established benchmarking or metrics criteria across the playing field, it's really hard to compare and effectively use impact research?

What bottom line are enterprises using? Carbon? Poverty indexing? What tools are we using to pin down and define social impact?

We need to be able to compare impacts across enterprises, to see where the best partnership possibilities lie, and how we can combine the strengths of one enterprise or NGO with another, to truly benefit communities, creating that synergy where businesses grow and development happens..

Does anyone see a way we might set up a cross sector metric, used by all to establish impact / benefit?

Kat - I can't join the discussion tomorrow, but believe integrating market research and impact research is of real value. As researchers we are used to understanding opportunities, needs, issues, challenges and insights from stakeholders. The real potential is in using these insights on the value and risks of social enterprise, to frame impact research and help shape some meaningful measures of impact.

There are some good examples of this in mobile and finance. Care published an excellent report recently on 'Connecting the World's Poorest People to the Global Economy'. It draws insights from seven pilots of informal savings groups and their links to formal financial services. They have effectively drawn on market research and impact research to develop next steps. I hope it is a good stimulus for discussion and I look forward to reading your insights.

I fully agree that market research and impact research differ, and yet also overlap. I would advocate for an active synthesis of the two.

My most recent experience of the complementary value offered by each approach involved our work with artisanal night fishermen operating on various waterways in Tanzania. About 100,000 lanterns aboard 17,000 boats are used to attract fish to netting areas throughout the night. These fishermen spend an average of 50% of their daily income to purchase kerosene to fuel the lanterns. One typical boat can use as much lighting kerosene in a year as would 50 to 100 conventional homes! Collectively, these fishermen spend about $70 million each year on lighting, emitting serious greenhouse-gases in the process while having to operate in an unsafe and unhealthy work environment.

The social and environmental “bottom lines” of addressing this market niche are clearly large. And we identified a strong business case for innovation in off-grid lighting equipment where solar panels power rechargeable LED lighting systems. We also determined that no solar-LED systems on the market were quite right for this application. As a result of the work, some companies have taken steps to develop and bring new solutions to market. While these companies are not social enterprises, the social ROI is likely to be part of their positioning of the products, and understanding those drivers is part of what creates confidence that there will be demand for better products.

Our experiences probably inform each of Kat’s three questions, particularly the third: listening – very closely – to the customer’s voice was critical to our understanding. Only by spending multiple nights out in their boats and observing up close their traditional practices, as well as their reactions to prototype Solar-LED lanterns could we arrive at meaningful findings and recommendations.

You can read more about our research on LuminaNET – a social network dedicated to off-grid lighting in the developing world.

This is such a great example of practical benefits which come from addressing such a niche. And yes, only by a combination: real world observations and working closely along the lines of localism do we get to understand these elements.

My NGO contacts in Madagascar frequently comment on how 'top down' solutions can just be a waste of cash which is swallowed up in no time. Working and meeting closely with local communities and identifying needs and long term niches and potential is what ought to be happening. And then the relevant bottom lines and benefits become so much more visible.

Evan, I'd be interested in talking more about your work in Tanzania for my contacts in the mainstream press... I will email you :)

Great topic for debate - it’s helpful to highlight the difference between market research and impact research and also how they interact dynamically; strategic market research can inform what impacts you aim for, not just the tactics of how to sell more. Equally, impact evidence can transform how a market works, and anticipating wider impact outcomes can and should inform the business strategy of a social enterprise (for example, what will fuel-efficient cookstoves and pico-solar lights do to the livelihoods of charcoal and kerosene sellers – can they be brought into your business model and be part of the solution?).

Using market research effectively to meet customer needs is a survival imperative for a social enterprise, whereas in a traditional grant-based model it is more ‘best practice’. A traditional grant-based NGO which fails to do this can set up a learning group to reflect on the experience; an enterprise will just go bust. This is not to say that it can’t be done in the traditional model, but the survival imperative is often more meeting donor demands rather than customer needs, so the danger of mission drift is more acute.

We need to be careful when we talk about giving customers what they want, rather than what we think they want or what we think they should want. Arguably many people living off-grid will say that what they want is cheaper kerosene or charcoal – this is the Henry Ford conundrum of market research telling him to build a faster horse. We should use market research to understand and respect people’s underlying needs and aspirations, but not be ashamed of using our knowledge and marketing capability (driven by research and data) to help them see the best solutions to meeting them.

Hi Giles, thanks for your comments. I agree that having benchmarking or common measurement is really useful for comparing across the sector, but I don’t think a lack of that should put an enterprise off from tracking their impact for their own good i.e. assessing the effectiveness of what they’re doing is one part of the equation, seeing how that compares to other organisations in the same field is an additional part.

We tend to talk about our bottom line at SolarAid/SunnyMoney as financial (sustainability) and impact, but you’re right, we don’t have a specific indicator on that; we use the indicators we track to measure ‘impact’, so it is multidimensional in that sense and I think that’s probably a better way of looking at it otherwise an organisation could be having success in one narrow area but not holistically.

I think there is also a risk inherent in having people ‘compare’ across enterprises because it can often lead to comparison of apples with oranges, and often organisations complain of the rigidity of common metrics because they might not quite fit them but I absolutely agree that shared measurement or common metrics is vital for informing the forging of partnerships so I agree it something we should tackle to make more effective.

I think what is happening a little more now is groups of organisations working in the same area coming together to create common metrics for that purpose. So, GOGLA (the Global Off Grid Lighting Association) is made up of members (private and third sector) working in this space and we’ve just created an impact working group which is all about trying to agree on shared indicators so we can start these conversations. I believe the Global Alliance for Clean Cookstoves has a similar working group. Perhaps we need to encourage more of this? What are your thoughts on the potential for this?

Hi Rachael, thanks for your contribution; great to have your thoughts.

I absolutely agree that there is a need to better use research results to really assess risks and value; I think using the word value is actually a great way of reframing ‘impact’ because it makes us sit back and question how effective we are, rather than just asking if we are effective. I imagine most organisations will be effective in some area, but it’s about maximising that and research findings can help steer us down that path if interpreted and acted on effectively.

Thanks for the link to the report from Care; I’ll definitely take a read of that – it’s sounds like a great example of how research has translated into practice. Do you have suggestions on how organisations can make sure their findings inform practice/development?

Hi Evan, thanks for joining the debate; we were hoping to have your voice in the forum. I like your use of the words ‘active synthesis’ – I think that describes really well what we all should be trying to do with this.

I love your example of the fishermen and how the information on ‘needs’ was able to inform the discussion with providers/suppliers about how to adapt/mould their product. I think we need to do more of that in the sector; adapting models/services/products that are borne out of hearing the expressed needs/desires/interests of our ‘stakeholders’ rather than trying to push our ‘solution’ on them and mould them to that; as Giles says, there is too much ‘top down’ work in this area.

In this particular case it sounds like the research would have been very time intensive – do you have any advice for how organisations can do this with limited resources? Would love to hear any thoughts you have on this.

Hi Mark, thanks for sharing your thoughts; I absolutely agree that enterprises need to react to their market research probably much more than grant-funded models as in a sense they are more accountable to their ‘stakeholders’.

I like how you talk about strategic market research informing what impacts you aim for – how would you advise an organisation with a pre-determined mission/vision to make sure that they’re adapting to this but staying true to their goals i.e. not suffering from mission drift? I wonder if our more traditional charities, not only perhaps don’t need to react to market research in the same way as enterprises, but also can’t, or find it harder to, be more dynamic? Would love to hear if you have thoughts on that.

I really like your comments about how wider impacts (possibly negative ones) can form part of the solution planning; I think it is vital for organisations to focus on their key competence but where they can integrate strategies like this into their process then it makes sense and maximises their impact, ultimately. I wonder whether this is also the place where partnerships can play a key role, as Giles, put forward earlier, i.e. if an organisation/enterprise identifies an area of wider impact but perhaps cannot directly filter a reaction to this into their working, perhaps they could/should then seek partners who could address this issue.

It’s interesting what you say about not being ashamed to use our knowledge and marketing capability to help people see better solutions. I don’t disagree with that and I guess that is actually where a lot of charities/organisations/enterprises have sprung from – recognising a need that isn’t being addressed on its own. But I think we have to be careful with that as while some things are perhaps not contestable (better health practices) others are very much so (religion). I think we’ve got to make sure our research really is open to be of use in informing our assumptions and opinions on this.

Welcome to the live segment of this discussion! We have great panelists from SolarAid, Ashden and SNV to help drive the conversation!

So - let's start!

Q1: How can business driven market research integrate with social impact research, and should it when the goal is scale?

SNV is highly involved in value chain development where we carry out market analyses and baseline studies before each intervention. These studies help us to design business models that are market based yet seek social impact, especially increasing household income. The market analysis is important for acquiring the necessary information to determine if a product is marketable and if so under what conditions. It also allows us to design a project around achieving a social impact.

I agree with Kelley - how can we know if a product/service is worth scaling unless we've listened to our intended customers? It'd be risky to try and go to scale without significant research activity.

Information gathered from our periodic impact studies feed directly back into the business model.

I'd go so far as to say it is hard to separate them... when we learn that selling a solar light to a customer has XYZ impact on a customer... our marketing people will want to use that. When our social impact maestro (Kat) is doing social impact research and receives info on, for example, a certain light having a low degree of customer satisfaction, that feeds our marketing....

Both of these examples are about customer satisfaction.

Customer satisfaction is essential to having impact and reaching scale.

Business driven market research should integrate with social impact research when the goal is to scale, as, in addition to researching the market, the affordability of its products, and the financial viability of its business model, a social enterprise needs to be able to demonstrate concretely how its solar light or clean cookstove is helping improve people’s lives. By being able to prove the specific impact of its products on respiratory illnesses and other health conditions, for example, the social enterprise can make a strong development case and help attract more funders and investors, thereby enabling the business to scale its impact.

Integrating the two kinds of research is quite simple and can be done in both qualitative and quantitative ways, depending on the size of the business, its geographical footprint, the number of people benefitting, and the time and resources available.

Yes, surely as you scale up it just becomes more imperative to get both these things right, as there is more to gain/lose?

If you would like more background on the topic of this discussion, check out these great blogs:

I believe that impact is fully part of the business model. There is no more reason to separate them and the question above May not be relevant anymore… Impact is business now.

And there is a perversion that one can be a witness of: some emerging business models are now designed for impact and without saying it, their main targeted clients are not the BoP or the end users but all these private and impact investors they are accountable for… Most of their revenues are fund raised and public investment… We can see it on how the business model is attractively designed and presented in “sexy” websites, not accessible to the targeted end users.

So yes impact is about business, and impact is a market signal to consider… Market and impact hoe together.

Q2: Do social enterprises use research findings more effectively than the wider international development sector, and do you have examples of where research has influenced programmes/projects?