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The One-for-One Business Model Carries Benefits Beyond Retail

By 3p Contributor

By Vivek Kopparthi

Imagine Apple trotting out this marketing strategy: For every iPhone 7 unit sold, the company sends a small computer to a child in rural Africa. It’s a way to strengthen a customer’s connection to your product, which is the exact appeal of the one-for-one business model.

The one-for-one method counts retail companies such as Toms and Warby Parker among its success stories. But the model can — and should — be applied to other industries, such as healthcare and education. One-for-one companies generate a profit, despite these donations, because the bill for materials is small for most products.

In business terms, the marketing advantages of the one-for-one model — such as the tax rebate donated products receive — vastly outweigh the minimal profit lost to donations. As the Apple example points out, when customers purchase these goods, they feel like they’re doing good for the world.

Customer connection and satisfaction play a vital role in a business-to-consumer (B2C) company’s attempts to build credibility with its audience. It would be wise of businesses in industries that put a high premium on customer engagement to consider this approach.

Give in order to get

Despite its good intentions, the one-for-one model has its detractors. The most commonly cited argument is an economic one: If Toms is handing out shoes for free, what happens to the cobbler who’s trying to sell them?

There’s just one hole in that argument: scale. In most cases, one-for-one businesses target the poorest of the poor, customers unable to afford shoes because they live on less than $2 a day.

While these critics get hung up on one-for-one’s potential negatives, perspectives in other industries are much different. Let’s take, for example, healthcare. I have a sponge in my office that takes around $3 to produce, but it’s sold to hospitals for $1,500.

Sure, an incredible number of other factors go into the pricing of the sponge when it’s sold to hospitals — research and development, operating expenses, and marketing costs all need to be covered. It’s this mix of variables, however, that produces the opaque prices of medical products that frustrate patients and doctors alike.

But imagine if the company that produces those sponges adopted a one-for-one model. The impact would be huge. The cost of the donated sponges would be minuscule compared to the potential value added to the company.

Instead of being seen as greedy for charging high prices, the company would be viewed in a much more benevolent light, which plays right into the image healthcare customers want to portray. They are some of the most empathetic people in the world, and they would gladly choose to do business with a company doing a great deal of good for the world.

Education is another field in which a little help does a lot of good. With new online possibilities, the face of education is changing, and there are new opportunities to provide it to those in need.

Ed-tech companies are growing at a rapid rate. Advances in technology are moving the education industry beyond its outdated model into realms that can assist the people who need it most.

Ghana, for example, is a country in which only 50 percent of students complete the fifth grade. In most cases, getting to school is difficult, while tuition costs and other related expenses are too great a burden. Again, situations like these are ripe for one-for-one partnerships because most people believe education is one of the worthiest causes to get behind.

Ed-tech companies that start one-for-one pacts with disadvantaged communities around the world will lead the way for educational philanthropy. Donating portable devices or useful software can have a powerful impact on communities that lack those resources.

Move outside the store

The one-for-one approach was born out of retail. Shoes and eyeglasses are consumer goods that most people are familiar with, and customers can clearly understand how those items would benefit people who don’t have them.

Utilized properly, the one-for-one strategy can provide so much more to industries outside that sector. In industries like healthcare and education, the products might not be as familiar to the average consumer — but the effect could be much more powerful.

Image credit: Pixabay

Vivek Kopparthi is the co-founder and CEO of NeoLight, an empathy-driven technology company primarily focused on lean medical devices for newborn care. With a background in electronic engineering, he and his team developed the world’s fastest, most powerful treatment for infant jaundice. As an entrepreneur, Kopparthi oversaw organizations of more than 100 employees, served as a startup advisor, and consulted for global corporations.

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