Crowdfunding has brought thousands of new products to the world and helped vault companies into household names from just an idea or a sketch, but more often today established companies are inviting fans and followers to help invest in new product lines and their company’s future.
Is crowdfunding right for your organization?
Successful crowdfunding requires you to follow a few steps, but it’s most important to work out in advance whether crowdfunding is a good fit for your company’s goals.
Do you have a brand that people love?
This seems like an obvious question, but it’s one that separates the companies trying to jump on the “viral” bandwagon from companies that legitimately want to build consumer-focused products.
You need to be honest about your brand. Pull data on sentiment from online sources and gauge the responses with a view to how these same people would react to your campaign.
Crowdfunding works because the public is more likely to support something when they have their own money on the line, and having a positive association with your brand is a cornerstone to that behaviour.
Do you have a brand you can actually innovate?
Crowdfunded projects that succeed are all coveted items that transform an industry. Crowdfunding a special edition of an existing product is a bad idea. Think way outside the box when you’re looking to crowdfund.
Do you have the internal staff to launch, maintain, and fulfill the campaign?
Crowdfunding is hard work. It requires a lot of planning upfront, the creation of a compelling video, and maintenance and fulfillment staff. One of the hallmarks of a well-executed crowdfunding campaign is the responsiveness of the campaign to its backers. Plan for key team members to oversee and pull in other staff as needed.
Do you have a manufacturer who can help you create your product on a tight timeline?
Before you put any effort into the creation of your campaign, make sure you have a lock-tight manufacturing plan and know what production gates and shipping concerns that manufacturer has. Often, items shipped from overseas take days to produce and months to ship.
Do you have a contingency plan if you can’t raise the money?
If your crowdfunding campaign fails to raise enough money, do you have a contingency plan for topping up the remaining funds? Or will you just abandon the project? What will your messaging look like in case this happens? Figure out these details so you’re not caught off guard.
Crowdfunding Best Practices
Prime your fans in advance
If you’re planning on mounting a crowdfunding effort, the first step is to ask your fans and followers what they might like to see next from your company. You may even consider turning this into a contest. What you’re looking for is enough response for you to be reasonably sure that if you build it, they will come.
In the run up to your campaign kickoff, make sure your email and social media efforts plant the seed of your campaign
Make an engaging video
There are many resources available on how to construct a crowdfunding video correctly, but the most important things to keep in mind are:
- Keep it short: 90 seconds is an optimal length, but you might not be able to do this easily.
- Keep your message simple: stick to easy-to-grasp value propositions.
- Clearly demonstrate the features and benefits of the product visually. Don’t just talk about the product – show your fans what it looks and feels like.
- Convey an emotional through line. People buy products for two reasons: 1) necessity, or 2) because they are moved to purchase for the way the product makes them feel. What makes your product covetable?
Get your social media in order and post regularly
Do not launch your crowdfunding campaign without a complete social media strategy and some tactical pieces thoroughly worked out. Try to tease out your product and make it irresistible. Make all of your messaging uniform and exciting.
Set achievable tiers for average consumers
Pricing is one of the hardest parts of business, and you only get one shot at it. Crowdfunding is no different. Make sure the funding tiers for your product take into account the average person’s spending power. Make the freebies in these tiers meaningful and worthwhile.
Make your premiums irresistible
On the other hand, in the upper echelons, when people are making a big bet on you, make sure there is a sufficient payoff. Call in favors. Put together one-of-a-kind experiences to make sure those tiers get snatched up first.
Crowdfunding can be a great way to bolster your relationship with fans and build your next big business idea. Take time and plan ahead for success.