What Makes A Great Fit?
Crowdfunding can benefit both the startup business and the new business. A crowdfunding campaign can be an excellent way to raise capital to allow a prototype to become an actual product, or a germinating idea into a visible business. The new business can use crowdfunding to its advantage by moving aside more traditional methods of financing and in the process acquire a greater reach to its target market. It also requires a smaller investment by the business, both of time and money, and lowers the resistance level for entry of new products and services into the marketplace.
The question remains, “Is crowdfunding the right solution for your situation?” Here we will look at successful crowdfunding campaigns and help you decide whether to begin the road to acquiring backers and funding. There are a number of important characteristics to learn that will help you make the decision, and the answers to these questions will significantly influence your decision whether or not crowdfunding is a viable option for your business.
Characteristics of Successful Crowdfunding Campaigns
One of the most consistent practices of successful campaigns is they tell a story that moves people to action. Crowdfunding allows you to tell that story to thousands or even millions of people. Therefore, create a story that will engage your visitors by including such topics as: why you chose to invent your product, the origins of your team, and hoe your idea will have the force to change the world for good. Anyone can ask for money, but far fewer people will be able to get others to become engaged enough to want to be part of your story.
Successful campaigns have taken the time to perfect their sales pitch. Be assured your customers and your backers will be fickle people. One of the reasons is that there are so many distractions and things that are asking for their attention. Their time is limited, so they will not use their time to read about the entire history of your company. Nor are they likely to read brochures, or click through a prepared presentation. To be successful, you need to know that for every visitor, time is valuable. Using short videos infographics, or a short list of key industry facts are ways to target your message to a specific audience and provide a format that is easy to understand. Keeping it simple and hitting on the major points you want to communicate lays the foundation for visitors to connect to your story quickly and easily.
Today if you are going to be successful as a fundraiser you must be active on social media networks. The reason is both simple and obvious: social media networks provide significant leverage to get your story out, and have it rapidly spread to thousands of people in a matter of days. Using the more traditional methods of communicating and advertising will result in far fewer people contacted. Think of social media as going on a tour across the country with your message, but being able to do it in 1/100th of the time. Social networks tools such as Facebook and Twitter make this speed possible, and because your business should already have an active presence on these and other social networks, you have a built in following.
A company that has a large and supportive personal network established from the beginning is another way to vastly increase your chances of having a successful crowdfunding campaign. The reason is similar to that of having a social media presence. Everyone from family and friends to existing customers are available to communicate your product or idea to, long before your campaign gets started. By tapping into this established market, you will get a head start that can have added to it social media, email marketing strategies, and the old but still reliable word-of-mouth advertising. The advantage to using your personal network is the message is not about getting money, but about the idea or product that you want to get funding for. Yet another advantage is these people will be there later to give your campaign some momentum, should you need it.
While we have been looking at the reasons certain crowdfunders are successful, we can briefly look at some of the reasons why others are not. Consider this statement from Seth Godin, who has a proven track record of crowdfunding success:
“Kickstarter campaigns fail when the line of people who believe in the idea is too small…[it appears to be a great way for fans to find your work. You put up a great video clip and a story, and wait for people who will love it to find you. But that’s not how it happens. What happens is that people who already have a tribe … use Kickstarter to organize and activate that tribe. [It’s] the last step, not the first one.”
Successful crowdfunders offer compelling rewards to their potential backers. This may seem obvious, but you still need to think long and hard about the rewards and incentives you want to offer to your backers. Despite bringing a following with you, the majority of backers will not support you simply on the basis of altruism. They will want something, usually tangible, in return for their support. The most common rewards of successful crowdfunding campaigns is either the opportunity to pre-order the product, or to receive some type of discount for initially purchasing the product. A minimum cash level for backers to contribute is best set at below $20. For the largest donors, one technique is for the rewards to be cumulative. If there are five tiers of rewards, offering the rewards from tiers 1 through 4 and the tier 5 rewards acts as a great incentive.
Finally, content should be shareable, especially videos. The issue of creating a compelling story was the key element in the discussion of successful crowdfunding campaigns. Here it returns to be relevant as while a great story can attract a number of followers, sharing that story across social media and other marketing channels is just as important. The length of the video should be less than 5 minutes, making it quickly downloadable and just as quick to view. Because the content is shareable, a single download can find its way into the hands of hundreds of potential backers. If this is the result of all your hard work creating the video, your effort will have served its purpose.