The varied nature of crowdfunding is optimistic and naive. Crowdfunding has the power to bring dreams and ideas to the life which is not possible with conventional financial methods. Hence thousands of people with creative and innovative mind turning toward crowdfunding.
However, crowdfunding is also just like your another business where planning, execution, marketing, efficiency, effectiveness, management, leadership and discipline all are as important as in your main business in order to bring expected result.
Keep your feet on the ground and your eyes on the stars if you are planning to launch your crowdfunding campaign. Measure your campaign from the eyes of critics, put yourself in shoes of your customers and play like a pro with strategic business strategy as the success of your crowdfunding depends on how you do marketing.
1. Early Planning & Execution
“A goal without a plan is just a wish.” ― Antoine de Saint-Exupéry
This is an obvious stage of any campaign you run. Efforts without planning are just like a rocket without fins traveling in all directions except its goal.
Plan for Successful Crowdfunding Campaign
Have you ever heard about Chinese firm building 30-Story Building in 15 Days? No kidding, man behind this company says they can literally build a 30-story building in 15 days and the secret behind this is planning. This Chinese firm says that most of the construction work (by developing building blocks) is being done off-site in a factory, and only work left is to assemble them on the place.
This is similar to what well-known crowdfunding consultant Clay Hebert says “Crowdfunding projects get funded before they launch, not while they are live”. He also suggests starting work on your campaign six months before you want to launch.
So when your crowdfunding campaign goes live your stage is ready. You should already have shared news, word of mouth and bring social media awareness about your campaign before even your campaign comes to life and you will just need to start collecting your funds then.
When the question asked, “Why do crowdfunding projects succeed or fail?”
There are really only two reasons any crowdfunding project succeeds or fails. Yes, it’s really only two reasons. Traffic & Conversion; answered by Hebert. You can read a nice post on this by Hebert here. Following point is accommodated for these two factors only.
10 Growth Hacking Tips for Your Crowdfunding Campaign Click To Tweet
2. Choose Right Crowdfunding Website
They say: Choosing the right tool for a project can sometimes be easy. For example, when driving a nail, the obvious choice would be a hammer whereas hammer is not the right tool to drive screw but a screwdriver is.
Meaning choose right crowdfunding platform to suit nature of your crowdfunding campaign. If you want to raise funds for your product idea donation-based crowdfunding is not the right platform but reward crowdfunding platform is. Same way if you are looking to raise funds in form of equity then equity crowdfunding is right platform instead of reward-based crowdfunding.
Choosing Right Crowdfunding Platform
So you need to identify what kind of crowdfunding camping you want to start and what is the nature of your campaign.
Here are some examples
If you want to start crowdfunding campaign ranging from $10 to $50k for a personal or social cause like education, medical, sports, animal, charity, faith, travel etc then you should go for donation crowdfunding websites like Gofundme, Generosity where you are not going to offer rewards or perks to your backers.
If you are looking to fund your creative product ideas, startup service from $10 to $100k for categories like technology, arts and creative where you will offer rewards to your backers, reward crowdfunding platforms like Kickstarter, Indiegogo are the best choices.
Whereas if your goal is to raise funds of $100k or more with no rewards to investors but want to give ROI in form of equity, share in revenue or interest on investment, equity crowdfunding platform is the right choice for you. Crowdcube, Seedrs, Fundable, Crowdfunder, Earlyshares are few popular names in equity crowdfunding industry.
Peer to Peer lending is a popular and trendy approach to finance your needs like personal, business, education, debt consolidation and auto where you are willing to offer interest to your lenders. This is one of the fastest growing and disruptive crowdfunding type having abilities to replace traditional way of finance like bank loans. For your this purpose LendingClub, Prosper, Kiva are available lending platforms.
Crowdfunding Sites
Each crowdfunding platform will let you crowdfund your campaign on their platform and will charge you some fixed fee or percentage commission of funds you raise or both in return.
Also, each of this crowdfunding platform has their own terms and conditions related to maximum and minimum funding goals you can set, fundraising duration, payout rules and payment gateway methods you need to follow, so choose wisely. You can also check this crowdfunding infographic to get some idea about each type of crowdfunding platform, their fees and funding type (AON and KIA explained well in the same post below).
3. Let Your Crowdfunding Pitch Speak for You
When you go for online crowdfunding you are not going to speak to your potential backers most of the time but the pitch on your crowdfunding campaign page will do it on behalf of you.
So preparing a convincing, emotion-rich, multimedia-rich crowdfunding pitch is key to success.
Each and every crowdfunding platform has their own campaign structure you need to carefully provide information for each element of it.
In order to create your crowdfunding campaign page which can successfully convert strangers into backers, here are some tips for you.
Weave Catchy Titles & Briefs
Picking a right title for your crowdfunding is extremely important. This is the face of your campaign and this is one of the elements your traffic will look at first and click to know more.
Hence your title must be effective and reflective to speak on what your campaign is all about. Zack Miller of thebalance.com has prepared a great post on this topic here.
Produce Great Videos
This is an era of speed, people need everything quickly. If people have shown interest in your campaign by its title and brief it doesn’t mean they will spend 15-20 minutes reading your campaign story at first.
They want to know something very quickly about your campaign to further make their decision about investing or backing your campaign. Videos are the best way to tell your campaign story quickly to your audience.
But wait! Video praising your campaign for 5 minutes will create boredom and your potential backers won’t get idea about what your campaign is about, what problem it solves, its benefits and applications because as per the various research was done in this segment says your visitors people are likely to switch off videos longer than 30 seconds average.
So first 30 seconds window of your video is most important and you need to tell your story in this time frame. So make it clear, short, simple and professional.
Great Pitch Text
If a visitor is convinced with your pitch video congratulations! You have finished the first step of bringing one potential backer to your campaign, pitch text content is next farm your visitors will dig into know more about your campaign.
Pitch text is an element where you can be as much descriptive as you want but to the point and relevant information only.
In your pitch text you can not only text but photos, images, animated gifs and videos to explain features of your product, how to use, variations of your product, timeline and media coverage of your campaign and so on.
4. Traffic & Conversion
Traffic is nothing but the number of people visit your crowdfunding campaign page. Whereas conversion is the percentage of people who actually fund your crowdfunding campaign.
The math is simple, good traffic and conversion can lead your crowdfunding campaign to success. Any of these two is not good you need to find out and work on it.
Let’s discuss tactics you can use to improve traffic and conversion.
Traffic
- Building contact or email list
- Organic traffic
- Paid Traffic (aka PPC)
- Social media marketing
- Content marketing
- Platform traffic
- Press Release
Conversion
- Your product or service
- Targeted audience
- Your campaign story (told via your video, photos/images & text content)
- Your campaign rewards
- Social proof
- Progress & Updates
There are many but these are the main traffic and conversion affecting factors. Each of them is needed to be understood deeply to milk the advantage of each of them at fullest; I’ll discuss each of them via a separate blog for each of them later. Signup newsletter to receive updates on same.
Traffic and conversion both are required however common misconception among fundraiser is to gain more traffic but the fact is they need higher conversion rate most importantly. Let’s take a real-life example.
Funding goal of your crowdfunding campaign is $50,000.
If backers contribute $50 by average on your campaign and your conversion rate is 10% then we can say that 10 out of every 100 people who visit your crowdfunding page are funding your campaign. Now calculating traffic is easy and straightforward.
You will need 10,000 visits x 10% = 1,000 backers at average $50/backer = $50,000
Now let’s take another example where everything remains same but your conversion rate is 5% (5 out of 100 visitors funding your campaign).
You will need 20,000 visits x 5% = 1,000 backers at average $50/backer = $50,000
The conclusion here is if you measure less conversion rate you better need to improve conversion rate or traffic and if you are able to manage good conversion rate you will need relatively less traffic. If you are able to maintain both high traffic and conversion rate, you may not only hit your target but also over fund your campaign.
5. Know Your Customers
In the planning phase of your crowdfunding campaign, you need to choose audience you are going to target.
Understanding your customer is very important because you cannot win over everybody on the internet. You have to specifically identify your audience and weave your marketing efforts for and around this audience.
Best way to stay focused on your targeted traffic is to prepare “Buyer Persona”. A buyer persona is an illusory representation of your ideal customer you want to reach. Consider behavior, patterns, demographics, challenges, motivations, and goals of your ideal customer.
Hubspot wrote an excellent post on how to create buyer personas. According to it following is the basic template you can use to create a buyer persona for your crowdfunding campaign.
Buyer Persona Structure Explained
Want to make buyer persona? A detailed buyer persona will help you keep focus your time and efforts. Grab your FREE buyer persona template from here. Or you can generate one online from here via Hobspot’s MakeMyPersona Tool.
6. Realistic Funding Goal
Keep your funding goal as you can manage and you need. As you do not need to oversell yourself you also don’t need to undersell yourself. Be realistic and transparent to your backers. There are two disadvantages of being unrealistic to your funding goal.
Let say if you really need to raise $10000 for your project keeping all expenses in mind, but keep your goal $6000 considering the threat of not being able to raise fund could vanish the actual purpose of your crowdfunding.
Let’s take an example of overselling yourself. If you want to raise $5000 but set your goal $15000 is really exciting however could end up in an unsuccessful campaign because people only trust crowdfunding with a transparent breakdown of your spending.
Selecting right funding type is also another factor you should consider while setting your funding goal.
There are mainly two types of crowdfunding funding types being widely used by crowdfunding platforms across the globe are fixed funding and flexible funding.
Fixed funding also is known as All-or-Nothing model or AON. According to this if you are fundraising $5000 and if you raise $5000 you will get your funds, but if you are able to raise only $4000 – Bam! – Better luck next time, you will go back with empty handed.
Whereas flexible funding (aka Keep-It-All or KIA) is where if you are raising $5000 but only able to raise $4000, you will still get your funding but (may or may not be) at different(higher) platform fee comparing to successful fundraising – $5000 in this example.
Flexible funding is an advantage for you if you are crowdfunding but backers feel more secure with fixed funding because they know that if the campaign goes unsuccessful they will get their fund back. So you need to better care about funding type you choose.
As per the analysis conducted on 47,139 campaigns in 2014 by Cumming, Leboeuf and Swienbacher, from the IndieGoGo and found that most fundraisers have chosen Keep-it-All model, however, a campaign with All-or-Nothing model get funded mostly.
KIA v/s AON Funding Type
7. Great Rewards Really Encourage
Best rewards relatively attract more backers and help you improve the conversion rate for your crowdfunding campaign.
Offering a copy of what you are making as a reward to your backers have been always great idea rather than just “Nice Thank You” email. Try to put yourself in shoes of your backers and think would you expect just Thank You email in return of your $100 funding?
People are self-interested. They want to know what’s in it for them. Take a look at 96 rewards ideas suggested by Kickstarter.
Keep few things in mind even if you are not planning for just digital high-five
- Direct perks matter most: Always try to offer perks directly related to your campaign rather than indirect perks (eg. Amazon gift cards).
- Having early bird rewards on your campaign.
- Be careful with prohibited content in your rewards like drugs, illegal stuff, raffles, and porn. Watch out for terms and conditions of the crowdfunding platform.
An alternative game you can play is to make people believe in your campaign or give them chance to become part of something crazy or funny. Not convinced? Want proof? Check Potato Salad Kick Starter Campaign of Zack Danger Brown. This campaign raised $55,492 through 6,911 backers against funding goal of just $10. Can you believe this?
Why people raised this crazy amount of money for this campaign? Just potato salad as a reward? No, Zack is making them laugh and offering the chance to become part of something funny and tell their friends about their contribution to that silly crowdfunding campaign.
Law of Giving & Receiving
Always try to offer more as rewards than your pledge amount but keeping math of your budget in mind to avoid overspending. I would add a piece of lesson from Srimad Bhagavat Gita. (The Holy Hindu Book).
Srimad Bhagavad Gita Lesson
In chapter 4 sloka 11 of Bhagavad Gita.
॥ ये यथा माँ प्रपद्यन्ते तांस्तथैव भजाम्यहम् । मम वर्त्मानुवर्तन्ते मनुष्याः पार्थ सर्वशः ॥
“ Ye yatha_ mam’ prapadyante tams tathaiva bhaja_my aham”
Means: “When you give more than what you get Soon you get more than what you gave.”
Remember, “The Secret to living life is giving.”
8. Personal Networking
Foundation of a successful crowdfunding campaign is the powerful personal network. If leveraged benefits of networking properly using different networking techniques (eg. Social Media), networking will likely be your most effective and significant tool when it comes to campaigning your crowdfunding.
But the question is how to do it. I’ll discuss few proven techniques suggested by crowdfunding marketers, influencers and successful crowdfunders with their case studies.
There are mostly 3 types of backers who can fund your campaign. Family, Friends, and Strangers. You can further divide these 3 categories into subcategories like friends, best friends, 2nd-degree friends, business friends, classmates, roommates, co-workers, co-member and so on. Reaching and pitching these 3 types of backers consumes all sort of efforts you need to use.
“Charity begins at home” They Say
One should help family and close friends before helping others. You can use this reverse. Ask your friends and family to fund your crowdfunding campaign first.
Friends and families are backers you can get for your campaign easily. Also request them to spread the word about your campaign with their friends and family to increase possibilities of getting funded by 2nd, 3rd-degree friends and family members and sometimes strangers.
Cycle of Word of Mouth
Use Every Channel
There are varieties of ways you can reach to your potential backers to let them know about your crowdfunding campaign. Direct mail, email marketing, social media, webinars, seminars, events, expo/conference are examples of it.
Use the Power of Social Media
Social media has been proved as a powerful and effective tool for crowdfunding industry. It is nearly impossible to find crowdfunding campaign not using this tool.
Building social media followers should be started six months before you launch campaign as we already discussed. So you can set your game even before it is started.
Preparing a list of potential backers who will back funds and spread words about your campaigns like friends and family as we discussed above is one step and composing, scheduling your most social media post you will use throughout the campaign is another step to do early marketing for your campaign.
Tasks like reaching out press media, niche blog, influencers, interacting with backers to fulfill rewards cannot be done before launching crowdfunding campaign so if you can successfully complete your tasks you can perform before launching is good for you.
Use all sort of possible social media like
- Facebook: Obviously Facebook is powerful social media marketing tool allows you to share posts with links, images, text, and videos without limiting the length of your content. You can prepare your Facebook marketing plan dedicated to your campaign on what you will share how frequent with what type of content. Also don’t forget to put your Facebook people reach column for each post in your social media marketing plan so you can measure which of your post did well, why and when.
- Twitter: Twitter can also give you a great number of followers if you use it well but within a limit of 140 characters, also it spread words much faster than facebook and any other social media. Remember video advert Twitter, faster than earthquakes? Kendall Almerico, A crowdfunding Attorney and JOBS Act Expert says “Tweets should be written and scheduled so that they are run at least 10 to 15 times per day for the duration of the campaign, at all hours of the day.”
- Linkedin: Linkedin is a network for professionals, you can reach similar industry experts on LinkedIn who might donate to your campaign or at least can help you spread words. Crowdfunding groups are the best herd of people to introduce your campaign in. Check 19 LinkedIn Groups Every Entrepreneur Should Belong To will definitely help you in your Linkedin marketing.
As part of your social media marketing plan keeping your plan ready on what you will share, when, how frequent is a good idea. Check an excellent post prepared by Neil Patel on social media marketing plan.
Bonus: Try to interlink all social media pages so one follower on one social media can also follow your campaign on other social media account. Also, some social media account will allow posting automatically on other social media if you connect which will save you lots of time.
Appeal Existing Fans
If you are crowdfunding for the same campaign again or crowdfunding a different campaign first invite your existing fans to your new campaign again will increase possibilities to get funded by them again as they have already backed you in past.
If you do not want to miss a single chance to reach them use all possible channels as motioned above. To do this you should already have prepared an up to date contact list of your previous backers including their first and last name, email, phone number, WhatsApp, address, social media profiles, profile photo, gender and so on will give you full control over all channels you want to reach to.
Using best CRM or contact list management tool is best practice to achieve this.
9. Keep in Constant Loop
Backers of your crowdfunding campaign can not only lead you to success in crowdfunding campaign but also in your business. Keeping your backers in the constant loop is really important. You can communicate 3 ways with your backers and potential backers mentioned below.
- Campaign Updates: Posting frequent updates on your campaign will keep your backers and new visitors well informed about your crowdfunding campaign but this is one-way communication from you to your backers and visitors. Each crowdfunding platform will allow you an option to broadcast updates as many times as you want and these updates are the only way to inform about what is going on your campaign from your campaign. Use this feature for your own benefits. Fundly has prepared a very useful post on crowdfunding updates best practice you should really follow.
- Campaign Comments: Unlike campaign updates, the comment section of your crowdfunding campaign is two-way communication and another way to interact with your backers and visitors. This section can be used by your backers to post a word about their support and you can reply with gratitude. Not only that but comments can be used as public question and answer section where you can answer interesting queries raised by your backers and visitors will give you the opportunity to answer them to gain trust from them. Sometimes these kinds of Q&A can also answer similar questions might be asked by other backers in advance. Comment section can be also used to hear complaints, important feedbacks, and improvements for your product sometimes from backers.
- Direct Mail, Email & Social Media: Once a visitor converted into backer to your campaign you might get access to their social media profiles, email and sometimes mail address you can use to tell them new updates about your campaign if they are not following your campaign page.
10. Dos & Don’ts of Crowdfunding Campaign
Dos & Don’ts of Crowdfunding
Dos
1. Conduct a market research to validate your idea. Build your audience before launching your campaign. This will give you an idea on how your audience is excited about your start-up idea.
2. Connect with millennials; these younger generations are most attractive donors. The reason is simple: Youngsters are more connected to social media, are good tech users and have a direct connection to cause or people they support.
3. Candace Klein, CEO at SoMoLend recommends keeping campaign shorter around 40-45 days for best results.
4. Be great with your math: This doesn’t mean you should become a great mathematician but to well calculate your budget, reward cost including shipping and tax to avoid over or under spending on anything.
5. Get your product ready before or after your campaign ends as per your commitment to your backers. Otherwise, no matter if you have raised 1000% funds of your campaign goal, you will end up with a failed business.
6. Offer great customer support is key to run a successful business. Focus on customer delight pre and post sales. Engage a couple of your team members in live chat support to help visitors understand more about your product/service will lead them to become backers for your campaign.
Once you sell your product or services don’t think your job is done, delight your customers/backers even after sales to fix their issues with your product/service will play an effective way of improvement, engage your delivery, post-sales and support team members here.
7. Who wants to buy faulty products? People relatively less trust product doesn’t cover guarantee or warranty. Understand anxiety of your customers, offer them guarantee or warranty you can afford with your reward cost and make them feel that if anything happens to your product you are there to fix them.
8. People love customization. Let’s talk about real-world example on how Rolls-Royce took one important step forward. Do you know what makes rich people crazy about Rolls-Royce cars? Luxury, Class, Rich-Feel, Enjoyment, Hobby, Quality? Well yes but not only this but also customization.
Offer Customization to Your Product
Rolls-Royce lets customer build a custom car which gives the feeling of uniqueness and it makes sense because after spending thousands of dollars no one wants to see copies of the same car overtaking him on the highway.
Well as a start-up, you cannot match your customization to Rolls-Royce, but offering customization that you can afford is always a good idea.
Don’ts
1. As you already know that your friends and families would become early backers of your campaign but don’t ask money they cannot afford to back or you won’t be even able to tap into these early backers to your campaign.
2. Don’t overlook local regulations might applying to product and services you are offering or it would be serious consequences for you and your start-up.
3. Don’t ignore tax implications: Donations made through crowdfunding are tax deductible if they are made to a 501(c)(3) organization under the IRS tax code. Consulting CPA on this is the best way to deal with tax implications if you have any question.
4. Don’t release ideas unprotected as you cannot copyright or patent your idea. Launch something tangible with your crowdfunding campaign to protect your intellectual property. If you have only idea and nothing solid it means it is not the right time yet.
5. Don’t offer monetary rewards until and unless you are raising funds as equity or debt. Monetary rewards are ineffective in reward crowdfunding as the notion of this type of crowdfunding is related to product or service or goodwill only.
6. Don’t forget to thank supporters just like traditional donations, every single backer of your campaign is important and deserve appreciation. This is the daunting task but keeping it recorded properly can make this task doable. This task is also important to build relationships with potential donors for future campaigns.
Bottom Line
Starting your crowdfunding campaign is like working on two start-ups at a time. Crowdfunding is like another business as we discussed and will require all sort of resources to run your successful campaign. If you think you do not have sufficient resources available in terms of a team of expert you can hire crowdfunding marketers, planners and consultants sometimes a good idea.
Plan Early – Execute On Time – Get Succeed
Happy Crowdfunding 🙂
