So you have the next million dollar idea, now what? Among the many paths to making your dream a reality you are sure to consider crowdfunding as a key avenue to raising the funds necessary to bring your product from idea to production. We are sure you have been busy studying the 7P’s of crowdfunding success and have everything ready to go for launch, right?
You launch your campaign and away you go, staring anxiously at your screen, watching for the pledges to come rolling in. To your dismay, your expectations are less than fulfilled as you quickly discover the major “B” of crowdfunding. That’s right, the big, the bad, the beautiful, the BACKER.
The backer is the key to your crowdfunding success; yet, we often overlook the path the backer must take to pledge. In traditional marketing, both online and in brick and mortar storefronts, we are told repeatedly to eliminate purchasing obstacles for the consumer. In a storefront, we eliminate purchasing deterrents by ensuring products are in stock and varying payment methods and options are available. If you are running an ecommerce site, you can eliminate purchasing deterrents by removing captchas, using auto-fill options during checkout, and offering sign-in methods, allowing consumers to store their information for quicker check-out. We use these methods because we want to eliminate obstacles from the consumer; we want to make the purchasing process easy. Crowdfunding is no different. When running a crowdfunding campaign, you want to make the pledging process as easy as possible for your backers. You do this by removing the obstacles.
What obstacles you ask? Simply put, your funding goal and your reward structure can be among the biggest obstacles your backers will face.
Imagine walking into a store and finding a really cool gadget that you couldn’t wait to get your hands on. You have watched the demos, checked out all the cool features; this product is just for you. Then a sales associate approaches you and informs you that only 20 of the 100 really cool gadgets have been reserved by customers and unless 80 more people this month reserve the product, you won’t be getting that really cool gadget.
Now, if you find yourself in a fairly empty store, would you take the time to reserve the product? You are likely to feel discouraged. This is the very obstacle your backers face when your funding goal is set too high. In this same scenario, had 80 of the 100 really cool gadgets been reserved, would you be more likely to reserve yours? Chances are, you would be feeling much more optimistic about getting your hands on the product at this point.
The best scenario, is to eliminate this situation entirely by reaching and exceeding your funding goal as quickly as possible. This way, when you are standing in the store holding the really cool gadget and the sales associate tells you, “look at this product, we have sold 150 of these really cool gadgets when we only set out to sell 100” you have not only received instant validation that this is indeed a really cool gadget, but your risk of reserving the product now and not receiving the product later is almost diminished.
The quicker you can remove the funding obstacle, the more backers you will inherently find. You can learn more about the key components of setting a successful funding goal here.
Another common obstacle we see for backers is the project reward structure. Often, as creators, we get so excited to offer every reward level we can think of so that we don’t leave any backer behind. Trust us when we say, you won’t be leaving anyone behind by limiting your reward structures. The more rewards you offer, the more obstacles you put in front of your backer. Do I want the really cool gadget with feature x, or do I need feature y, or z? What color do I need, how many should I buy? Wait, these rewards have add-ons? The more questions your backer must ask, the longer it is taking them to consider their pledge. This puts a great burden on both you and the backer. Our advice, limit your reward structures to your main product as often as possible. Remove the obstacles! If you want to offer add-ons or options to buy more than one, consider stretch goals and upsells. These are great tactics to turn could-be obstacles into additional revenue. A sample reward structure could look like the following:
If you have a campaign that has multiple color/features to choose from, we would highly suggest using a Backer Management/ Pledge Confirmation System after your campaign to provide your backers with these options:
Organize all products from the campaign - helping your backers see what they are going to get and organize your product SKU’s for manufacturing.
Acquire shipping information from each backer and organize the information for your fulfillment provider.
Collect on failed pledges and offer additional methods for payment
We recommend that you use www.crowdox.com for your post-campaign needs.
To put it simply, the key to winning your backers (after you have your 7P’s in place) is to keep your funding goal and your rewards structure the same way you want to keep your potential obstacles…LOW!
If you would like to talk to our team of crowdfunding experts about your upcoming, or even live campaign, submit your project here, we would love to chat!