The 7 P’s For Crowdfunding Success
The idea of crowdfunding has been around for a while. However, crowdfunding as we know it today, via platforms such as IndieGoGo (started in 2008) and Kickstarter (started in 2009), is quite new.
And yes, the idea of participating in something so cutting-edge and exciting makes the thought of creating a crowdfunded project very appealing. However, no matter how gifted you are as an entrepreneur, there are certain elements you need to consider and incorporate to get your project funded and off the ground.
At Funded Today we call those elements “The 7 P’s of Crowdfunding Success.”
And these are not just some ideas that we’ve thrown together to sound clever. Based on our rigorous testing process, which we’ve applied to hundreds of projects, we’ve developed and refined a Validation program that is HIGHLY effective and very rarely inaccurate.
For all our projects we strive to achieve statistical significance. We let the data speak to how capable a project is of achieving a positive ROI and continuing to raise money.
In short, we know what works and what doesn’t work.
We’ve learned to apply numerous techniques and elements, including the 7 P’s, to all our projects in order to maximize the potential for success.
The 7 P’s tell you WHY, or WHY NOT, a project/campaign gets funded or ultimately fails.
Introducing the 7 P’s of Crowdfunding Success
Every crowdfunding project begins with, of course, the product. Your product has to be good -.even the greatest campaign in the world won’t salvage a bad product. Promoting a product that the market simply does not want, robs you of money.
So, how then do you know if your product is “good?” Begin by asking yourself these questions:
· “Why is this product different/special/unique?”
Can you buy a very similar product in a store? Your product must be a product that consumers can’t buy at Bed, Bath and Beyond, or Target, or Amazon, or Wal-Mart. It has to be unique.
· Is there something about your product, some benefit, that makes it wholly special?
Ideally a product should give us some benefit that no other product offers. Even if there are many similar items, what is it about yours that no one else offers? Does your product offer a solution or a prevention? How does it do this better than other products on the market?
· Would you buy this product? Will your family and friends actually give you cash for it?
This is that step beyond, “hey, that’s a great idea.” This is the, “Here’ s my checkbook, I want in”, step.Part of your research on this needs to include other crowdfunding campaigns to see if other people have sold a similar product. And, if so, how much did those similar campaigns raise? What do the Kickstarter comments say about this product and what do the facebook ads comments say about this product?
· Is your product “techy” or cool?
Certainly your product does not need to be techy or cool for you to make money. But no one can deny that tech products or those with a coolness factor do sell well. Some examples include:
Watch + Tech = Pebble Time ($20 million raised)
Cooler + Tech = Coolest Cooler ($13 million raised)
Luggage + Tech = Trunkster ($1.4 million raised)
Meat Thermometer + Tech = Meater ($1.2 million raised)
Wallet + Tech = Woolet ($332 thousand raised)
· Will a lot of people need or want this product and/or its benefits?
How big is the market for your product? Is your product dependent on other products? (For example the pebble watch band depends on owning a pebble, and OrbiPrime depends on owning a VR headset). If your product is dependent on the consumer owning something else, you need to understand how this will affect your potential market.
You have to be on the right platform for your product. And not only that, you’ve got to consider whether crowdfunding is even the right platform to launch your new business or idea. If you want to start a landscaping company, that might very well be a great idea, but, it will NOT be a good idea for crowdfunding.
Therefore, for this P, let’s focus specifically on if you’re invention is a good fit for a crowdfunding platform. In this case, there are many crowdfunding platforms to choose from but the two top-players are Kickstarter and IndieGoGo. The first thing you need to determine is whether your product is suited at all, for crowdfunding on Kickstarter or IndieGoGo.
Currently the hottest crowdfunding site. Accepts all major kinds of creative projects but not for causes or awareness campaigns.
Here you can kickstart any project including donations for charity.
So, as you set out to determine which crowdfunding site is the best one for you, do thorough research. Find out which platform similar projects do best on. You can leverage our free Kickstarter vs. IndieGoGo comparison tool here Apps really don't do so well, for example. A lawn care or window washing business, while great businesses/ideas, likely would NOT do well on the crowdfunding "platform" that is Kickstarter or IndieGoGo.
Once you know that a crowdfunding platform is a good choice for your product, then you need to decide which crowdfunding platform is ideally suited to your project. Which is better for your product - Kickstarter or Indiegogo? You can search Kickstarter and Indiegogo’s other projects for examples to give you an idea. To help get you started here are some of the categories to research:
This is where Funded Today comes in with our new Creative/Video department.
When we talk about presentation we are including the video and the page design. To create an effective presentation you need to consider these factors among others::
How is the video?
How is the page?
Is everything visually appealing?
Does your presentation sell the product well?
Does it show use cases of the primary demographics/users who would use the product?
Does it show use cases of all the different scenarios someone might use the product?
Does it focus on product benefits and not features?
Are your video and page emotionally compelling?
Are your reward levels clear and not confusing?
Presentation comes down to this:
Does just looking at the page, and reading the sales page/landing page, and watching the video make you want to buy?
The fourth P is promotion.
To be blunt, this part is simple because you can hire us. We are the most successful crowdfunding agency in the world and we have the P for crowdfunding promotion down pat! :)
As one of our promotion examples, let’s take a look at SpineGym, a great example of BAD promotion to start. SpineGym had a great product and a great presentation, and they were on the right platform, but they had HORRIBLE promotion. At least until they hired Funded Today. Once they hired us all the P's were hit and we raised them to over $1,300,000 USD in just a few months! http://www.kicktraq.com/projects/767539469/spinegym-strong-back-and-abs-for-the-rest-of-your/#chart-daily
Your promotion needs to take into account what the marketing has been up to this point.
So, what do you need to include in your campaign to create a phenomenal crowdfunding promotion?
Our special promotion sub “P’s”, paid media, press and partnerships.
· Paid Media
For Funded Today this comes down to – spend money anywhere you can make money. The best paid media is what works. From this you can build an email list. If this doesn’t work don't bother with Press or Partnerships. To do well you need to know how different demographics are converting on paid media.
Working with Press is simple, but hard. You need to create the angle and the story, and be able to tell the Press (in a non salesy way) why should they write about you/your product. Consistency is key here with the goal of getting an article syndicated to generate massive publicity.
Partnering with others who are excited about, and want to help promote your crowdfunding project, gives you access to a massive email list. You need to offer partners great incentive. Partnerships can be with anybody. It’s about building relationships and leveraging connections.
How do we at Funded Today fine tune our promotional spend to maximize campaign success?
We aim to see an average between all the many ad and audience combos, to make sure that we have a minimum ratio of 1: 3 - meaning spend $1 and make $3 or more. This alongside the EPV*, which shows how much is made for each person that comes in to the page (the value of these people), and additional metrics, we are able to determine a verdict on what’s working and what’s not.
Before we move on, let’s talk about your product price for a moment.
Clearly, as you go about setting up your promotion you’ll need to set the initial price of your product at the right entry point. However, price is something that may, and often should, shift as you test it during the promotion stage.
Price is harder than it sounds. It’s not just a number.
How do you know if your price is too high or too low? Are your pledge levels set up properly? Are there early bird pledge levels? Do you have different pledge levels for people who want to buy more than 1? Are the pledge levels easily clear and understandable?
If you "price yourself out of the game" before you even begin, you run the risk of offending Prospective Backers, even before you price drop.
For example, let’s suppose that you have a product, XYZ, which has minor modifications to it. So granted, it’s not exactly the same as other XYZ products on the market. You decide to offer a crowdfunding early bird special for $100. However, a quick Google search turns up many similar products priced at $99 or below.
You have a problem. Your price at $100 is going to feel too expensive, particularly if your presentation does not convey that this is a $100 XYZ. If a potential backer is going to look at your XYZ and think, "Hey, that's a $25-$30 gizmo, max," and then they scroll down to view your rewards and the least expensive option is $100, your project is going to fail.
So, if manufacturing costs dictate that you price your XYZgizmo at $100 then your presentation and stand-out benefits HAVE to convey, "This is a $100 product."
What if you find out that you simply can’t competitively price your product? (Clearly, your initial research had some holes in it). You can disband and invent something new, or move on to your next adventure. Remember, this is business, not personal. A failed project does not represent you in any facet of the world. Mistakes are key to our growth. If you’ve had a failed crowdfunding campaign, please read Your Crowdfunding Campaign Might Fail. And That’s Okay. Here’s Why.
Bottom line, you have to set a reasonable price right from the start.
However, determining your pricing doesn’t stop there.
At Funded Today, we set that initial price after selecting the platform, but then we like to experiment. We do A/B Split Tests on price, during the promotion stage.
That is how we determine the absolute best price point for great conversions and crowdfunding success.
The previous Ps, for the most part, are relatively concrete. When we talk about the 6th P, Probability, though perhaps harder to quantify, can have just as much impact on the success of your project as any of the other Ps.
Will people think that your product can really happen?
Is your creation a product with a lofty undertaking and, if so, will consumers still believe in your product?
For example people struggle with the idea of this project:
ORBI Prime: The First 360 Video Recording Eyewear
Effortless, intuitive, and durable, ORBI Prime lets anyone create incredible 360° videos and images.
Why do people struggle with this product?
They think ORBI Prime is just NOT realistic. In other words, they don’t think the probability of creating something like this is high enough to justify backing OrbiPrime. Certainly, that doesn’t mean that it can’t be done, just that people perceive that it can’t.
When consumers are predisposed to not believe in your product even if it’s a great product and you can deliver, that clearly makes it much harder to get the funding you need and require.
Even if you’ve gone through all the steps above, and believe you have all your Ps and Ps in a row, there is still one last P for you to understand and examine: the people behind your product. Talk about perception a bit here (Does your team exude confidence and capability).
You need to take an honest look at your team. Do the people you have behind the product lend credibility to their potential on delivering? In other words, knowing the strengths and weaknesses of your team, can you deliver what you say you are going to deliver, and are consumers going to believe that?
If we go back to the example of ORBI Prime, one of the issues is that Prospective/Would Be Backers did NOT fully trust the people behind the product to be able to deliver, or they thought that their team simply couldn’t pull it off.
ORBI Prime has a SMALL team and even HUGE companies like Google have "failed" when it comes to products of similar nature, like Google Glass, for instance.
Summing up the 7 P’s
A quick note first, on the idea of perception.
Perception: Each of these seven (7) P’s really have two (2) elements to them: The actual fact of the 7 P’s and the other is the PERCEPTION of these 7 P’s. You can have a presentation that your product is X value but you can CHANGE your presentation and the PERCEPTION of your whole campaign will change. So, even though your PRODUCT might not change, when you PRESENT it differently, your P for PRODUCT will change in the minds of your customers/backers.
Perception primarily comes down to the FIRST P of PRODUCT. Onsen Towel - The product has SOME intrinsic value that you cannot get elsewhere (LunoWear - your backing generations of watchmakers), the wine bottle (Same wine, different bottles, if it looks fancy, people will actually say the product tastes better)
Product, Platform, Presentation, Promotion, Price, Perception, and People. The 7 P’s.
So your Crowdfunding Success equation looks something like this:
Potential + 7Ps = Profit
When you are strong on all your P’s, you are going to have a successful campaign. In other words, you are going to profit. As are your backers and buyers who get all those awesome benefits.
As you can tell by this article, at Funded Today we do not simply throw great content out there to support your product. We use our vast base of knowledge to test and refine all aspects of your project, so that together we can make your crowdfunding project wildly successful.
And that’s why we are the best rewards-based crowdfunding marketing agency in the world.