The Data Reveals These 3 Fundamentals for Crowdfunding Success
I’ve watched a number of entrepreneurs and small businesses attempt fundraising success with a Kickstarter campaign or other crowdfunding platforms. The concept is great: You pitch people on your ideas and only start building and investing after you’ve drummed up interest. This puts markets to work. If people aren’t interested in a project, then they simply won’t invest. Bad projects die out -- or so we think.
Of course, a lot of good projects never gain traction, either. What looks like luck boils down to good planning around your marketing and timing, mostly in competition with similar projects. Indeed, part of Kickstarter success simply comes down to being in the right place at the right time. Savvy entrepreneurs try to recognize trends and act on that knowledge to improve their chances of success, but often there is a dearth of timely information available. By the time most campaign analytics firms can supply you with predictions, the data’s value has decayed.
With crowdfunding, it’s not enough (most of the time) to sit back with your fingers crossed. Instead, you have to be proactive by marketing your goods and engaging your audience. There’s no way to guarantee success, of course, and ultimately your crowdfunding campaign can only be as good as your product. The best marketing campaign won’t be enough if you don’t have the goods.
Still, there are some steps you can take. Evan Varsamis, CEO of Gadget Flow, claims his team has helped thousands of companies launch Kickstarter campaigns and provided the numbers to prove it. He allowed me to take a dive into one of the largest repositories of crowdfunding campaign data. The data is definite on three points: social influencers are big sales drivers; video is the "king" of persuasive content; incentives influence all buyer behavior.
But how do you put that to practice?
Related: The Basics of Crowdfunding
1. Identify true believers and social media influencers.
In the technology adoption lifecycle there’s a critical chasm between earliest adopters and not-quite-so early adopters. Kickstarter programs face a similar hurdle: They need enough initial momentum to provide traction and to give the project a chance of success.
For Kickstarters, the first to bite are “true believers,” typically friends, family and associates with faith in you (and cash for you). A core group of true believers can get your Kickstarter campaign off to a quick start. Other crowdfunders are more likely to pitch in after they see people investing in your project.
It's important to reach out to social media influencers in your segment. If you’re launching a board game, endorsements by the biggest board game influencers will tremendously increase your chances of success. “Social currency is paramount in campaign marketing," Varsamis says. "If social media influencers and true believers sing praise about you and your products, other people follow suit. They’re following these key players on Instagram, YouTube, Snapchat and the sales tend to follow shortly thereafter.”
2. Video is Kickstarter’s "content king."
Researchers at the University at Buffalo School of Management found that video, pictures, and other types of media greatly increase the results generated by crowdfunding campaigns. Video content is becoming king not just for Kickstarter, but digital marketing and engagement in general. A number of people quite simply prefer video, which is effective for building trust with people. With video you are front and center. You can make a personal pitch, highlight key features of your product, show off your team, explain your vision and otherwise simply prove that you’re real. Trust is a big issue when it comes to crowdfunding campaigns.
Further, a video is an investment when you’re asking people to invest in you and your campaign. A simple video is evidence that you’re already investing time and resources into bringing your vision to life. For skeptical funders, this can go a long way. Don’t know what your video should include? Consider the following formula from Gadget Flow’s segmented data:
Intro (15 seconds or less): Introduce yourself (best to appear in person) and your product.
The problem, want, or need (15 to 30 seconds): What pain does your product solve? What want or need does it fill? Why do other would-be solutions fall short?
Solution (30 seconds): How does your product address the previously mentioned problem, want or need? Be forward -- explain what makes your solution different from others.
Technology (20 or so more seconds): Demonstrate the credibility for your product. Explaining some of the technological aspects of your product and how it works will help. Consider focusing either on the tech itself or the high-quality materials it’s built from.
Team (15 additional seconds): Now is a good time to introduce your team. This will help build trust, which is going to be very important shortly.
Why you need funding (20 seconds or so): Why do you need funding? What, specifically, will you do with it? What will people get in return?
Call to action (10 more seconds): Make a final pitch to get people to fund you. Reiterate the benefits of funding.
3. Approach crowdfunding as an incentive-based marketing effort.
Ultimately, your crowdfunding efforts boil down to fundamentals of marketing but with a twist around incentives. Consider running ads and paying for placements. Get your team involved. If you have a staff, run a contest with a bonus. For example, the person who drums up the most leads via their social media accounts gets an extra paid day off.
Your goal is to generate more funding than what you spend on marketing. You can use the tried-and-true formula “traffic X conversion rate % X value per-funder” to determine if your product is a success. As with most other areas of business, to make money, you’ll have to spend it. The Gadget Flow data showed projects that raised above $100,000 usually spent 1/3 of the total money in marketing.
There is too much noise on the internet these days to rely on word-of-mouth marketing alone. You have to be willing to spend money to see a return. Be bullish on your marketing budget and it will pay off.