Crowdfunding has grown into a phenomenon over the past few years and it’s a trend that has helped many interesting and innovative projects get off the ground.
Here’s how it works: An entrepreneur creates a video that showcases an idea or project and asks for financial help from the online community, at various commitment levels, from individual backers to turn the idea or project into reality. The idea is that many people, each giving relatively small amounts, will amount to a large overall number, and a successful independent project.
As Crowdfunding became immensely popular, a bunch of large-scale companies rushed in, hoping to measure the community appeal of their already fully funded enterprises. This muddied the waters for struggling independent entrepreneurs for whom the opportunity was created. It also sullied the social media reputation of otherwise good corporate citizens whose motives were viewed suspiciously, even as deceitful, by backers who felt duped when it came to light that the organizations didn’t need the money at all.
What is the learning from all of this? In essence, without a genuine and authentic need for independent community funding, a campaign has very low chances for success. Consumers are as wise and ready for revolt, as they are eager to participate.
A Challenging Promise
Let’s start by debunking some common misconceptions about Crowdfunding.
1. Nothing is easy. There’s no such thing as easy money. In fact, running a campaign requires a fair amount of work to create interest and maintain momentum.
2. You need to be money-smart. Your backers are savvy, and expect you to demonstrate that you will be good stewards of their investment. If there is no meeting of the minds in this regard, backers will either not fund your campaign or will feel cheated and negatively promote your campaign via their social networks.
3. Backers expect rewards. To be clear, the money that is given to you is there to fund a project that delivers for the backers, not paying a marketing initiative of which the goal is your personal financial gain.
4. It’s not about you. Crowdfunding is about the realization of your project. Your project needs to be something tangible. A successful project cannot be achieved without the help and support of the community.
Have Realistic Expectations
Once you’ve placed the expectations of backers at the very center of your campaign, it’s time to reconcile your own desires, given the reality of the Crowdfunding scene.
Just because you’re asking the online community for money does not mean you will receive it. There are several factors that come into play when it comes to setting up a campaign. The amount you are asking might greatly determine your chances of success of failure.
A lot of failed campaigns are doomed from the get-go because the amount of money requested feels unrealistic or is grossly incongruent with similar projects. So before setting the dollar figure amount, do the research into similar successful projects. Then get realistic about it.
Be aware that running a Crowdfunding campaign requires you to be involved daily. You must not let it sit around for days, just waiting for the money to just land in your lap.
Without Appeal There Is No Reward
Once you have a compelling project with the right value-ask attached, it is time to work on “what” it is as well as the trigger mechanism that will turn a prospect into a backer: the rewards.
Backers need to be rewarded for their belief in the project. Therefore, the reward you offer needs to have perceived value (exclusivity) on the part of the backer. It also has to have real value. For example, the reward level for a digital download of a movie, album, game or ebook should not exceed the $25 level.
A Simple “Thank You” Can Be a Powerful Success Vector
The easiest way to advertise your campaign while turning backers into brand advocates is to simply acknowledge them on social networks just as you would post your campaign across all social streams. Acknowledging your backers and thanking them for their contribution translates into retweets and reposts and spreads the word to people beyond your network who might not be aware of your campaign.
Crafting the Campaign Story Requires Compelling Content
In order to execute a successful campaign, it is necessary to comment on the progress of the campaign and your project in order to attract new backers, as well maintaining interest of existing backers promoting your campaign on social networks.
An active campaign is very attractive to potential backers and encourages people who already backed the project to increase the amount of their contribution.
An update every three days as well as responding to a couple of comments on the Crowdfunding platform is a good way to make the campaign feel alive. If responding to comments cannot be planned ahead of the campaign, gathering or planning enough content for the run of the whole campaign is necessary.
The goal is to show backers and prospects alike that the project at the center of the campaign is moving along and that the campaign is just an extra push away from success.
Planning the Happy Ending Even Before the Campaign Start
All the successful Crowdfunding campaigns have a thread of storytelling in their timeline. A campaign should be planned the same way a story should be written. It’s like a roller coaster with constant updates on the behind-the-scenes twists and turns. The story illustrates the emotional highs and lows of the project team as well as the challenges and successes faced during the campaign and during the project development timeline.
Community Means Being Social
By its very nature, Crowdfunding is a social form of financing. Therefore social networks must be fully leveraged. Posting updates and links to updates is a big part of being socially active, but you must also featuring articles showcasing other funded projects similar to yours. This is the key to making potential backers feel that you are part of the community and not an outsider only asking for money.
We all have friends and family willing to take part in the campaign as backers. What is a tremendous asset on a personal level could also be viewed as a deceitful practice by backers not related to the project creator.
With companies trying to abuse the crowdfunding scene to generate online buzz, backers are very suspicious of certain patterns. When a campaign has a very high amount of money and a very low number of backers, the vast majority of which are new to the crowdfunding platform, it is perceived as being a campaign orchestrated to manipulate the opinion instead of helping a genuine project.
The End of the Campaign is Not the End of the Update Cycle
Your campaign is a success! You are funded and you are ready to post your final update to thank everyone who participated… Except this shouldn’t be your final update, it should be just the beginning. Just because a campaign comes to an end doesn’t mean you part ways with your backers. People backed the project. They want to keep being updated until the project is completed.
Once again it’s all about the project, not the campaign.