More and more entrepreneurs are using crowdfunding to raise dollars and awareness for their startup ideas, yet many people overlook a key principle: before you can get the funding, you have to have the crowd.
A big misperception about crowdfunding is that you don’t need an audience or a marketing budget.
That all you need is a good idea and it will magically fund itself. The wishful thinking goes something like this: You send your idea to your friends and they will send it to their friends who will then share it with all their friends – that old school “things will go viral online” mentality. Or you tweet to one person, that person will tweet to three, and each of them will tweet to three more, and soon your idea will spread exponentially.
Unfortunately, it doesn’t usually work that way.
Think about other things you post. If you send your blog post to three people, it’s likely that one of them won’t read it, one of them won’t car,e and the third may send it to one other person and it won’t go any further. You need a critical mass of followers before your idea has a chance of going viral, and even then it’s not something you can bank on.
Another mistake people often make is to confuse crowdfunding with preselling. Crowdfunding is not a way of selling your stuff in advance. It is a way of allowing people to support your project and help get it off the ground. You may offer samples or copies of your product as a perk. But many of the people who pitch in are often doing so because they want to support you and your project. It’s a subtle difference in motivation.
What crowdfunding is really good for is concept validation – to get input on what you are doing to make sure it is something people really, really want. This makes it a great tool for authors, artists, inventors – anyone looking to launch something new that they think people will be excited about. The money that you raise must go to help produce the idea, whether it is time to write, to produce the art, buy the supplies, or manufacture your product.
If you want to succeed at crowdfunding, think first about your audience and the various motivations they might have for supporting your project. This goes deeper than the ladder of escalating perks you see on Kickstarter (if you donate this much you will get this, if you donate that much you will get that.) It’s more than throwing in bigger and better prizes the more money people give.
Realize that in most cases, you will have at least three broad profiles of potential donors:
- People who are supporting you because they want your project to come to fruition. These are the ones who would be interested in a DVD, book, or three autographed copies. They want the thing you are actually making.
- People who care about what you are doing, but don’t want your product. They may care about a cause, such as independent publishing and want to support you, but not actually want what you are creating. For instance, I have supported a few people who are writing children’s books without wanting copies of the books.
- People who want to support you as a person and care about your story.
The key is you want to align your incentives with your donors’ motives. Make sure there is an appropriate perk to go with each motivation.
A student of mine approached me to support her cause, finding a cure for cancer. I am not a cancer awareness activist, but it is a good cause and I wanted to support her project. Her list of perks included a free eBook for donors on the very low end, $5 to $25. I thought, fine, I can save that on my hard drive. But I would like to give more. The problem was, for every level of giving above that, there was some kind of perk (we will name this recipe after you, feature your logo, send you a bunch of books) that I was not interested in. I would have contributed more than I did, except that I didn’t want any of those things.
So make sure you give people lots of options for how they can support you – including ways to just give without saddling them with stuff they don’t want.
Here’s another thing to keep in mind: successful crowdfunding campaigns are about more than just you and your project.
That may work for your friends and family, but to appeal to a bigger audience, you must be able to communicate why your product or project will be awesome and interesting on a larger scale.
People want to feel invested in making a big idea a reality, so that should be a key part of your messaging. They should be made to feel – because they legitimately are – a part of that funding, enabling a community that allows something amazing to be created.
At the end of your crowdfunding project, when you have raised or surpassed your goal, your response shouldn’t be “Awesome, now I can go do my thing.” Instead, tell those who supported you: “We did it! And because of your support, there is going to be something of value to the world that you care about.”
Audience engagement expert Danny Iny (@DannyIny), a.k.a. the “Freddy Krueger of Blogging”, is the co-author (with Guy Kawasaki, Brian Clark, and many others) of Engagement from Scratch! (available on Amazon, or as a free download). He also teaches marketing that works for small business owners and entrepreneurs at Firepole Marketing.
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Category: Startup Advice