Seven Vital Factors in Crowdfunding Success
This post by David Edward Garber of Funded Today LLC highlights the seven crucial factors that you need to consider before launching a crowdfunding campaign. From planning your product to your team, these factors will help you prep your campaign the correct way.
After working with 3,000 (and counting) rewards-based crowdfunding campaigns on Kickstarter and/or Indiegogo, we’ve concluded that their success depends heavily upon seven vital basic factors. One way to categorize those seven factors is as follows:
1. Firstly, you need to build a team of genuine likable trustworthy competent personnel who offer the global crowdfunding community a highly-desirable product at a widely-acceptable price.
2. Secondly, you need to present those first three factors as persuasively as possible on the best platform with the best timing.
3. Thirdly, you need to actively promote your project to the right audiences to efficiently draw the right crowds to view your presentation.
This order is important because your traffic won’t help if your visitors aren’t converted by your media, which ultimately can’t be any better than your offer—so, it’s best to prioritize your focus accordingly, starting with your…
The most important element in any rewards-based crowdfunding project is how you intend to benefit people’s lives through your product or service.
Some entrepreneurs forget that they work for the market and, instead, assume that they work for themselves—and, as a result, they may make the mistake of creating products first and then trying to find customers for them, rather than trying to identify customers first and then trying to make products for them. Proper market testing can help you to ensure that you’re supplying things that enough people actually want, thereby avoiding a common reason why startups fail—and why crowdfunding campaigns fail also.
We’ve noticed that crowdfunding projects also seem to struggle more-than-average when they offer services, apps (except for computer learning courses), and/or any products that are overly-niche, overly-localized, business-to-business, or primarily charitable in nature. And they seem to thrive more easily when they substantially improve commonplace consumer products for a global marketplace. We’ve observed many successes with projects involving computers, electronics, homes, gardens, food, travel, commuting, clothing, accessories, EDC, health, fitness, beauty, outdoors, pets, and games, among others.
Whatever you may offer, you’ll need to provide proof of a working prototype in order to campaign on Kickstarter, for which you may want to hire a manufacturer that will also mass-produce it later. It’s usually best to start with products that are minimally viable, while deferring costly enhancements until later, and to derive their functionality into an attractive form. Names generally work well when it’s easy-to-guess how to pronounce them correctly, and when they lack negative connotations but may suggest relevant benefits. It can help to create multiple prototypes for use in testing, media-creation, reviews, packaging, et cetera.
If prospective backers find your benefits sufficiently desirable, then they’ll usually want to determine (next) if your costs are sufficiently acceptable, which involves…
Before choosing prices, you’ll need to assemble a series of “rewards packages” for various pledge levels. It’s usually best to avoid rewardless pledges, partly because Kickstarter will automatically add a “pledge without a reward” option, and to instead offer your core product as your cheapest option. It’s also good to include costlier options, such as bulk-discounted multi-packs or even a special experience like a factory tour, which helps your cheaper options to sell better. Offering discount-priced options for early-bird backers encourages urgency in pledging, which helps you to get your project fully funded more quickly. Rather than creating separate rewards for same-priced colors or styles, it helps to combine these to keep options simpler, while asking backers to specify such details after your campaign has ended successfully.
When pricing each option, it helps to accurately estimate your costs, which may include platform usage (5%), marketing (perhaps 35%), third-party payment-collection (3%-5%), wire transfers, post-campaign pledge-management, packaging, shipping (which is best offered “free” to increase conversion rates), lenient return policies, and taxes (for which you should consult a tax advisor), all of which may total over 50% altogether. Prices that end in 9 generally sell best. And it may help to note that, after launching, it’s easier to correct prices that are too high than prices that are too low.
Along with pricing, you’ll also need to choose a funding goal. Goals that are overly-high may seem daunting, while goals that are overly-low may arouse suspicion—so, it’s best to choose goals that are as minimal as possible without risking failure to fulfill. Backers are more likely to back projects that are making rapid progress toward (or, better yet, beyond) minimal goals. You can also choose unofficial “stretch” goals beyond your official goal that, if met, will result in your product being enhanced in ways that are prohibitively expensive without increasing your scale. You don’t necessarily need to choose all of your stretch goals in advance, but you can invite your backers to help you to finalize these mid-campaign.
Most backers are serial backers who have pledged to at least one project that failed to fulfill as promised (or at all)—so, even if they otherwise like your benefits-and-costs, they may still hesitate to back your project unless you can sufficiently resolve their concerns that you won’t disappoint them. Additionally, customers feel more inclined to transact business with people who are genuinely open, likable, customer-centered, guided by shared values, trustworthy, and competent. So, it helps to become your best self, and to build an exemplary team with partners, so that you can genuinely assure your prospective backers that you have everything that you need (except for funds) to transform your idea into reality. Incorporating, filing for patents, and using clear simple NNN agreements can also help minimize your legal burdens so that you can focus better on what actually earns you money.
As you steadily develop your personnel and product and price, you’ll eventually need to consider your…
If your product is seasonal, then it’s generally best to seek funds whenever your product is most in-season, which Google Trends might help you to figure out. If your product is not seasonal, then it’s generally best to campaign as soon as you’re sufficiently ready, with two possible exceptions. One is July-through-August, when popular campaigns may thrive due to an annual peak in organic traffic while other campaigns may languish due to an annual glut of competition that can easily bury them from view. Another is Christmastime, which impedes crowdfunding marketing with multiplied advertising costs, busier reporters, et cetera.
As for campaign durations, overly-short campaigns lack enough time to raise funds, while overly-long campaigns lose their sense of urgency that encourages pledges, but we’ve found that 30-45 days works well. We also recommend starting between Monday and Wednesday (except for major US holidays) while it’s still morning in the USA, and ending between Wednesday and Friday before it’s evening in the USA. Unexpected delays are normal, so it’s best to keep all launch dates flexible. Please note that Kickstarter requires creators to submit their projects for its approval before launching them and that this process may require at least a few business days. After Kickstarter approves a project, its creator may launch it anytime, although any extensive revisions to it may trigger a second review.
Crowdfunding platforms attract the community of serial backers who are most likely to support your project, and these backers include many “early adopters” who help new technology to start gaining popular acceptance—so, it’s good to engage this community by campaigning on a platform that it already frequents, such as Kickstarter or Indiegogo. Campaigning on both websites at the same time may divide funding and/or confuse backers, so it’s best to campaign on only one site at a time. Although Indiegogo treats creators exceptionally well, we highly recommend running on Kickstarter because it’s better-known, more-trafficked, and enjoys a superior reputation among backers. Also, after working with dozens of identical campaigns on both sites, we’ve noticed that Kickstarter always results in better click-through rates for ads, better conversion rates for pages, and higher fundraising totals in general. Any Kickstarter campaigns that succeed may want to transition immediately afterward to Indiegogo InDemand in order to glean some additional pledges while awaiting fulfillment.
Well before running a campaign on either of these sites, it helps to establish yourself as a member of the crowdfunding community by creating accounts and then familiarizing yourself with how they work, including by backing some relevant projects—and also to familiarize yourself with their rules for running campaigns in order to minimize any risk of rejection or suspension. Kickstarter is notorious for canceling popular campaigns without either warning or explanation, although persistent following-up can help obtain answers in such cases. Common reasons for suspension include attempting to run multiple campaigns simultaneously (rather than fulfilling one before starting another), failing to show sufficient evidence of working prototypes (including showing renderings rather than actual photographs), infringing upon copyrights, offering things that have previously sold elsewhere, and/or promising to either cure or treat disease.
After you’re sufficiently familiar with these platforms, you can begin to create your…
Your campaign media serves as your electronic salesperson and should strive to present your project in its best possible light. Its persuasiveness (or lack thereof), influenced subtly by the platform on which it appears, can either cripple or multiply your project’s success at raising funds. Crowdfunding platforms allow you to readily study other projects’ media, but it also helps to remember that some projects may succeed despite their media, rather than because of it, and to understand relevant principles of sales psychology. Although effective e-salesmanship involves countless factors that each play their small role, we’d like to highlight a few key ones below.
Your project’s title-and-subtitle should generally introduce your project and establish its relevance, usually by stating what it does better than anything else in the world while including good keywords to help the right searchers to find it. Relatedly, your project’s primary image should generally draw attention to itself, show your product in its best possible light while presenting its benefits at-a-glance, and arouse viewers’ curiosity to know more. You might want to produce a few such images and rotate them periodically while your campaign is active. These elements will help draw the right people to your campaign page to view more.
Your project’s media’s most vital element is its video. Such videos often work well when they convey engaging true stories in which products are the heroes who lead everyone to a happy ending—and also when they captivate attention within their first 5 seconds, introduce your project within about 10-20 seconds, clearly show-and-tell viewers at an even pace (without wasting any time) about your project’s benefits plus your personnel, and end with a rousing call-to-action to pledge, all within about 1-3 minutes. It helps to perfect your script in order to avoid expensive revisions, to film in clean uncluttered well-lit settings, to use separate audio equipment, to minimize poor videography that may distract viewers from your message, and to add second-person narration to help engage viewers by telling them what you’re showing them.
Your project page’s “story” section should generally start with a good brief “hook” to assure viewers that it’s worth their time to continue. Campaigners often hook viewers by presenting their entire sales pitch condensed into a single power-packed paragraph and/or simple infographic, accompanied by supportive “social proof” in the form of praise by reporters, experts, celebrities, and/or “ordinary” people like your prospective backers. Just as your video’s hook shouldn’t take too much time, your page’s hook shouldn’t consume too much vertical space before proceeding to the main part of your pitch. Viewers who get hooked will typically skim down the rest of your page, pausing to read only whatever catches their interest, which is why your page should accommodate such behavior with elements like clear section headers.
After your page’s hook, it’s generally best to lead with benefits, follow with costs, and resolve concerns about your team. As for benefits, it’s usually best to present them in descending order of potency, and to derive them from your product’s features. As for costs, it helps to show viewers their range of options for rewards, plus their range of prices for each reward package, in such a way that’s both instantaneous and effortless to comprehend them, as well as to make comparisons between them. As for your team, it’s good to include any true evidence that they’re likable trustworthy competent people who won’t disappoint backers, for the reasons stated above. Photographs with both names and titles can show openness, which facilitates trust. Well-told true product creation and/or development stories may demonstrate virtuous character (including laudable values) while building rapport. Both budgets and schedules can provide evidence of competence. And citing your relevant past successes can encourage confidence that you’ll succeed again. Et cetera.
Your content should sell primarily through emotion, and often benefits from a friendly upbeat confident tone, although reason plays an important supporting role, and you should avoid any vagueness or confusion. Your page’s text should be composed in plain simple conversational English, free from both excessive hype and industry jargon, and then proofread to perfection by a native English-speaker who understands proper spelling, grammar, and punctuation. And, whenever you tell people something, it’s good to show it to them also. Images help break up boring walls of text while illustrating complex concepts; however, you should use GIFs sparingly so that pages will load quickly. Your campaign page should show-and-tell everything exhaustively (unlike your video) without wasting any words, and with minimal links to external sites where you risk losing your audience. Anytime you believe that you may have sold people (such as in your costs section), it’s good to ask for the sale through bold call-to-action buttons linked to your rewards checkout page.
While developing campaign media that will convert views into pledges, you should also prepare to draw the right crowds to view it through your…
Word-of-mouth marketing is powerful, but it usually requires time, and those who rely entirely upon it will likely get disappointed. It’s both quickened and magnified by your own marketing initiatives. So, it’s good to actively reach out to the right audiences and efficiently draw crowds from them to view the media that you’ve prepared for them while using effective analytics (like Google Analytics) to measure your performance. Because crowdfunding marketing is synergistic, it’s best to use every form of marketing, while focusing the majority of your efforts on those forms that are most likely to yield pledges, as overviewed below.
Before launching, it helps to prepare leads to synergize with the spike in “organic” attention that most campaigns receive during their first few days, which helps to increase its effectiveness. Arranging at least 30% of your funds in advance is a good benchmark, but more is always better for those who can afford it. In our experience, the most effective form of pre-launch marketing is running social-media ads to generate e-mail leads, although this can be costly. An alternative is to build a social-media community of fans, who may be harder to mobilize than e-mail subscribers. Pre-launch PR can arrange reviews from influencers while helping to nurture relationships with reporters that may eventually lead to news coverage. And mobilizing personal contacts, even if they only pledge $1 each, can boost your project’s popularity rankings, which raises its visibility to organic traffic.
After launching, it helps to use additional techniques to maintain (or even increase) your campaign’s momentum after organic interest wanes. For post-launch marketing, we’ve enjoyed the most success (in descending order) with social-media advertisements, cross-promotions, affiliate marketing, public relations, and social media posts. Although some well-placed posts can potentially go viral, you shouldn’t normally expect much from posts unless you pay to boost them as ads. Ads are ideal for yielding a steady stream of quick results, but they can be costly. By contrast, news normally costs time, not money, and it enjoys great credibility and longevity, but it also lacks urgency, which renders it better-suited for boosting long-term sales than for raising short-term funds. Cross-promotions are also free and can be arranged between any two campaigns, but they usually fare best between similarly-sized projects that offer complementary (not competing) products and/or that appeal best to similar demographics. Affiliate marketing typically involves hiring third-party agencies like Kickbooster and/or Funded Today’s Cashback Network.
As for advertisements specifically, they can be very hard to optimize, but hopefully, this paragraph will help some. We’ve found less success from Google Ads (which are great for targeting intent) than from Facebook Ads, partly because most backers are serial backers who aren’t necessarily seeking to buy what you’re offering until it’s presented to them. Our best audiences to target are often either lists of past backers or lookalikes of past backers of similar campaigns—but, sometimes, targeting either behaviors or even interests can also work well enough, especially when further limited to rewards-based crowdfunding interests. It’s also good to restrict targeting to English-speakers in countries where backers are most concentrated. And to segment all basic targeting according to world region, gender, and/or age-range. We normally only work with audiences larger than 10,000 people. For each audience, it’s good to test multiple image-and-text combinations to attract clicks to your page and to eliminate the combinations that don’t perform well. Ad content should consist of a great image (product or lifestyle or team) with supporting text that doesn’t look too obviously like an attempt to advertise something, but that draws attention to itself and then arouses curiosity to click. It’s ideal to attract click-through rates of at least 5% if possible, and the higher the better. You should ideally spend minimally on each audience (perhaps $25/day) until it proves sufficiently profitable or not, and then either abandon it or else gradually scale it up until your campaign ends. Facebook ads will never reach their entire audience, but will increasingly target the same people as they slowly lose their profitability.
Ideally, your marketing will efficiently yield a steady flow of curious well-qualified traffic to view your media, which will effectively persuade them to pledge for your offer, which will substantially benefit their lives—and the lives of others for years to come.
We hope that you found this basic advice helpful and we welcome your feedback about it in the comments below. If you’d like to study these topics in greater detail, then we invite you to peruse our website’s growing array of free self-help resources for crowdfunding campaigners.