Crowdfunding for entrepreneurs? Most people probably associate crowdfunding with earnest folks raising money for charitable causes, or artists looking to fund their 10-minute animated short film as a passion project. Most people still don’t see the possibilities here for firms to massively boost the value of their sales and marketing efforts. It’s one topic that came up again and again at the recent Digital Strategy conference – and increasingly, my clients are asking about it.
The best example of crowdfunding that’s still on people’s minds more than a year after it launched: the Occulus Rift, a virtual-reality headset for 3D-gaming. It’s a neat piece of technology, but you could say the same thing about many such gadgets today. Even if you’re not a gamer (like me), you’ve certainly heard about this product – and not because of a big advertising campaign or Apple-sized brand appeal. Virginia Postrel in Bloomberg View explains:
When more than 9,500 people gave $2.4 million — nearly 10 times the original goal — to back the Oculus Rift headset on Kickstarter, it was clear the market was hungry for the invention. Although smaller donors received T-shirts or posters, the vast majority contributed enough to get either a prototype or a developer kit.
The inventor had an idea for a product – just the idea, not an actual working model. He could have sold the idea to another company or worked out of his garage to put one together, then launched his own company with massive startup debt and potentially very little runway to either succeed or crash spectacularly.
Instead, they took the crowdfunding route, which allowed them to do on the cheap what it can take conventional businesses suitcases of money to fund:
- Capital for product development, without needing to go to banks or investors.
- Easy validation of your value proposition. You’re excited about the potential of this new product that’s going to change the world. Well, if backers fund it, you know the idea has legs, even before you go to market. If they don’t – you just saved yourself several hellish years of butting your head against a wall of apathy from the market.
- Instant engagement with a target audience through a crowdfunding platform like Kickstarer or Indiegogo, which gets millions of eyeballs a day looking at various categories of projects.
- Instant customer feedback for marketing, before they ever sold their first product. Just imagine, instead of operating on hunches from market research among competitors (and good luck with that if you’ve got a disruptive idea), having people who are passionate about your offering telling you on forums, emails and comment threads exactly what they want.
- Instant sales list development for future offerings. Your crowdfunding backer was willing to spend their cash on you before you had an actual product. Now that they know who you are and you’ve proven you can deliver what they want, you can take the rest of their feedback and develop new products to answer other pain points.
The people behind some of the most popular crowdfunding platforms may not have intended fro them to become entrepreneurial laboratories, but the smarter ones are just going with that, allowing users to test features and pricing, changing them up at will according to backers’ feedback.
Crowdfunding to find customers: not Just for Startups
Take the New Matter Mod-T, a ‘3-D Printer for everyone. The campaign on Indiegogo wasn’t started by some first-time inventor with stars in their eyes, or even a small startup team with more talent than experience. According to Xconomy, the mover was Bill Gross, a serial entrepreneur with plenty of business success to his name. He went on Indiegogo to connect with customers directly and in 2 months, had raised nearly twice the goal of the campaign, with over $683,000 banked.
Crowdfunding is for business, period. It’s a way to make your sales and marketing efforts low-cost and high-reward, with little risk.
But there are some risks.
Crowdfunding Successfully for New Sales
I hope I didn’t give the impression that putting together a winning campaign on a crowdfunding platform is easy. It isn’t. For every Occulus Rift, there’s 100 other campaigns that didn’t even make their funding goal (and if you fall short on some of these platforms, you get zero). The crowdfunding marketplace also seems somewhat skewed towards catering to self-declared ‘nerds’: if your product isn’t video games, wargaming miniatures or 3D printing technology, it may be a little trickier to connect with your customers.
How to be successful at crowdfunding campaigns is a topic worthy of a book – and many have already been written. Some excellent overview tips are to be found in this interview with Indiegogo about achieving crowdfunding success). The good news is that instead of trying to hash through abstract rules and slogans, you can look at thousands of successful campaigns that are still live and see exactly what they did to connect with their audiences. Check out their product descriptions. Pore through the forums and comments to see how they adapted to customer feedback on the fly. See their pitch videos (if they had one). It’s up to you to put together a great campaign – but you get to do it while standing on the shoulders of giants who earned 200, 300 or 400 percent of their goal.
Looking or some the experts in sales strategy in Vancouver who can help you with your crowdfunding campaign? We can help.