Thanks to high-profile successes like the Pebble: E-Paper Watch and Double Fine Adventure, crowdfunding has exploded in interest amongst businesses as an alternative to venture capital or angel investment.
The recent passage of the JOBS Act, which legalizes limited equity sales for publicly-backed projects, promises to further open the floodgates for enterprising startups. However, many inadvertently confuse these campaigns as fundraising efforts, because they call on the general public for support. Here are five reasons why crowdfunded endeavors are secretly more akin to consumer marketing efforts.
1. You have to give to get in return. If you simply ask for contributions, and offer nothing of value in exchange, you’ll quickly discover why crowdfunding isn’t like running a charity fundraiser. Backers expect meaningful returns in exchange for contributions — and that means offering compelling rewards. Whether providing preorders at a fraction of retail prices, exclusive merchandize, or singular experiences (e.g. a cameo in your next creation or executive producer credits), meaningful incentives must be provided. Pricing options must also be included at, and spaced out between, all tiers from impulse buys to splurges, to attract all backers. Ultimately, you’re selling something, whether advance access to a software product, or the chance to appear within a film’s all-star cast.
2. Having a promotional plan is essential. Many projects debut to great fanfare then peter out just 48 hours later. Remember that launch is only one phase of a project’s lifecycle. As campaigns can last 30 days or more, creating sustainable buzz with fans and media is vital. Before debuting, you not only have to put actionable promotions plan in place that steadily unfold over time and leverages multiple channels (press, social media, fan forums, etc.), you must also secure supporting assets in advance. These could be screenshots, concept art, video testimonials from notable personalities. Prior to starting, it’s also vital to understand who your target audience is, their appetite for such outings and how to best reach them. This requires market research and a clearly-defined promotions strategy, just as with any traditional consumer marketing effort.
3. Outreach must be constant and ongoing. Upon debuting, your core task isn’t just to keep chatter surrounding projects alive, it’s to sustain that buzz and grow it. Not a day should go by that team members, fans and/or partners aren’t updating, tweeting, posting news, calling on prospective patrons, or reaching out to influential community members and critics. Maintaining a running dialogue with backers is also vital through direct messages and mass updates. New surprises, announcements and rewards must be introduced at regular intervals, as the squeaky wheel gets the grease. Think of it as a virtual telethon if you want. But since it’s one that lasts for weeks, and must constantly compete for share of voice, to keep the proverbial phones ringing, you’ll have to steal a page from marketers’ and social media strategists’ playbooks.
4. You’re selling yourself as much as any product. Speaking of telethons or political fundraisers, how many demand that you yourself remain on-call for weeks on end? With crowdfunding, people are buying into you as much as any end product; realize that this demands the need to build empathy and creates a personal sense of obligation.
Beyond simple customer relationship management, someone on your team has to function as a tangible, readily reachable face of the movement. Moreover, patrons expect to hear from you often, feel genuinely appreciated, and play a direct role in unfolding efforts. Traditional fundraisers may employ celebrity spokespeople, but they don’t make them man the phones for months. That’s a role more commonly reserved for entrepreneurs who appreciate the value of word-of-mouth buzz generated through great customer service.
5. Endless advertising is involved, and with good reason. Paid placements or no, whether through public relations tactics, social media channels, and direct outreach to personal connections or industry influencers, creators are constantly selling themselves, their end product and their vision. Ultimately, succeeding with a crowdfunding project requires creating a stream of dialogue that steadily grows to a roaring crescendo.
Successfully light the initial spark and stoke the fire, and donations will pour in. Fail, and despite occasional spikes in interest, no matter how worthy your cause or creation, obscurity will consign it to an untimely death.