Are You Ready to Crowdfund?
So … you’ve invented something!! That’s awesome … you are an innovator, and helping to create the economy of the future!
If you want to use crowdfunding to launch your product, there are some key indicators to know that you are ready.
You have an MVP!
A minimal viable product is essential to be able to communicate to investors and your target market to get feedback on your innovation.
You have tested your product with an independent audience.
You should be able to identify up to 10 pieces of feedback you received about your product from your target audience. You’ve already incorporated the changes that were suggested by 25+ percent of the testers.
You have figured out the supply chain.
The last thing you want to do is have sales on Kickstarter or Indiegogo, but have no idea how you fulfill your orders. This erodes the crowdfunding ecosystem, and its terrible for your brand.
You have a budget to spend on lead generation and advertising.
You will need money to build a list and then to advertise your campaign because …
You need a list.
To be successful in crowdfunding, you need to come with your own crowd! The algorithms used by platforms like Kickstarter and Indiegogo benefit products that have significant sales in the first 3 days of a campaign. The generally accepted rule is that if you sell 33% of your goal in the first 3 days, the platform will begin to rank you higher. You will land on the first page, maybe they will include you in a newsletter … you will generally get more exposure to their subscribers.
To make this happen, you need to come ready with a list of customers who have shown an interest in buying your product. For more info on doing this, research “creating a successful email campaign” and “advertising on social media to get people to sign up”. Often, getting people to sign up on an email list or newsletter list involves giving something away, like a trial or a discount. Another hook is to say “Stay up to date on the launch of our Kickstarter campaign”.
You have budget for marketing.
You will need some great artwork, photographs and a video of your innovation. A website will not hurt either. The criteria for a crowdfunding video are varied … its worth taking the time to understand the messaging needed.
You have figured out your ROI on your ad spend & separately, on your campaign
The guideline that I have come across is that a cost of under $2.50 to capture a qualified email address will result in a successful crowdfunding campaign.
Once you have your list, you can find ways to create 'look-a-like" audiences and target ads towards them ... of course you'll need money for both of these activities.
These questions might help you realize your ROI on the campaign:
- What is my cost for a production run [include shipping, handling and duty to avoid surprizes later]
- How many do I need to sell to break even on the production run?
- How many can I sell in the first 72 hours?
You understand the way the “OFFERS” system works in crowdfunding,
and you have several offer options ready. Ideally you have tested these with an independent audience as well.
Plan for the future
Everything you do to crowdfund can be done with the idea that repositioning on a Crowdstore or online marketplace like Amazon may come later in the process. Save yourself time and resources by considering this.
Using an Agency
And lastly, there are many crowdfunding agencies out there. Their value varies based on your product category, their experience, their access to PR and their access to lead generation. You have to do the math before you commit. From what I have seen, agencies will help you to complete a successful campaign, but there will be no real financial gains to you to re-invest in your company. The main outcome will be proof of concept with a successful campaign. That is a huge win if you are going to investors next!
There are many other tips to out there … luckily there is a ton of information available online, and interviewing agencies will also give you many insights!
This discussion of Crowdfunding is presented by Innovator Lab.ca
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Sima Gandhi, Innovation Architect