The growth of crowdfunding has allowed smaller startups to be more competitive in their niches by heavily increasing customer engagement with their crowdfunded projects.
But crowdfunding isn't just for the businesses that can't afford to manufacture their own products, it's a way to calculate consumer interest, generate buzz, sell exclusive product packages, and interact with audiences like never before.
The Business of Crowdfunding
Crowdfunding has been different from a traditional investment model in the sense that individual investors were not vying for a stake in the company, but rather for an early copy of the product, a sense of engagement, and/or the satisfaction afforded by being a contributor.
It is worth noting that the aspect of equity in crowdfunded projects has changed somewhat, but the model still retains its advantages in engagement.
Through the power of the web, sites like Kickstarter have successfully put together digital platforms for entrepreneurs to showcase their ideas for funding. These sites are backed by national government regulations of course, so for the most part, crowdfunding is an entirely free way to call upon fellow savvy business people to fund your idea.
This is different across multiple platforms, but the idea is the same. People are interested in funding projects that are interesting, useful, and unique. They want something out of their investment. For a business, this is a great way to build momentum for a new product or gather information about consumer interests.
Related: The Basics of Launching a New Product
Choosing a Platform
In less than three years, dozens of sites have popped up showcasing themselves as crowdfunding platforms for a variety of different purposes, but Kickstarter is by far the most popular and prevalent. If you're not a fan of Kickstarter, Indiegogo is also worth checking out.
- Kickstarter distinguishes itself with backer rewards. This is an option to promise rewards to your investors depending on how much money they pledge. So you could offer a finished product, some sort of memorabilia, or a copy of the media if it's more for entertainment value. You can get creative with these "rewards" and the enticement of reward certainly has helped Kickstarter attract a large user base.
How to Make Your Crowdfunded Project a Success
The secret behind a success crowdfunding campaign is simple:
- Add a sense of personality
- Be professional
A good personality in the crowdfunding world involves transparency. There's no reason why you should be hiding anything from your audience. Be clear with your goals. Explain where the money is going and the timeframe in which everything will be accomplished.
Related: Knowing the Product Lifecycle
Next you want to show passion for your project. No one is going to care if you don't care first. You've got to show your audience that you want this badly. Put effort into every aspect of it, from the pictures to the FAQs. Every part of this project must have your attention 100 percent of the way.
Finally, be professional about your campaign. You need to show that you've thought this through all the way, and know your project inside and out. Do whatever it takes to make your project look "shiny" for your audience. Remember, crowdfunding is all about regular people doing extraordinary things. Make sure you do the same.
Bio: Vincent Clarke is a marketing analyst and branding consultant for USB Memory Direct, a wholesaler of B2B promotional goods. With a background in traditional marketing, he focuses on how new media, funding platforms, and social engagement affect the outcomes of business strategies. Connect with him on Twitter @vhclarke.