For several years entrepreneurs and organisations around the world have been making use of crowdfunding platforms to fund their start-ups and projects. Crowdfunding, for those unsure of what it is, refers to gathering money – usually via the Internet – for a project or venture by way of raising numerous small amounts of money from numerous different people, not necessarily known to the fundraiser. While not all find success with this approach, many do, and a good number of those end up being far more successful than they ever dared hope.
So what makes one crowdfunding effort more successful than another? Is it simply the perceived value of the product, service or cause that determines its success? While this undoubtedly plays a pivotal role, there is another important aspect in the mix, one that will often tip the balance in the funder’s favour: offering the backer a reward.
Offer an attractive reward
Fundraisers who offer their contributors a decent perk or reward are more likely to garner the finances and support they desire.
So what are the most common and appealing rewards that one can offer? Experience shows that funders seek and respond well to:
- Personal involvement
- A cause
- Local ventures
- Customised swag
- Unique experiences
- Monetary perks
Let’s briefly consider each, and as you read through the list, consider each strategy in light of your own business model, asking whether or not they might offer a technique that would enhance your crowdfunding effort?
1. Personal involvement
We see time and again that backers enjoy getting involved in the development and creation of products and ventures that appeal to them, such as innovative tech devices, niche services, sustainability projects, or quirky apps.
Petcube, for instance, the company that developed a smartphone app that allows you to watch and interact with your pets via a camera when you’re away from home, made successful use of Kickstarter in 2013 by offering those who pledged more than $5,000 the chance to attend meetings with the founders to help develop the product and have input into future projects.
2. A cause
People like to fund companies that are developing a product or service that speaks to an area of importance to them. It’s the principle of emotional buy in. One example is the Nikola Tesla Wardenclyffe Science Centre.
Matthew Inman, the Seattle-based web comic known by his site name and nickname The Comic, was so upset that history seemed to have largely forgotten engineer and inventor Nikola Tessla that he started to crowdfund on Indiegogo to save Tessla’s wireless transmission station Wardenclyffe Tower on Long Island, New York. Over $1 million was raised in just nine days and so a museum and centre honouring the man are also being constructed. Preserving Tessla’s legacy clearly resonated with many.
When it comes to this ‘cause’ strategy, also think along the lines of environmental causes, social enterprises, missionary endeavours and animal rights. Because if you’re going to run with a venture that meets a need or niche you care deeply about, it’s highly likely that there are others out there who also care deeply about it. Making your mission and vision clear will help to attract like-minded people to your campaign.
3. Local ventures
Tangential to the above stimulus is the pull of local initiatives. The Saint Benjamin Brewing Club in Philadelphia, for example, made excellent use of the crowdfunding platform Lucky Ant to raise more than $20,000 to restore the building’s historic façade, the project clearly having resonated with the local populace.
People want to see their communities flourish and whatever the nature of your project, it might have broader fundraising appeal than you realise simply by dint of its localness.
Status is a very strong influencer with many potential funders. People want to be the first to have something, to own things that are exclusive, and to have others see them have it. When potential backers are promised to be given a product before the wider market, or to be given a limited edition item, they are often pulled in.
The Pebble smartwatch is a nice example of this: it began crowdfunding for its product launch in April 2012 on Kickstarter, essentially offering backers who donated $115+ to pre-order one of the wristbands. The campaign was wildly successful, largely because the product was innovative and cool, and so appealed to tech lovers wanting to own the ‘latest and greatest’.
In keeping with this motivator, companies that offer their funders the promise of recognition (e.g. funders’ names will be listed on the company website and the top backer named “Most Generous”) have a better chance of achieving their fundraising goals.
5. Customised swag
Many crowd funders who have offered their backers customised swag have done very well. Conscious Step, for example, the Australian sock manufacturer that partners with NPOs to bring about change in accordance with the UN’s Millennial Development Goals, allowed those who donated over $3,000 on Indiegogo in November 2013 to design their own pair of socks.
(Note that the brand also achieved its fundraising goal because it promised to give 50% of all its profit to its three partner NPOs; this charitable focus appealed to those wanting to support a worthwhile cause.)
6. Unique experiences
With the excesses of materialism being felt by many, there has been a shift in the mindsets of many, who now prize unconventional, unique and exclusive experiences above tangible things. A portion of businesses have consequently begun to market themselves according to this shift in focus.
Brazilian band CallMeLolla, for instance, which raised 20,000 Brazil Real (that’s well over $8,000) to record their first album in NYC, rewarded the two backers who donated over BRL 1,000 each with private home gigs. (Note that these two individuals were also given customised swag and a special thank-you video on the band’s website.)
If you’re the sort of brand or personality that attracts super fans, then this approach is highly effective.
7. Monetary perks
Perhaps the most obvious of all the perks is merchandise giveaways or discounts. The Saint Benjamin Brewing Club, for example, advertised that anyone donating over $5,000 would be given a King of Prussia Club Reward, a perk that ensures them a lifetime 50% discount.
As is clear, you can make use of one or more of the above strategies to increase your crowdfunding efforts. The critical thing is to offer the right sort of reward. You’ll land on the most effective strategy if you make the effort to understand your market. In other words, pinpoint a reward or perk that would really mean something to your potential backer base. When you tap into their priorities and desires, you’ll find they’re more motivated to donate.