I hope you enjoy what is the first instalment of many things I’ll be sharing with you on here.
Over the next few posts I’ll be sharing insights into working with external contractors & outsourcers and having clear expectations when working with offshore manufacturing.
Crowdfunding Essentials (6 min read)
Crowdfunding is a collective cooperation of people who network and pool their money and resources together, usually via the Internet, to support efforts initiated by other organisations for business ventures or personal gain. I thought it proper to start with the definition just to clarify what it is we’re talking about. The opportunities made available through the crowd-funding platform are numerous; it’s a great way to gain marketing exposure, can be used as market validation of your idea, is much more efficient than previous fundraising models and attracts early adopters & advocates to your cause.
In this post we’ll cover the following points:
- Crafting a Compelling Story
- The Devil is in the Details
- A Goal Without a Plan is Just a Wish
- Keep Going, There Will be Hurdles
Crafting a Compelling Story
There are countless articles and posts out there with tips and tricks on how you can fully fund a campaign in 24-48 hours, and thousands of “consultants” who promise to easily exceed your funding goals by thousands. What I’m offering here are insights into what I find has generated real results through a well executed approach, rather than looking for that one magic bullet that’ll grant you stratospheric rewards.
For the campaigns that I’ve successfully had funded (and there are several) I’ve found that weaving a story into the details has really made a difference in gaining a commitment from viewers. It’s true that behind all campaigns someone is giving a narrative of what they need, but often potential backers aren’t engaged because the missing ingredient in the narrative is the art of storytelling. I’m aware this sounds cliche, but if you’re looking at running a successful campaign then you’ll need to maximise your viewer engagement.
What I’m advocating is to change the narrative into a crafted story that follows a proven framework. This isn’t my original work, but it’s been used by many others (including Elon Musk and Steve Jobs) to successfully engage audiences through presentations, videos and the written word many times over in the past.
I believe just about any call to action can be crafted as a compelling story by utilising these 5 steps.
What these 5 steps give you is some structure that really helps your story appeal to readers. There may be one or more of these stages that you previously hadn’t considered, or hadn’t thought to incorporate into your original narrative. In order for your story to have the impact it deserves, I’d recommend tailoring your pitch to have all of these elements and in the below sequence too.
Feel free to contact me if you think the narrative for your crowd funding campaign could benefit from a second opinion.
A Goal Without a Plan is Just a Wish
Preparing for a successful campaign may be exciting or it may feel tedious, some elements may be much easier than others or you may not know where to start. I believe it is absolutely vital to prepare adequately prior to launch and I believe structuring the completion of activities around a prescribed launch date is also very important. This may appear very methodical but if planned properly it also gives you the flexibility to shift activities around if you need to, without compromising on your launch date.
Several things to consider when preparing your campaign:
What external marketing/advertising will you do to drive traffic to your campaign?
How can you leverage the exposure you have with your existing audience?
How will you keep your backers engaged during and after the campaign?
Establishing the perks (rewards for backers) is often one of the most time-consuming elements of the preparation, but for your backers this is often the main reason they’re supporting your campaign. There are some restrictions on what can be offered, but generally the perks offered include merchandise, first-run products, honourable mentions and exclusive content. Considerations must be made for the sourcing/manufacturing and shipping of products or merchandise, if these are offered.
Presenting the right mix of perks for backer’s support is crucial in giving your campaign the best chance of being fully funded, and offering a limited edition variant of something desirable to your existing followers can be very enticing. Combine this desire with emotive price points ($39 instead of $40 etc) and pricing your tiers strategically will also influence your backers to make a decision with less resistance. Combining multiples of your product offering with other perks and cross-combining different perks (at slightly discounted rates for higher pledges) will also influence potential backers to support you for higher amounts.
It seems simple, but planning how many backers for each tier your campaign needs to reach/exceed your funding goal is a fundamental in establishing how many of each perk to limit your offer to. Your funding goal should be an accurate representation of all costs associated with the design, manufacture, advertising/marketing and distribution of your project. The model that I use when establishing funding goals is to then add 10% to the final figure for your platform and payment processing fees, and then add another 10% as your buffer for unforeseen costs.
Setting yourself some deadlines for completion of different components, and a confirmed launch date is important because it provides accountability and can help you prioritise activities. Establishing if there are any holiday impacts due to seasons also goes without saying (but still needs to be said). I’ve run campaigns through the Easter Holiday Season successfully before, just plan to have minimal contribution and exposure during this time.
Generally I’ve recommended about 6-8 weeks of preparation time for campaigns I’ve advised on, with the creator/s and I working in parallel on different elements prior to launch. This time invested up front allows most potential issues to be established and either overcome or planned for. It also ensures the campaign is presented as a well presented pitch to potential backers from day one and they are assured of minimal changes as the campaign rolls on.
The Devil is in the Details
If you’re running a 30 day crowd-funding campaign, and you’ve decided to go it alone, this is the part where I tell you that you’ve probably bitten off more than you can chew. Unless you’re well-organised by nature, there will be many unforeseen issues and challenges that you will need to overcome and many of them will become bottlenecks you can’t avoid.
The numbers below attest to the popularity of this platform as a mode for raising funds, but without proper planning and execution you may become part of the majority of started campaigns that never reach their goals.
Less than 40% of all started campaigns get fully funded, and 19% of those funded never get fulfilled – mainly due to a lack of preparation.
In my experience there are dozens of separate tasks that need to be completed adequately even just to run a very basic campaign incorporating design, manufacture, distribution, costings, timelines, internal & external marketing and advertising. In order for your campaign to give confidence to your backers, you must show that these things have been executed properly.
If you don’t raise your required funds in the first attempt (and you’ve appealed to your inner circle, clients & customers and potentially called in favours) then a second attempt may be harder to get off the ground because you will have lost some of those that chose to support you in the first round.
Potential backers generally follow the path of least resistance (as do most of us) and unless you can show that you’ve allowed for unforeseen issues, people will generally move on. By showing that all of the minor details are taken care of you promote confidence for your backers.
As consumers we all enjoy smooth transactions, and in the current global marketplace we’ve grown accustomed to getting them. If your campaign is unclear, seems complicated or doesn’t feel right, potential backers will generally move on. Sure, there are exceptions to this rule, but there many benefits to presenting a campaign that appeals to the mainstream.
Let me give you an example of how a potential issue can be used to give your prospective backers confidence. In a recent campaign I was called on to assist with we wanted to be able to ship multiples of a product to all locations globally. The main complication with the shipping cost was that there was no consistency to ship to any region around the world, and the cost of one unit couldn’t be scaled for 2,3,4 units etc.
We had several choices:
- We could limit shipping (and backing) to certain locations only. This would have saved considerable time, but we realised it would have limited our exposure with the product significantly based on the creator’s global audience.
- We could generate an inflated set of costs that would cover any of the specified locations. This would have again saved considerable time, but we realised it would have limited our exposure as the postage for each unit was already very high.
- We could invest a significant amount of time compiling costings for 6 specific global regions for one, two, three, four, five and six units respectively. We could also add a crucial element by stating that we would happily ship anywhere in the world and to contact the creator with your details and we would add your country.
We chose to run with the third option and the feedback from the backers that contacted us to add their countries was entirely positive. These additional backers added approx 15% to our overall funds raised and had a higher than average backer financial contribution too.
One other detail that I think is crucial in building confidence with your backers is to provide accurate details about your project issues and challenges. Kickstarter has this as a default section in their template when you fill in your campaign details. Our natural reaction to shy away from problems and issues may make this uncomfortable to complete, but it’s important in showing that integrity is a key part of the campaign. Outlining the issues and challenges and also showing how you’ll overcome them is extremely powerful, and can often be enough for undecided backers to choose to support your cause.
Keep Going, There Will be Hurdles
Have you ever undertaken a project and realised within the first few days of starting that it wasn’t going to be as easy as you thought to complete?
One of the hardest things to deal with (for some personalities more than others) is having unexpected setbacks that force you to reassess your position or your approach. Things will still go wrong despite our best efforts at planning, forecasting (even with generous buffers), management and foresight. Having the ability to adjust on the fly, to find a new positive direction or how to deal with conflicting information is often what a well developed sense of decision-making is all about.
Often in these times it is important to tap into that inner-strength and continue working on a solution, even if the sense of helplessness starts to set in. I’ll tell you a secret I’ve discovered in my years of working with people on achieving their aspirations – it is ALWAYS harder than you think it will be. This is the case 99.99% of the time.
“IT IS ALWAYS HARDER THAN YOU THINK IT WILL BE”
Identifying what you want to achieve, or the reason why you’ve chosen to undertake this project can be a great motivator in keeping you focussed when you’re hitting these hurdles. Taking a step back and analysing why this hurdle is such an obstacle can also help you understand what you can do to move around or overcome it. Personally I believe we are capable of more than we give ourselves credit for and these moments of difficulty often serve to give us greater satisfaction when the whole project is done.
Talking to successful creators about the journey they’ve taken, nearly all respond with positivity about how much they learnt about themselves in the process. There is great satisfaction in knowing that you’ve brought an idea to life, or fulfilled a real purpose and only those that have progressed through that journey can attest to the growth they have undergone through the experience.
Best of luck with your campaign, stick with it and enjoy the journey.
If any of the insights shared in this post resonate with you and you’re launching a crowdfunding campaign then feel free to contact me here if you need assistance.