Crowdfunding is fuelled by innovative new ideas. But without proper planning and execution, even great ideas can fall flat.
By researching past projects to see what works, and what doesn't, you can improve your odds, and design your crowdfunding campaign for success.
Set smart reward levels
If you're asking people to contribute to your campaign, it helps to offer them something in return. The type and number of rewards you offer to supporters will depend on your project, and there's no one-size-fits-all solution.
But there are some general principles for developing a reward strategy.
“You need to give contributors the ability to donate at any level or budget,” advises Scott Steinberg, chief executive officer of consulting firm TechSavvy Global, and the author of The Crowdfunding Bible.
“It's very important to have a variety of rewards, starting at the impulse-buy level, and then moving upwards,” he says.
Mr. Steinberg advises entrepreneurs to evenly stagger reward levels, avoiding gaps. “You don't want to jump from $5 to $500,” he explains. “You need to give people the ability to contribute at a level that's comfortable to them.”
It's also important to offer a range of rewards that appeal to different levels of engagement. Build in reward tiers for both the casual supporter and the rabid fan.
Crowdfunding sites such as Kickstarter and Indiegogo offer pricing suggestions based on historical campaign data. Both sites report that the most popular pledge is $25.
On Indiegogo, rewards at the $100 level generate the most capital. That leads it to advise “that projects have at least two perks options: one within the $11 to $25 range and one within the $51 to $100 range.”
Make a pitch video
“They say a picture's worth a thousand words. A moving picture's worth about 10,000,” Mr. Steinberg says.
Video can be a powerful tool for crowdfunding, but creating an effective one can be tricky.
“You have to grab the viewer's attention within the first five to 10 seconds,” he says. “You absolutely have to keep the message concise, clean and simple, and differentiate yourself at a glance.”
He also says it's important to ensure that your video answers questions that will help convince viewers to pledge.
“Why does this project matter? What is its unique value proposition? Why are you uniquely qualified to bring it to fruition? Why does it have to happen now? You need to create a sense of urgency.”
According to Kickstarter, “projects with videos succeed at a much higher rate than those without (50 per cent vs. 30 per cent).”
Indiegogo claims “campaigns with a pitch video raise 114 per cent more money than those without one.”
Despite those figures, Robin Furr isn't convinced that video is necessary for all projects.
Mr. Furr is the designer of the Plus Spindle, a project that he successfully crowdfunded in March using Kickstarter.
Mr. Furr's campaign did include a video, but he doesn't believe it was integral to the success of his project.
“I know what they say about the importance of video, but I didn't need it,” he says. “Honestly, my video sucked.”
More important than video, he says, was his ability to connect with existing communities who would be interested in his project.
Tap into existing communities
By its very nature, Mr. Furr's Plus Spindle is geared toward a specific audience: the hand-knitting community. So, to promote his project, he went where the knitters already were: an online community called Ravelry.
He purchased banner ads on Ravelry, and asked friends – well-known members with reputations on the site – to spread the word.
The outreach paid off. According to his Kickstarter analytics, half of Mr. Furr's backers (and more than half of his capital) came from Ravelry.
Mr. Furr also discovered how effective offline outreach can be.
“I put a sign up in my local knitting store,” he says. That sign and the knitting store's existing community helped to generate a significant percentage of his overall contributions, he says.
Mr. Furr says that tapping into these types of communities can be a powerful tactic, and entrepreneurs should ask themselves, “Which of the communities that I have access to are going to be the most likely to be interested in my project?”
Mr. Steinberg agrees. “See who in your community you can team up with,” he advises. “Instead of asking them for dollars, maybe they'll help you with a mention here and there.”
When approaching existing communities with a crowdfunding project, Mr. Steinberg says it's more effective to create a conversation than an advertisement.
“People are always happy to participate and offer up their opinions,” he explains.
“What they're not happy about is when you're marketing directly to them and not giving them a voice in the conversation, or when everything seems like a straight sales pitch.”
Special to The Globe and Mail
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