Here is the harsh reality of crowdfunding – 85% of campaigns fail.
Gone are the days when you launch a campaign and it goes viral with little promotional effort. If you think you can build a product and expect it to magically generate sales on its own, you are in for a rude awakening.
But here’s the good news. With the right strategic plan and preparation, you can successfully create and execute a successful crowdfunding campaign.
Not enough social capital
Lack of social capital is the #1 reason why most campaigns fail. It is critical to hit the key milestone of reaching at least 30% of your funding goal in the first 48 hours. If you do not hit this mark, the stats show that you have a 70% failure rate. If you do not have a strong network of friends, family investors, and more ready to back your campaign, then conducting pre-launch marketing activities to build a targeted email list of potential backers is key to launching with a bang and ultimately campaign success.
Not properly preparing
Once the campaign starts, you should already be ready to go. First and foremost, you should have a timeline of the events that are about to occur, including timing of launch, updates, ads, and other elements of the campaign. You should also have all your images, video content, and copywriting that you need for your campaign page and advertising ready to rock. You should also know what your budget is for advertising, along with a little leeway in case you have to make a last-minute adjustment. We’re not saying you can’t roll with the punches if you come to find that you need to make little adjustments but starting off strong with a plan could mean the difference between a hot mess and success.
Not setting a realistic funding goal
Setting too high of a funding goal is a common reason why crowdfunding campaigns fail. You need to make sure you have at least 30% of your funding goal ready to be invested into the campaign in the first 2 days. Prior to launch, we recommend doing a realistic assessment on the strength of your social capital and estimate how much you can raise from them. If your campaign falters at the start, visitors to your campaign may be dissuaded from supporting it as people only want to back winners. The goal is to exceed key campaign milestones in the first couple of days to ensure you are trending and showing success. With the funding momentum created at launch, Indiegogo/Kickstarter algorithms will kick in and will increase your campaign’s visibility within their community.
If a picture’s worth a thousand words, then you’d better be sure it’s saying the right thing. Your images should help you tell the story and your messaging should be concise, well thought out, and consistent. It’s always important to use a professional photographer and copywriter. Nothing loses your audience’s faith in you faster than a bad first impression.
Uninspiring campaign video
Your video should highlight the product, but also gives your audience a taste of what the experience with your company will be like. An average campaign video should run about 2-3 minutes. No more. And it is very important to get your message across in the first 30 seconds. You need to come out and say what this is and why people need it in the opening salvo of the video. Studies show that 60% of the people stop watching a video after the first 30 seconds.
A video that’s short, easy to watch, and convincingly tells your story is key to converting your visitors and getting them to support you. Brand-building is essential to running a successful crowdfunding campaign and you need to start off on the right foot with a great video.
A unique product
Sure, your product is cool, but has it been done before? Make sure you do your homework before you start just in case someone else had the same idea. That doesn’t mean that you can’t revamp the idea into something bigger and better, but make sure there is enough of a difference (and that difference is a strength) that you have something new to say about it. You will need to be able to differentiate yourself from similar products on the market and convince people to invest in your product.
Not being strategic about rewards
As much as people want to help out new inventors and artists, crowdfunding is usually a quid pro quo. People feel good about giving something to a project they believe in, but they feel even better about getting something in return. Make sure you have a few tiers of rewards, giving the lowest price to the early backers and saving a higher price-point (although reasonable and still a discount to what your retail price will be) for those who back your campaign later on. Of course, you always want to create a perceived valued discount and a sense of urgency utilizing limited perk quantities. In addition, you can also create new perks, promote flash sales, advertise secret perks (Indiegogo) and other tactics to rev up a campaign that may have stalled.
Not having an integrated approach
It’s more important than ever that your campaign marketing strategy includes engaging your target audiences in several channels. The more channels in which you can reach your customers, the greater your chance for success. An integrated campaign utilizing PR, social media, digital marketing and online advertising is essential in creating interest and driving massive amounts of traffic to your campaign. This means more than just placing a few Facebook ads and spending lots of money. Making sure you have the right combination in place along with the proper execution will help skyrocket you to success.
Not having a budget for advertising
You think the internet is free? Guess again! One study by Sprout Social even showed that organic reach on a Like page was only 6.4% of your fans. That’s not a lot, especially if you’re trying to keep them updated about a campaign launch. To be successful, a campaigner needs to drive visitors to their campaign so they can convert them to purchase. PR and Facebook ads deliver the best ROI by far and are the biggest drivers of crowdfunding campaign funding. Be prepared to spend money on Facebook, Instagram, and other places where your audience lives to promote campaign awareness. As they say, you need to spend money to make money. And that is especially true in today’s crowdfunding ecosystem.
Not having a solid shipping strategy for shipping fulfillment
If you don’t have a fulfillment plan for your rewards, you’ll need one before your campaign ends. Delivering your backer rewards quickly and in a timely fashion will build trust and earn you the brand loyalty you need to translate your campaign’s success into ongoing company success. Don’t let overestimation of cost, long lead times, and other unforeseen problems squelch all the goodwill you’ve garnered from a successful campaign. Underestimating on the fulfillment cost can cut into much of your profit if you are not careful and is one of the main reasons why crowdfunding campaigns that were seemingly successful, fail.
So what is the takeaway? Don’t make the mistake of assuming your product will automatically generate sales. To be successful with your crowdfunding campaign, prepare, plan, and devise strategies to ensure your product reaches its full potential in the crowdfunding community.
This guest blog post was provided by Sean Angus, President of The LaunchPad Agency, a PR and Digital Marketing firm that helps their clients build both awareness and sales. For more information about The LaunchPad Agency and how they can help with your next crowdfunding campaign, visit https://launchpadagency.com/crowdfunding/ or email firstname.lastname@example.org.