11 Reasons For Crowdfunding
Could crowdfunding be the magic silver bullet in your next product launch?
Well, it may not be quite that simple, but we believe that crowdfunding if done the right way, is an effective strategy to boost your next marketing campaign.
But before you get started, make sure you have some boxes checked off.
Have you built enough buzz ahead of time?
Before launching your project, ensure that you place some teasers about it on your website. And don’t forget to communicate with industry journalists and shoot out some emails to your main contacts. Most importantly, create promotional materials such as fliers and videos. (Hint: BoostYourCampaign can help with this!)
Do you have the right marketing agency on board?
With an expert on crowdfunding helping you, you greatly increase your chance of success. For example, BoostYourCampaign has raised over $400 million for its customers over the course of 4000 crowdfunding marketing campaigns. After all, if you aren’t knowledgeable about crowdfunding, it’s in your best interest to trust someone who is.
Are you selling a high-quality product?
Even the best crowdfunding campaigns will fail if the product doesn’t live up to expectations. As long as you have a great product, the sky is really the limit.
With these questions out of the way, it’s time to focus on what you came here for.
Namely, why is crowdfunding a good strategy for your product launch?
Benefits of Crowdfunding
Here are 11 reasons why you should give crowdfunding a try.
1. It allows you quick access to the capital you need.
To start a business or launch a product, the first thing you need is a reliable source of capital. Traditionally, most business owners seek this capital from banks or investors, a process that takes a fair amount of work and initial investment of your own. But it doesn’t have to be that way.
2. It minimizes risk.
Whether you’re a new company just starting out or a well-established business, a new product launch always poses some significant risk.
Expenses related to marketing, production, and distribution can be hard to predict in the initial stages. In addition, you can never be sure how much of a share your stakeholders will need in order to make it worth their while. Add to these risks the many unforeseen challenges and delays that could be lurking, and it’s easy to see why 95% of new product launches fail. And when you consider how much money went down the drain along with those failed product launches, you get a very real sense of the risk involved.
A crowdfunding campaign is a simple way to mitigate these daunting risks. It gives you the opportunity to introduce your new product to a small sector of your target market without depleting your energy and resources by doing a full-scale launch.
By finding investors on a crowdfunding platform like Kickstarter or Indiegogo, you get others to share the risk so it doesn’t fall squarely on you.
Besides that, crowdfunding allows you to pre-sell a larger volume of product within a shorter amount of time, so you can take advantage of economies of scale. In addition, you’re only paying to produce items that have been sold, so you’re cutting out the risk of paying to produce unsold inventory.
It’s really a win-win situation for everyone; your stakeholders get first dibs on a cool new product, and you get to produce and sell your product without taking a hit to your bottom line.
3. It builds a community around your product.
There are few things we love more than a good old-fashioned success story. A crowdfunding campaign gives you a platform to share your own story and build a community around it.
This community will grow to encompass media outlets and reporters who will get the news of your product out to the public more efficiently than you ever could do on your own.
More importantly, the campaign will leave you with a fan base who are eager to pre-pay for your product and to convince others to do the same.
This is especially important given recent trends towards customers’ choosing brands that align with their values.
The same community you can count on during the early days of marketing your new product are the ones who will eventually become repeat customers, as well as your most vocal advocates.
Traditionally, it could take you years of producing and selling a variety of goods and services to generate such a fan base. But crowdfunding speeds up that process for you.
4. It makes it easy to pre-sell or upsell.
The opportunity to pre-sell your product allows you to take the temperature of your marketing campaign and to figure out what you might need to do differently before you officially put it on the market. By experimenting while in this phase, you avoid potentially costly mistakes later on.
Another great opportunity crowdfunding brings: it gives you the chance to upsell other products in your inventory as add-ons or bonuses. This allows you to maximize your sales while bringing more attention to your entire product line, making your campaign even more profitable than it would be otherwise.
It’s an especially nice touch if you add some affordable accessories or add-ons as perks during your campaign. Indiegogo posted a statistic that the most popular add-ons in crowdfunding campaigns were in the $10-$30 price range.
This is a wonderful incentive for your contributors, especially if you offer discounts and bundled pricing.
5. It doesn’t cost you anything.
This means that no one is charged until the fundraiser reaches its goal. So you can potentially raise 100% (or even more) of your needed funds without spending a dime. This is good for your contributors, too, because they don’t lose anything if the campaign is unsuccessful.
Indiegogo offers a choice between flexible funding (which allows you to keep all the capital raised whether you meet your goal or not) or fixed funding (in which you only keep the funds if you meet the goal).
6. It gives you media exposure.
A crowdfunding campaign is an effortless way to attract the attention of journalists and media influencers. This, in turn, makes you more visible to potential investors and future customers.
Reporters are intrigued by stories of new business ventures and will gladly spread word of your efforts across media channels.
Such publicity and media coverage is not easy to come by under normal circumstances. Most journalists receive more pitches on a daily basis than they know what to do with.
But a good crowdfunding campaign is such a natural draw that reporters will be attracted to news of your product launch.
Your primary goal may be raising funds, but media visibility is definitely a nice side perk. It allows your product to come to the attention of your target market via search engines, social media platforms, and major news sites.
The more people know about your product, the greater your chances of success.
7. It’s a useful marketing tool.
Part of good marketing is getting your brand out there in front of potential investors and customers. You want as many people as possible to know about your mission and vision, the products you have on offer, and the things that make you unique. Making all this happen on your own can be costly and time-consuming. But a crowdfunding campaign, especially in conjunction with BoostYourCampaign, gets your brand into the public arena effortlessly.
The campaign brings organic visitors to your brand, many of whom will spread the word, possibly making it go viral.
According to Fundera, 12% of Facebook shares convert to donations, as do 3% of Twitter shares. Every increase in the number of Facebook friends you have translates into a higher conversion rate. 53% of email shares also convert. So the more people share information about your brand on social media, the more investors you can get.
BoostYourCampaign specializes in marketing your campaign as effectively as possible through Facebook ads, social media, and influencer marketing.
8. It provides social proof.
The launch of a new product can plunge you into a kind of vicious cycle.
To make a sale, you need social proof. But to earn that social proof, you have to make a sale.
A crowdfunding campaign allows you to bypass all that.
It also gives you a risk-free opportunity to provide a proof of concept to potential investors. Your campaign demonstrates that you already have the backing of a customer base who believes in you, powerful evidence of the value of your product and your chances for success.
Your campaign provides built-in validation of the integrity of your brand, something that could otherwise take months, or even years, to prove.
And once your campaign succeeds (as we know it will!), you’ll have even more solid proof that your product is worth investing in. After all, almost anyone is more willing to put their money on a product that’s already winning.
9. It’s an opportunity for brainstorming and feedback.
When it comes to improving your brand, two heads are better than one. And 200 heads are better than two.
Crowdfunding gives you a free, built-in “brain trust” of potential customers and backers. They can help you with everything from your business plan to product quality to customer service. Think of it as hiring a team of consultants who work for free.
Best of all, crowdfunding gets you intimately connected with your customers, gaining valuable insights into their unmet needs. The feedback they give you is gold, because you can use it to create a product that delights a much larger customer base in the future.
But make sure you have a thick skin. If you’re easily hurt by criticism, you won’t be in a position to benefit from this valuable feedback.
10. It builds loyalty.
Your present-day early adopters are your future lovestruck fans. And loyalty is worth its weight in gold.
But how do you convert members of your target audience to loyal early adopters? By introducing your brand during a crowdfunding campaign.
This allows people not only to try out your product, but to get to know your brand’s mission and values. It could be the beginning of a beautiful relationship. A survey from Motista found that an emotionally-connected customer will spend approximately $699 per year on the company of their choice. And customers who report themselves “totally satisfied” deliver more than twice the revenue of less satisfied customers.
Customers that care about your company and share its values will become your most enthusiastic spokespersons further down the road. That means they are happy to spread your story without receiving anything in return. In this way, you can keep the momentum going long after your campaign ends.
11. It’s usually easier compared to a direct-to-market launch (but not always).
You will have to do work behind the scenes on your crowdfunding campaign to make it successful. But compared with the months or years of marketing, raising capital, and building a customer base that you would have to engage in otherwise, crowdfunding is quick, easy, and affordable. Within a short amount of time, you’ll have a product on the market that is well-publicized and a fan base who believes in it.
And having the right marketing agency on your side makes all the difference. With the help of the professionals at BoostYourCampaign, you’ll be well on your way.