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When companies come to me for advice on crowdfunding campaigns, my first response is always: Have you thought this through? The few, well-publicized success stories, like the $20 million Pebble Time Smartwatch campaign, perpetuate crowdfunding’s greatest myth: Hundreds of complete strangers are looking to shell out money on your project.
It doesn’t work that way. In fact, only about two percent of campaigns aiming to raise $100,000 or more reach their goal. To launch a successful crowdfunding campaign, you need a solid execution plan that uses marketing, PR and social media in unison.
Related: Crowdfunding Won’t Work Unless You Prove Your Product Can Ease a Pain Point
Reckless crowdfunding can backfire because anything less than achieving set campaign goals equates to failure in the public eye. An unsuccessful campaign is the quickest way to torpedo public confidence. It can have lasting effects because the campaign results are immortalized on the crowdfunding site and remain discoverable. Take for example Ubuntu, a well-established company that introduced the Edge, a new smartphone concept, via Indiegogo. Even though the campaign raised over $12 million, it fell short of its $32 million goal and thus was considered an epic failure by the media. This tarnished the company’s brand.
The Ubuntu example (and plenty of others) illustrate how quixotic expectations can make relative success look like failure. However, if done right, crowdfunding can be a powerful platform not only for raising funds but also for establishing loyal fans, testing new concepts, gauging market demand, and supporting traditional PR and marketing efforts. Here are three questions you need to answer before you launch a crowdfunding campaign:
1. Why are we crowdfunding?
Is it to garner media attention, test market response, actually raise funds, or all of the above? If it’s primarily to garner media attention, the best bet is to shelf the crowdfunding idea in favor of a more traditional media outreach campaign. Over 500 new crowdfunding projects are launched each and every day, and most products never make it to mass production. The sheer number of products that end up as “vaporware” has made influential reporters skeptical. If you crowdfund for media attention, you have a very steep mountain to climb.
Tip: If you decide to crowdfund and raised funds are less of a concern, set the campaign goal low — this sends a message to media that it’s less about money and more about giving backers first dibs on something cool.
2. Do we have a social media presence?
Social media is the ideal place to highlight product characteristics and incentives that differentiate your campaign from all the others vying for attention. It’s also the place to build a network of potential customers, influencers, distributors, and other audiences who could play pivotal roles in your campaign and future commercialization plans. On social, identify non-reporter influencers and incorporate tactics such as contact-building or social advertising campaigns that send traffic directly to your crowdfunding page. Sparking conversation among early backers and non-media influencers is as important as locking a TechCrunch article.
Related: Which Entrepreneurs Will Benefit Most From the New Era of Crowdfunding?
Tip: If you don’t have a social media presence, take the time to create one. That is the advice my team and I gave UBTECH, a Chinese-based company with zero social media presence, before they unveiled the Alpha 2 house robot via Indiegogo. We created a social media following using multiple tactics including a sweepstakes to give away robots to a few lucky winners. With a solid base going into the crowdfund, UBTECH generated over 17,000 campaign clicks and raised over $1.3 million — far more than their $100,000 goal.
3. Can I make good on promises?
The last and most important question to ask is: Can you actually deliver if you hit your campaign goals? Overpromising and under-delivering have become synonymous with crowdfunding — hence, why the media has become somewhat jaded.
Take for example the Coolest Cooler, one of the most successful crowdfunding campaigns of all time. Manufacturing delays, worker strikes and poor management practices have pushed delivery so far back that the delays have created a media and social media firestorm. So much so that the company’s CEO has received death threats from backers.
Tip: Don’t put hard dates on product delivery, especially when speaking with the media, unless you are 100 percent certain you can stick to those dates. Instead, use language that is more forgiving — talk in months and quarters, not days.
Related: Starting May 16, Entrepreneurs Can Raise Money in a Whole New Way. Here’s What You Need to Know.
If you have questions about how to crowdfund well, don’t hesitate to reach out to the platform of your choice. They want you to succeed almost as much as you do, and their staff can help you optimize your campaign landing page. To take your crowdfunding campaign to the next level and become legendary for the right reasons, start with the right question: Have you thought this through?
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