Top 10 Tips for Reward based CrowdfundingReward based Crowdfunding can be a brilliant process for testing the viability of that new product or service offering, raising essential funding for a community-based or charity project, or raising some much-needed growth capital to fund that next stage of your businesses expansion.
With so many clients exploring Crowdfunding as a primary or secondary route to raising finance, we thought we’d write a blog on A2F’s top 10 tips for reward-based crowdfunding campaigns.
1. Identify if this is the best route of financing your project
Put simply, are there going to be enough people out there who will put money towards your campaign?
Crowdfunding for reward typically works if you can tick 1 of the following boxes:
Is it a good thing to back (community or charity-based campaign)?
Will enough people want the products or services that you are offering as a reward?
If you can tick both above boxes, brilliant! If you fall in to neither, then the truth is that a campaign is going to be very difficult.
For example, if you are offering a reward for £20 that potential backers have had the ability to purchase via your website for the past 2 years, there is very little incentive for the customers to suddenly spring into action and buy via your crowdfunding page.
The backers of your campaign will need incentives. Will they, for example, have access to this product or service before anyone else? Will you be offering limited editions to be sold exclusively via the crowdfunding campaign? Is it a good thing to back that will benefit the community that may otherwise not happen if it doesn’t get crowdfunded? Not every business or charity will succeed at crowdfunding, and this is the first hurdle to navigate.
So you think you have a campaign idea that can get traction – Great!
Now the work starts, and it isn’t as exciting as you probably hoped! To have a successful campaign, it is important to spend time researching. We have broken this down into several key headings below.
Previous successful (and unsuccessful) campaigns
Before you map out your pitch, you will want to know exactly what has worked previously for likeminded campaigns:
- What rewards were the most popular, what were these priced at?
- What rewards were least popular?
- Look at the FAQs – what should you pre-empt and include within your pitch?
- What imagery and video content captured your attention?
- How did they communicate with their crowd?
3. Investigate your platform options
There are many different crowdfunding platforms, and they are not all the same. Of course, there will be pros and cons to each platform, but what these pros and cons are will very much depend on what you are looking to crowdfund and who your crowd will be.
Research every platform you think could be an option before deciding. Whilst there is nothing to stop you from changing further to an unsuccessful campaign, it is far better to get the best platform for you to start off with, as campaigns require a huge amount of effort and drive to make them a success.
Top Tip: Read the small print – find out what the platform costs to use, including the payment charges and compare. Remember to take this into account when you are looking at the finances behind your campaign and budget for the commission and the cost of honouring the rewards.
What is your target amount? Is this realistic? Have previous campaigns targeted similar sums?
With a few crowdfunding sites, if you don’t hit your target, you won’t receive a penny. It is vital that you understand what a “realistic” target is and work towards this.
Has a competitor just completed a raise on your platform of choice?
This happens more that you would like to think. Whilst there is nothing wrong with competing on a level playing field, it may be slightly tilted in their favour if the crowd have just backed a campaign with incredibly similar rewards. It may be wise to look at different platforms / change your rewards / wait a few weeks until launching.
4. Identify your crowd
The most important people for the next few months! To have a successful campaign, you need high numbers of people visiting your pitch, but more importantly, you need the right type of people.
Identifying your crowd early on is very important as it will dictate and shape many of the following points on this list. Make a list of who you think your crowd are and talk with them early on. You want people talking about your campaign and getting excited for its launch.
Get them following you on social media. Get their email addresses and send them updates. Build your numbers as far in advance as possible. There are numerous agencies that can help with building your footprint, brand and reputation, it could be a very wise investment should you be planning a crowdfunding campaign in the months ahead.
5. Motivate your crowd
Once you have identified your crowd and have them hooked to your social media accounts/ blogs / email updates, it is time to get them excited and on the lookout for your pitch. It is very important to get a good start to your campaign, as gaining an early momentum really can make the difference between hitting your target and falling short.
Keep your social media up to date with developments and give them sneak previews or ideas about what some of the rewards are likely to be.
Top Tip: In this world, there are trend setters and there are followers. Identify some significant trend setters who will back your campaign, but more importantly, will shout about it to their followers. Ask them to write reviews, get some press coverage and your campaign will get even more attention.
What are you offering pledgers in return of their hard-earned money? Of course, everyone has family and friends who will throw in £10 for a thank you on your website, but that isn’t going to drive you quickly towards your target.
The most important aspect here is to appeal to your crowd. The rewards must appeal to the people you are driving towards your pitch. Even then, it is estimated that less than 5% of people who click on your pitch will financially back your campaign.
Here are some suggestions:
- Have a minimum of 5 rewards
- Make it easy for people to back your campaign with some low-priced rewards
- Offer unique rewards to the crowd that are only available for the period of the campaign, through your pitch.
- Include some high value rewards and limit the number on offer (this could drive demand)
- If you can’t honour the rewards straight away, include an expected delivery date
- If you are going to offer naming rights, be sure to include a disclaimer… remember ‘Boaty Mcboatface’…
Top Tip: Don’t forget to price out how much it will cost you to honour the rewards. Remember your profit margins – just because you raise £10,000 by selling 400 bottles of Gin at £25 per bottle, don’t forget you have to deliver on these! If you need to make £10,000 for a new piece of equipment, you’ll need to sell a lot more bottles than 400…
7. Video and Imagery
Your campaign needs to speak to your pledgers, and videos and images speak 1,000 words.
Be it bright images of your jewellery, or highly emotive video content for your charity raise, the importance of media content on your pitch can not be understated. This will become more evident as you look at previous pitches on the platforms, which in turn may give you some ideas for your own media content.
It is said that crowdfunding is more of a marketing campaign than a funding raise, and we (to an extent) would have to agree.
Keeping your crowd up to date with your progress is key. You need to reach out to as many potentially interested parties as possible.
- Issue a press release when you launch.
- Get your rewards shouted about by the trend setters you engaged with a couple of months ago
- Have a marketing firm reach out to potential pledgers through their wizardry
- Promote your Facebook / Twitter / Instagram posts
- Keep a blog
- Issue updates via the chosen platform
- Shout about your early momentum!
Top Tip: Access to Finance have a grant pot that could help fund 50% of your crowdfunding marketing expense. Contact the team for more information or check the list of grants out at www.a2fcornwall.co.uk/a2f-grants
9. Take your time
The chances are, this is likely to be your first crowdfunding campaign and all of the above can seem a little overwhelming.
Whilst there is undoubtedly a huge amount of work, time and effort that needs to go into a successful pitch, time is on your side. The vast majority can be done over months, some suggesting that you should leave yourself 6 months from planning to launching. All of the platforms that we have experience in allow you to gradually build your pitch behind closed doors, so to speak. Only once you are 100% happy that you have everything in order, and you hit the ‘go live’ button, will the public be able to see what you have done.
Rather than rushing to get your campaign live and online by a certain date, we would suggest that you only go live once you are happy with the content and your plan. Have others check over your pitch – most of the platforms are happy to offer you their advice (they financially benefit as a direct result of your campaign success – why wouldn’t they!). Listen to what they say both before and during your campaign – they are the experts in this field.
Remember – first impressions really do count!
10. Don’t lose your pledgers!!!
After you have recovered from your bruising campaign, make sure you sign all your backers up to an emailing list (or equivalent). You never know, you may want to do it again sometime!
It is far more cost effective to keep a customer than to acquire a new customer. Keep them updated with how your project turned out. Showcase the new item of machinery they helped fund, send them pictures of the new community centre they help build – keep them engaged, they deserve to see the outcome.