Everyone has heard of it, some have tried it, few are successful. There are several reasons to launch a crowdfunding campaign. There are also several reasons not to launch a crowdfunding campaign and that will be coming in next weeks post.
- #1 Test the Market
Everyone thinks they’ve got a great idea. Whether you’re watching Shark Tank and you see a product and shout, “I CAME UP WITH THAT!” Or perhaps you’re already running a successful business and a brilliant team member has come up with an idea for a new product. Kickstarter & Indiegogo are both free platforms to test the market. Simply build a campaign and put it out there to your followers, friends, family, fans, to the public! After your campaign receives some traffic you will get a good sense of whether or not it truly is a good idea or product.
- #2 New Market Opportunities
Since 2008 Kickstarter & Indiegogo have had a ton of success. Some crowdfunding creators (crowdfunders) have turned to these platforms to launch successful campaign after successful campaign. The reason for that is new market opportunities! Let me explain.
More and more people are learning about Kickstarter & Indiegogo by the day. Whether its local news reporting on a high school business club that’s raised $10K for their new invention or whether its celebrities running a campaign for their upcoming indie movie project. Regardless people are learning about crowdfunding and signing up for new accounts and browsing for something cool. As campaigns become successful, Kickstarter & Indiegogo both have newsletters, social media accounts, and at random, will select campaigns to highlight across all their channels. Which raises the odds of new customers finding your project through their channels.
As campaigns become successful, Kickstarter & Indiegogo both have newsletters, social media accounts, and at random, will select campaigns to highlight across all their channels. Which raises the odds of new customers finding your project through their channels absolutely free. This is especially true if your campaign goes viral or is selected as a staff pick, popular project, or reaches the newsletters.
- #3 Instant Customer Feedback
Kickstarter & Indiegogo are both great at allowing you to communicate directly with your backers. In fact, it’s almost mandatory that you do so! Algorithm’s in place on both platforms encourage or react whenever you get a ton of engagement. Engagement being comments, updates, backers. We always encourage our campaigns to get the comments section going as soon as possible.
But this allows you to ask questions, send out surveys, find out what your backers what to see in generation 2 of your product. Or perhaps what colors, sizes, functions they would like to see added. Ask your backers, followers exactly what they want and they will respond! Always go into your campaign knowing this and have questions that you want answers to pre-loaded or written down.
- #4 Build a List
It’s all in your list! You can buy them, you can share them, but nothing is better than building a list of loyal customers and if you’re launching your first campaign. With no following. This is a great way to build on. Even if your campaign fails to reach its goal you will at least have few backers to add to an email list. In fact, I’ve seen and interviewed crowdfunding creators who have run crowdfunding campaigns to fail. Just so they could build an email list and get feedback about their product with the intentions of launching the same product on the same crowdfunding platform.
Because if the campaign fails the first time around but your open and honest with your backers and you communicate effectively with what you’re trying to accomplish. It’s likely they will jump onboard the second time around. And when they do jump on board the second time around it will be on the first day of your campaign.
There are several other reasons your email list is important. Above is just an example of you can use an email list to your advantage. (you should start building your email list long before you launch your campaign)
FYI (you should start building your email list long before you launch your campaign)
- #5 Low Financial Risk
Outside of hiring a videographer or photographer to take product shots and shoot a crowdfunding video. Running a crowdfunding campaign is relatively cheap. So cheap it’s FREE! So if you have a videographer or a cell phone with a video camera you really don’t have an excuse not to run a campaign.
It doesn’t cost to launch a campaign, it only costs if your campaign is successful. Even then the top platforms (Kickstarter / Indiegogo) only charge 5% and another 2.5-5% for credit card transaction fees.
- #6 Are you an Entrepreneur
This is perhaps my favorite reason to run a crowdfunding campaign. Are you an entrepreneur? Running a crowdfunding campaign is basically a mini lesson in entrepreneurship in the 21st century. You will go through the hurdles of hiring a manufacturer, launching a product, managing invoices, digital marketing, customer service, etc…
You will know the pains of waking up early to send Thank you emails to backers, to reach out to press for PR and write ups about your product. You will also understand the excitement and addiction of clicking refresh to see your next backer pledge to your project.
- #7 Learn your Lessons
Being an entrepreneur is all about failing. Fail fast as they say and that can and will happen if you stay in the crowdfunding arena for very long. But what is important is to document and learn what worked and what didn’t.
Did tweeting about your campaign work? What about that ThunderClap? The services you paid for from the local PR company, did it generate any sales or leads for your campaign? Document everything!
And if you fail, understand that’s a part of entrepreneurship. I hope you don’t get discouraged to the point that you quit and give up on your dream. I always say, “if 7 out of 10 businesses fail. Start 8.”