Does a scenario in which you have a great idea, get it out there, and wait for the money to start flowing in sound too good to be true? It does because it is. Crowdfunding often ends in zeros. If you don’t plan, execute, and THEN crowdfund you WILL become a statistic. We talked to IdeaPros CEO, Fred Cary and our resident expert in crowdfunding, Simon Solotko on how you can avoid the usual mistakes and be ahead of the game.
Certain categories of goods do well in crowdfunding, while others don’t. B2B solutions, services, and apps are usually a no go. Kickstarters do best with products and categories that consumers have demonstrated previous demand for.
A big part of Kickstarter is innovation. Doing something no one has done before. The crucial thing is understanding whether or not your product meets the key requisites. It shouldn’t be too expensive or too cheap.
There should be an established audience who craves the product. A lot of products fail because they haven’t identified an audience in the earliest phases. If you don’t have an audience and you expect to find it on Kickstarter, you are destined to fail. There are 18 million people there, but they won’t find you – if you don’t have momentum.
Another mistake is setting a goal too high. Kickstarter is often just the beginning of raising money for your business. Have that in mind before you burden people with too much expectation. Setting your goal too high without momentum can kill your business. Pricing and reward tiers are also very important factors that can hinder or advantage a project.
“The most important thing in crowdfunding is careful planning.” – Simon Solotko
Ideally, you will have the initial set of people who will back you before you launch the campaign. You’ve already talked to them and you know you have their support. This means you’ve done some pre-marketing: you’ve told people about your idea and ensured they are excited about it. Involving them in the design and development or at least initial feedback and beta testing of the product is a way to engage them from the beginning. Once, they’ve made a mental commitment they will join in every time you notify them. Most successful projects have been actively engaging their audience for 6 months before the launch of the campaign.
“If you haven’t engaged with people previously that process then starts in the relatively short window of a Kickstarter project. 30 days or 40 days is not very much time.” – Simon Solotko
IdeaPros’ Launchpad is an incubation process you need and it is designed to execute best practices in marketing. You begin to engage audiences socially and by email. As you want to see what people think before you’ve manufactured anything. We are talking about 10,000 to 20,000 people or more – if possible. Because not all of them are going to buy. You’ve got to gather them, nurture them, and get them to commit. You’re still only gonna get a percentage of that number.
Writing things down is critical. Model out your crowdfunding campaign. What is a reasonable expectation about the number of backers, the financial return, and the costs associated with running the project?
Writing down your plan for pre-marketing and marketing engagement, influencers, members of the community who are highly likely to back you, and who you want to call or email before the project launches are very important. A great thing about a documented plan is that you can run it by experts or friends who have experience in this area.
The next important question is if your audience is able, willing to go, or potentially already on Kickstarter. If your audience is already there because your product is suited for the platform then you should ask yourself, “if what you have is above the noise?”
“People believe because we are in this digital age that you can put something online, create some social media content, or send some emails that it will create digital magic that will draw people into your project. It ain’t so.” – Simon Solotko
Pick up the phone and connect with people, that’s how you get sales. The more you are on the phone, the more you are emailing, and asking people to back your project, the more engagement you will have.
There are many things you can do in marketing and a small subset of things that are useful to early-stage crowdfunding projects. The most important thing is to make sure that your product is ready for production – that means having a great prototype.
Once you have your prototype, you can create engaging content, video, photos, and testimonials that will help you build the initial audience. You will have to spend money to get there on PR or influencers.
The part that is cheap, but productive is to make phone calls. If you work with a company a budget for a relatively small campaign is probably $25,000 with their part being around 20%. A minimum advertising budget would be also around $25,000, which sums up to around $50,000 – if you are going to work with another company.
Every crowdfunding, even a successful one, is just the beginning. You can look at it as a validation that there’s a demand for your product, a push out of the nest. The next step is to think about what you’re going to do as an organization. Stay persistent, optimistic, build partnerships, and focus on growth.
The “Idea Pros” at IdeaPros have the resources, experience, and tools to help you at this step or any step in the entrepreneurial journey.
We partner with entrepreneurs at any stage and who are ready to invest their ideas. Apply for an interview and let’s explore partnering together.
Want to see the products we have launched? Check out the IdeaPros Launchpad!