We try to dissect the anatomy of a crowdfunding campaign from start to finish. Lets follow trough the 9 stages to Crowdfunding Success that we have identified during this year and a half long journey.
The 9 Stages to Crowdfunding Success
1st Stage of Crowdfunding is the Business Plan / Model
What many entrepreneurs do not know is that crowdfunding is the END of the entrepreneurial journey to get funding. It takes 3 to 6 months of pre-launch activities in order to maximize the likelihood of success in a crowdfunding campaign and there is never a guarantee of success. As such, a startup must have a business plan or a business model. It must be a viable business that has gone through the lean startup launch formula in order to present a company in a credible way with a credible plan. As much as we would like crowdfunding to be this magic place where the internet angels fund everyone, it is anything but. I have found a great site called StartitUp.co to organize your lean startup launch and do the early validation BEFORE you launch your startup.
2nd Stage of Crowdfunding is Securing your Intellectual Property
If there is a product or process that you are introducing into the world for the first time, you want to be sure you secure your intellectual property and ultimately incorporate a business structure, copyright and trademark logos, etc., to ensure that you are both protected and also not infringing on someone elses patent. There are an assortment of online resources, but the best place to start would be your states specific website that is charged with business filings. Then, as you interview patent attorneys, you will soon realize that you may not have enough funds to secure a full blown patent. Take these cost estimates and build them into your crowdfunding campaign goal. You can at least file a provision patent which would give you a small level of protection for a year while you raise the funds to pay for the other legal costs. One thing to note: DON’T let your fear of not having a full blown patent stop you from starting your journey towards crowdfunding. I would rather be first to market than not to market at all.
3rd Stage of Crowdfunding is your Social Media Strategy
Now you have come to the point where you want to begin leveraging the power of social media to grow your crowd and build relationships with new connections that you may not have had access to before. You must first take stock of what your current footprint is then seek out other resources to learn exactly what the best way to grow your audience is.
One of the most important things to note about social media is this one key principle that holds true across all channels:“If you follow someone within your target market and you’re sharing content relevant to them then there is a high likelihood that they will follow you back.” Knowing this, it is now your job to identify the tools that are available in abundance that will help you highly target your market on social media and will allow you to follow and unfollow them in bulk. As you commit to this practice daily, you will notice a significant increase in your website traffic, your contact form inquiries, and ultimately your opportunities to engage with a whole new set of potential backers and brand ambassadors to your campaign. Engagement is key to building these relationships and monitoring the social media accounts on a daily basis can be easily done using a tool like Hootsuite.
4th Stage of Crowdfunding is your Public Relations Strategy
Public relations is a mystery to most and measuring the ROI on it is even harder. Essentially, one must develop a story that is worth reporting on. How does one develop such a story? By taking themselves out of the picture and narrating that story from the perspective of how their product or service will benefit the target market and audience of said product or service. Once this story, or “Message Map” is developed, a “Media Kit” will need to be prepared that includes personal and professional bios, pictures, logos, etc. that a journalist or blogger would need to make their article much easier to write.
With these two items completed, it is then time to create or purchase a media list of journalists or bloggers who write about the topic that your target market cares about. Pitching to them is a whole other story as often times it involves a drip campaign using a combination of email, phone call, and social media mentions on twitter to get their attention. You may also use press release services such as MarketWired.com to do the “Shot Gun” approach to PR and see what sticks.
As you pitch these journalists 3 – 6 months before you launch your crowdfunding campaign, those of you with a prototype may wish to send these journalists one or your products so that they can write a review. If they agree, ask them to put the article “On Embargo” which means they are agreeing not to release the article until you launch your crowdfunding campaign. You will ask them to include the link to your live crowdfunding project so that when your target market reads it, they are directed to your campaign and hopefully become a contributor.
5th Stage of Crowdfunding is your Campaign Strategy
Similar to the 1st stage but more specific to your crowdfunding campaign, the campaign strategy is important because this is where you take your unique circumstances to determine where your most strategic time is spent. The 3 to 6 months of pre-planning ultimately is to attract 30 percent of your funding goal within the 1st week of launch and this funding number is increasingly needed during the first 48 hours! With that said, the likely source of this initial burst of funding will come from friends, family, acquaintances and others whom you have been able to touch during the preceding pre-launch period.
We recommend implementing a 30 day to launch strategy during the last month before you launch your campaign that incorporates a strategy for the following elements for the purpose of rallying each:
- Email Contacts
- Phone Contacts
- Social Media Contacts
- Public Relations Contacts
6th Stage of Crowdfunding is Networking and Team-building
At this point you are probably thinking, “Holy Crap That Is a Lot to Do!” You would be correct in this assessment. But fear not, if you have done the legwork up to this point, you have likely attracted the admiration of others around you who have watched you grow into an amazing entrepreneur during the previous months of trial and error. Crowdfunding is a team sport and finding people to network with who ultimately will become a part of your team is crucial to success, especially for larger projects with large funding goals.
What most people do not realize is that you don’t always need to hire out. If you cannot afford it, then realize that we all have compensation that we can give to someone who volunteers to be on our team. Our knowledge that we have learned and our time that we can devote to mentoring these team members will ultimately be much more valuable to your volunteer than any short term monetary gain. Become inspired about your project and I promise you will inspire others to join the effort.
7th Stage of Crowdfunding is Website Development
Your website will likely take three forms during your campaign. The pre-launch era of your website will either be a landing page service to collect email subscribers such as LaunchRock or will be a basic website that implements newsletter tools such as SumoMe in order to collect as many potential backers prior to launch as possible. The primary source of your website traffic will likely be coming from your social media efforts as well as backlinks from any PR that you may have been garnering prior to your launch.
During the launch, you will want to leverage all of the traffic you have built and re-direct it all to your crowdfunding campaign page so that instead of visiting your normal website they are brought to the location where they can become a project backer. If your traffic has been from a target market that is your potential buyers, you can expect higher than normal conversion rates when redirected from your website.
Finally, after your campaign has ended you now have to transform your website once more into an e-commerce site so that you can sell your product or service on an ongoing basis. If you had success with your crowdfunding experience, you may even wish to use crowdfunding as an e-commerce platform by incorporating the crowdfunding model into your website. A quick Google Search for White Label Crowdfunding Platforms will show you exactly how you may do just that!
8th Stage of Crowdfunding is Profile and Video
One of the most important elements of a crowdfunding campaign that gets the least amount of effort put into it is the profile and video that potential backers see. The importance of this cannot be understated. This is essentially your sales funnel. It tells the story of your product or service, the people behind it, and the amazing journey and work you have put into it during the prior 3 – 6 months before you launched. The video must be no longer than 2 – 4 minutes as a general rule and must be professional in quality. Although professional video can get rather pricy, there are other ways to get the help you need by reaching out to friends or family, speaking with colleges who need students to work on projects, etc., to satisfy the requirement of a quality video.
Additionally, a great video alone doesn’t cut it. The profile description needs to be fully transparent about the business including who the participants are, what the funds will be used for in an itemized budget, include plenty of pictures and testimonials of the product or service if available, among telling the inspirational story that is necessary for potential backers to vote for you with their wallets.
The way you know if your profile and video hit their mark is by circulated the campaign preview link around to your potential backers for feedback BEFORE you launch. Most people skip this critical feedback step and it costs them dearly when they realize that they told the world why they should like the project INSTEAD of asking the world why they like the project. Tunnel vision in project creators is the number one killer of a good story to tell. A great resource for market research to compare your campaign to other successful campaigns in the past is Krowdster.co.
9th Stage of Crowdfunding is Fulfillment
The 9th stage is perhaps one of the most important. You have selected the rewards or promises you are making based on the multiple monetary tiers that are available. Essentially, you MUST fulfill these rewards if you are successful in your funding. You are thinking to yourself, “I know this Manolis, I am not just going to keep the money and not fulfill on my promises!” You may think that now, but one of the most critical mistakes that we have seen is when project creators did not do their homework on the costs to fulfill on the rewards they are offering.
Some project creators did not get appropriate estimates of the manufacturing costs. They may have never created the prototype on a mass scale (or at all) and simply made a best guess at what it would cost to produce the product. Other project creators did not take into account the costs associated with shipping a product domestically and internationally. Other project creators do not give themselves enough time to fulfill on the rewards with overly ambitious fulfillment timelines. No matter the case, these delays or oversights either lead to fulfilling the rewards at a loss or even worse, not fulfilling them at all!
When the latter happens, the project creator is subject to litigation and many more troubles. What’s worse, the backers who were once the most supportive people in the world quickly become a pack of wolves chomping at the bit to defame and degrade the individual who broke their promises. That is why one cannot guess what the costs will be. If there are delays in the materials, then be communicative with your community of backers. They will understand for the most part if you are giving them evidence that the delays were outside of your control. You may wish to use a service likeBackerKit in connection with your campaign to help you with the fulfillment side of the equation.
That depends on the outcome of your campaign. If you do not succeed the first time, it does not necessarily mean it is the end of your dream. In fact, the world’s most successful Kickstarter project, “The Coolest Cooler”, failed the first time they tried. Take the time to re-assess what worked well and what didn’t work well and adjust accordingly until you find a way to reach the right audience.
If you did succeed, then you are now officially “in business.” You have a whole new set of challenges ahead and are likely receiving offers and opportunities that had previously “rejected you” in the past. Choose your opportunities wisely and never forget where you came from. What brought you success in crowdfunding will likely bring you success in your business too. After all, execution is really all that matters.