Crowdfunded
The ultimate guide to crowdfunding: mastering product launches, funding goals, and brand growth on indiegogo and kickstarter
Description
Crowdfunding should be an integral part of your product launch, getting future customers involved in funding, developing, and buying your initial product so they remain engaged. A successful campaign positions you for bigger deals by building a community of passionate supporters. First validate demand and identify your target audience.
Then pre-sell to this community and build momentum quickly to attract more backers. Use your crowdfunding achievements to drive further sales, while developing your next product for the next campaign. Ultimately crowdfunding allows you to continuously improve your products while building an authentic brand and loyal customer base.
Table of contents
01Section 1 - Evaluation
Over 60% of crowdfunding campaigns fail, primarily due to poor product positioning, which is crucial for campaign success. Effective positioning resonates with the target audience and is the cornerstone of the campaign. Creators must rigorously test and validate their positioning to ensure success. Pre-launch work includes demand validation, audience targeting, and building a reservation funnel. Crowdfunding expert Mark Pecota emphasizes that without strong positioning, campaigns are likely to fail, as it is the foundation of the entire crowdfunding effort.
Positioning
Positioning your product effectively for a crowdfunding campaign involves understanding your target audience and how your product addresses their needs. It's crucial to test different positioning strategies and let market feedback guide you. The Consumer Based Brand Equity Pyramid is a useful tool for developing your initial positioning hypothesis. At the base level, clarify your product category and the problem it solves with a simple statement, like "Starbucks sells coffee." Next, detail your product's features and how they differ from competitors, such as Starbucks' combination of affordability, convenience, and quality. Then, introduce performance details and imagery that shape consumer opinions, using evidence like data or testimonials. For example, AIR PIX rebranded to avoid high-tech, military connotations, aiding in raising $1.6 million. Finally, establish reasons for customer loyalty, like Starbucks' mission to provide a consistently positive experience. After working through these levels, identify your target market, top differentiators, and create headlines that convey your product's value. Remember, positioning is iterative and requires testing to refine your hypothesis. As expert Mark Pecota emphasizes, assumptions in positioning or budgeting are risky without testing. Testing helps ensure your positioning resonates before committing significant resources, reducing risk and guiding smarter investment.
Reservations
To effectively test a positioning hypothesis, one could implement a reservation funnel that encourages potential customers to make a small deposit, securing a discounted price for a product's crowdfunding launch. The process begins with a landing page where interested parties can submit their email addresses to learn more about the product and campaign, helping to gather leads and build an audience. Next, a reservation bridge page should clearly explain the reservation mechanics, offering a $1 deposit option that grants VIP status and guarantees the best available discount, presenting this as an exclusive opportunity for early supporters. The third phase involves a VIP reservation checkout page where individuals can provide their credit card information to make the $1 deposit. This page should be designed to facilitate conversions, featuring straightforward instructions, security assurances, and a conspicuous call to action. The final step is a thank you page that confirms their VIP reservation and outlines the benefits they will receive. This reservation funnel is advantageous as it distinguishes genuinely interested buyers from casual browsers. Data indicates that individuals who commit to a small deposit are significantly more likely to make a purchase upon launch. After establishing the funnel, driving traffic through targeted advertising and outreach can help accrue VIP reservations and foster a community around the product, setting the stage for a successful crowdfunding initiative.
02Section 2 - Initiation
To ensure a successful crowdfunding launch, aim for full funding within the first 48 hours to build momentum and exceed goals. Key tasks include finalizing perks, engaging social media, preparing outreach, and setting stretch goals. Crowdfunding platforms like Kickstarter and Indiegogo, with millions of visitors, offer a unique opportunity to reach early adopters eager for innovation. A strong start not only meets initial targets but also positions for future crowdfunding success.
Launch Event
To drive revenue in the first 48 hours of your campaign, segment your mailing list into VIPs and non-VIPs for tailored messaging. Inform VIPs 7 days before launch about the exact time/date and their exclusive discount, along with a campaign page preview to build excitement. Invite non-VIPs 6 days out to upgrade to VIP status by paying a $1 deposit for the best discount and give them a campaign preview. On launch day at 7am, email both lists to leverage exclusive first-day discounts for early traction. At 5pm, update both groups on the total raised and number of backers, reminding them the discount expires soon. To capitalize on initial momentum, introduce new perks and email at 8am on day 2, offering significant value despite a smaller discount. Share the second most popular reason for backing your campaign and tease the top reason for the next days. On day 3 at 8am, reveal the primary support driver and remind everyone of the ongoing deal. Recap the top support reason and the current best discount at 8am on day 5. Finally, at 8am on day 7, summarize the first week's fundraising totals, backer count, and the closing of discounted tiers. While six emails in one week may seem frequent, the timing and messaging are key to creating urgency around the limited early backer discounts for your crowdfunding campaign. After this sequence, pause emailing until the final campaign week to optimize your launch strategy.
Build Momentum
Starting a crowdfunding campaign requires strategic planning in phases to effectively engage potential backers. Initially, focus on remarketing to those who have previously interacted with your brand, offering incentives for early contributions. This targets the audience most likely to convert into backers. Next, broaden your advertising reach by targeting lookalike audiences of your existing backers on platforms like Facebook. Emphasize your campaign's early momentum and social proof to attract new backers. The final phase leverages promotional opportunities on crowdfunding platforms themselves, such as Kickstarter's "Projects We Love" newsletter or Indiegogo's featured placement. However, the success of your campaign ultimately depends on the quality and appeal of your product and campaign presentation. Genuine effort in your offering and customer experience is what convinces backers, rather than exploiting loopholes. Crowdfunding offers an advantage over traditional e-commerce by providing a built-in community that supports new products. Although Kickstarter and Indiegogo are not actual stores, they have high conversion rates as visitors are there to discover new concepts, not just to shop. This allows entrepreneurs to test ideas with less risk and capital than conventional launches, facilitating a value exchange between innovators and early adopters.
03Section 3 - Advancement
After a successful crowdfunding campaign, the real work begins. The post-campaign phase involves transitioning one-time backers into long-term customers. Utilize the InDemand feature of your crowdfunding platform to continue sales, leveraging the campaign's momentum. Focus on manufacturing and timely reward fulfillment. Key tasks include finalizing production, setting up an online store, managing customer relations, fulfilling rewards, communicating with backers, handling returns, improving the product based on feedback, and brainstorming future product ideas. This momentum can drive future business growth.
Monetization
Once a Kickstarter or Indiegogo campaign concludes, backers are charged for their pledges, but typically 3-5% of these transactions initially fail. Campaign owners have a 7-day window to contact these "errored backers" to update their payment details. After this period, unresolved issues lead to backers being dropped from the campaign. Funds raised, minus dropped backers and platform fees of around 5%, are transferred to the campaign owner's bank account 14 days (Kickstarter) or 15 days (Indiegogo) post-campaign. Personalized messages to errored backers have been the most effective method for minimizing dropped pledges, with campaign owners often recovering 20-30% of initially errored transactions. Crowdfunding platforms provide significant organic traffic and marketing at no direct cost beyond the 5% platform fee. Mark Pecota notes that, on average, over 28% of funds come through the platform itself rather than external marketing efforts, highlighting the benefit of tapping into the built-in crowdfunding community.
Feedback
Collecting detailed information from backers after a crowdfunding campaign is crucial for long-term business success. Surveys are a key tool for gathering important details such as shipping addresses and product preferences, which can reveal trends about your target customer base. While platforms like Kickstarter and Indiegogo offer integrated survey tools, third-party services such as BackerKit and CrowdOx provide more advanced features. BackerKit, for instance, imports your campaign data and allows for additional fundraising through upsell offers before fulfillment, with typical campaigns raising an extra $50,000 or more. It also simplifies logistics, including shipping and order processing. Although not mandatory, the powerful features of BackerKit make it a worthwhile choice, often paying for itself through the revenue from upsells. Market research is a multi-billion dollar global industry, yet crowdfunding presents a low-risk, cost-effective method for market validation. Early backers are a source of invaluable feedback that can enhance your product and business, and their vested interest in your success helps them become loyal advocates. Keeping open lines of communication helps to nurture an engaged community, which is essential for ongoing growth. In essence, post-campaign backer information collection offers actionable insights into customer preferences and product opportunities.
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