Starting a donations-for-rewards crowdfunding campaign is an appealing idea for many, and the conception is that you can post an idea on a platform and the money will start rolling in. In reality, most campaigns fail to reach their targets, and it takes a lot of work and a bit of luck to succeed at crowdfunding. This article will help you understand how to avoid common mistakes and increase your chances of successfully crowdfunding your idea or project.
- Thinking it’ll be an easy project
The bottom line is that crowdfunding isn’t as easy as it seems. It takes a lot of work and planning to run a successful campaign and what most people don’t know is that the top crowdfunding campaigns which go viral are usually run by marketing and PR agencies. If you can spend similar amounts of time and money planning and executing your campaign, you will have a shot at being successful.
- Failing to get early traction
The earlier a campaign builds momentum, the more likely it is to achieve its financial targets. Launching with a bang is an invaluable boost to start a campaign, so a lot of marketing should take place early before you even publish your crowdfunding campaign. Experts on crowdfunding, like Robin Moore, a business writer at Revieweal and Essayroo, say that “if you want to reach your financial goal during your campaign, you have to put all your effort into raising at least 30% of the target in the first couple of days. All the research out there is showing that this is what the successful campaigns have done.”
- Asking for crowdfunding when you don’t need it
One of the most common mistakes is asking for crowdfunding help when you don’t need it. Public outcry can be quite intense if people feel that you don’t need the money requested, such as for an extravagant overseas wedding. The problem is sometimes that money is requested for yourself, instead of for someone else, especially on charity-based sites like GoFundMe (more on different crowdfunding platforms later). If your campaign benefits only yourself or a handful of people, you will have to think very hard about the sort of rewards you will offer for contributions.
- Not preparing for all possible scenarios
Surprisingly, a mistake that is often made is not preparing for the best case scenario, which is surpassing your campaign goal by a large margin and then not being equipped to produce or access enough rewards. The difference between the capacity for production and distribution and the demand can threaten to ruin a company before it can really get started. It’s very important to prepare for any scenario that can happen after the crowdfunding campaign is complete so that your hard work and marketing won’t go to waste by being unable to deliver promised rewards.
- Having a poor rewards program
Many people will only put money into a campaign out of interest for the rewards offered, and not purely out of charitable goodwill. It is crucial that you have a great rewards program for the contributors of your campaign, and include rewards for small donations like 2, 5, or 10 dollars to make sure you’re getting casual donors as well. Anita Ludlum, a communications manager at Studydemic and Ukwritings, suggests another tactic: “implementing certain targets when a financial goal is reached during the campaign, which gets backers invested and interested. This can be as simple as unlocking a different color or pattern of the product.”
- Using the wrong crowdfunding platform
As previously mentioned, you have to make sure that the platform is the right one for your campaign. For example, Kickstarter is not the best option for international pledges, as opposed to a platform like Indiegogo which has a more international reach. Similarly, a charity-based platform like GoFundMe may not be the best idea for pitching a campaign that does not have a wide beneficial impact on society.
- Forgetting to cost out the delivery of rewards to your backers
Most crowdfunding platforms rely on a simple principle. You, as a person gathering funds, offer rewards for people who back you. This is a great way to do things because then the backers feel like they have received something in return. There can also be different levels of rewards for different amounts of funds in tiered steps. But, all of those rewards require delivery. And that costs real money which you probably don’t have yet. Calculate how much all of that could cost and whether you will have enough to send the items.
- Saddling yourself with high production costs if you don’t get enough backers
Don’t go for huge risks when you are not yet aware of how many backers you will have. Instead, wait to see if you will get enough backers and then create products as you need them and according to the funds that you have available. This is why setting a minimum target to achieve on an “all or nothing” basis can be a good idea.
There are other countless reasons that can make crowdfunding campaigns fail or succeed, and luck only plays a very small part in the process. Financial targets are met through careful planning and running a good marketing campaign. By avoiding the mistakes outlined here, you’re increasing your chances of successfully crowdfunding your idea. Do you have any personal experiences you want to share with the CSW community?