What You Need to Know About How to Crowdfund for eCommerce
When you have a project or business venture that you want to pursue, crowdfunding can be an excellent way to gather the capital you need to begin. Every year, crowdfunding takes in billions of dollars worldwide and helps thousands of entrepreneurs. However, a study from UK-based organization The Crowdfunding Centre estimates that fewer than a third of all crowdfunding campaigns actually reach their goals. Many factors that contribute to the low success rate of campaigns include poor planning, advertising, and design, much of which happens when an entrepreneur doesn’t have the skills and knowledge needed to launch the campaign in the first place. You can avoid this by following these tips on how to crowdfund for ecommerce:
- Vet your idea
- Choose a funding platform
- Study other campaigns
- Include the correct elements
- Plan marketing efforts
- Accept public feedback
- Deliver on the promises you make
Vet Your Idea
Not all ideas are suitable for crowdfunding. For your campaign to be successful, you need to amass a large number of backers–the people actually funding your idea–to meet your goal. Some ideas and products are less likely than others to gather those backers. Before committing to a crowdfunding campaign, there are a few questions you should ask about the idea you want to fund.
- Is your product similar to others on the market? If the market is saturated with products similar to yours, it becomes harder to interest people in it.
- How is your idea unique? On the flip side, if your product is new and unique, you may be more likely to interest backers. Highlight what makes it unique to understand how to generate interest.
- In what way is your product better than those of competitors’? If you offer a superior product than other options on the market, it can be easier to get your foot in the door.
- Will there be enough people interested in your product to actually meet your goal? If your product is too niche or too similar to other products on the market, you may find it difficult to succeed with crowdfunding.
The answers to these questions can help you make sense of your position in the marketplace and to know if crowdfunding will actually be a benefit to your business or just a hassle.
Choose a Platform to Crowdfund for eCommerce
Thanks to the popularity of crowdfunding, there are several different sites that allow you to set up and run campaigns. A few of the most popular include:
- Kickstarter: Kickstarter is one of the most well-known crowdfunding sites and has raised more than $3 billion for campaigns. One advantage of using Kickstarter is that it chooses campaigns to feature, which can be a great opportunity for your business. However, because of the number of campaigns on the site, it can be incredibly difficult to get featured. In addition, Kickstarter operates on an all-or-nothing model, which means if you don’t meet your entire crowdfunding goal, the funds you do raise are returned to your backers.
- Indiegogo: Indiegogo originally started as a site for musicians but has since expanded to crowdfund for ecommerce and anything else. It shares some similarities to Kickstarter, namely in running a “featured campaign” page. The big difference is that funding options are more flexible and if you don’t earn your entire goal, you can still keep what you do raise.
- GoFundMe: This platform is one of the biggest in the world, however it functions differently than Kickstarter or Indiegogo. GoFundMe focuses on donation-based campaigns to raise money for causes and non-profits. While it isn’t suitable to crowdfund for ecommerce businesses just starting up, entrepreneurs who want to start championing social causes might find success in that venture through GoFundMe.
Study Other Campaigns
When you choose a platform to crowdfund on, you should then take a look at other campaigns selling products similar to yours. First, take a look at the most successful of those campaigns and analyze what they do well. Do they have excellent written copy, a great video to highlight their product, a really catchy slogan? Next, analyze the failed campaigns and whatever it was that might have contributed to their failure. Did they lack information about their product, was the design of their campaign poorly done? Make notes on all the best and worst elements of the other campaigns to keep in mind when executing your own campaign.
Include the Correct Elements
The majority of successful campaigns have a few things in common. First, they’re all highly polished and professional looking. Other elements include:
- A Clear Title: While you may want to come up with something clever and catchy, a clear title for your campaign is usually the better choice. If potential backers are confused about what the product is from the very start, they’re less likely to investigate your project further. Generally speaking, tell people the name of your product or project, the basics about what it is, and what makes it unique.
- Your Pitch: Crowdfunding is a way to encourage people to invest in your business. In order to accomplish that, you need to pitch your business to them. There are a couple of ways to do that. You can either use text to explain your project, or a video. The goal of your pitch should be to convince people to support your project with no immediate reward or benefit to them. Whichever method you choose, make the pitch transparent, clear about the product, and the peak of polished and professional.
- Perks: Finally, one of the key elements of a good crowdfunding campaign should be backer perks. Very few people are going to give you money out of the goodness of their hearts. They often expect something in return and most often that something is early access to the product. Set up a list of tiers that backers can choose from where more money provides them with better and better perks.
Plan Your Marketing Efforts
Simply launching a crowdfunding campaign isn’t a guarantee that it will be successful, especially since you could be competing with dozens if not hundreds of other entrepreneurs in your industry. After the campaign itself is set up, you must also launch a series of marketing efforts to make people aware that you’re raising funding for a project. There are a few methods of advertising that work particularly well for crowdfunding campaigns:
- Paid Advertising: Whether you choose to use traditional media or digital media, a little bit of paid advertising can go a long way. You can use it to reach audiences from a wide geographic and demographic range, ensuring that your campaign garners attention from all over.
- Email Subscribers: If you already have an established business presence, you might also send out a newsletter to email subscribers. If you do, use that as a way to let them know about your crowdfunding campaign. If they already receive emails from you, chances are they’re already invested in your business. That will make it easier to convert them into backers.
- Press: While you can do little to guarantee media coverage for your campaign (try sending a press release or running a media stunt), press is a great way to generate buzz about your campaign.
Accept Public Feedback
When you share your campaign in a public forum, you have to expect that people will send you feedback about your product or project. While much of it will be positive, you may also get some negative feedback. Although it can feel hurtful, take any and all feedback to heart to improve your product and increase the likelihood of finding backers for your campaign.
Deliver on the Promises You Make
If you make promises to your backers in your crowdfunding campaign, make sure you deliver on them. By failing to meet the expectations of your backers, your business can lose credibility and professionalism or even incur legal repercussions.
A well executed crowdfunding campaign can be a great way to kickstart a business. Take the time to execute it well and enjoy the rewards.
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