Your crowdfunding campaign is an unparalleled opportunity to engage with prospects and potential investors. But your rewards program can actually make it or break it.
Reward-based crowdfunding is not only a great way to test products, secure market validation and build your brand, but it also provides you with a chance to build lasting relationships with advocates, customers and potential future investors. However, a rewards campaign is not easy money —not at all.
For your campaign to be successful, it is crucial you develop a solid rewards program. If you have creative, appropiately priced rewards that deliver a valuable product or experience that is unique and memorable, your supporters will be just as excited as you are when they claim their reward (and even more so when they receive it!).
So let’s look at a 3-step method that will allow you to engage with your backers more meaningfully through your incentives.
1. Define Your Goals and Funding Target
First step is to set a realistic, clear, and very specific objective for your campaign.
A successful crowdfunding campaign should give your backers a sense of ownership and belonging to the project’s community —they need to be able to touch the final product. For example: recording a documentary film is a concrete project, while launching your movie career is not. This works for both the creator and the backers. For your potential backers, it sets the expectations and helps them judge how well prepared you are. For you, it helps you define the scope of the endeavour.
Although this might sound straightforward, it is not. In order to establish a realistic goal, you have to create a budget that accounts for all expenses. Make sure your budget factors in for the following:
1. Cost of the rewards
2. Packaging and shipping
3. Marketing expenses
4. Crowdfunding platform and credit card fees
“If the budget you create requires you to raise more than $25,000, consider breaking the campaign down into manageable sections. Raise $10,000 first to build a prototype, get the initial marketing materials finished, handle the legal and accounting and be ready to manufacture. Then, raise the rest in a second campaign for the first production run of your manufactured products.”
Kendall Almerico at Entrepreneur.com
Also, take into consideration the social proof factor. If you set a high target and fail to raise a considerable amount relatively quickly, it is likely potential donors will not donate even though they might like your idea. People feel safe in numbers and if they believe your campaign might not make it, they will not give money. As Almerico suggests, it is a good idea to line up around 25% of your target prior to launch and have it donated on the first day of the promotion, so the goal seems more attainable.
Finally, remember that in addition to raising funds, your goal should be to increase social capital —so try to engage and communicate with your supporters as often as possible.
2. Research your audience
Once your financial targets are set for each objective, it will be much easier to pinpoint your target demographic.
If you try to promote your crowdfunding campaign to the general public, it will most likely fail. Instead, focus on appealing a certain community. Analyze the people who are interested in your product. Look at geographic location, industry, job title, gender and age information (or any other details you might find relevant for your product or service) and personalize your pitch for your community.
If you need some help and advice doing the research work you can use services like Backercamp, a full service partner for your crowdfunding campaign, that provides PR, marketing, communications and branding counsel.
Backercamp has helped over 3,000 Kickstarter and Indiegogo creators with promotion and support, raising more than $25,000,000 in successful funding. It also accepts projects in the pre-launch phase.
3. Set Your Rewards
Making sure your rewards or perks appeal to your target group is a key factor of your campaign.
Deciding what to offer
Overpriced or uninspired rewards will make your project struggle. Therefore, make sure to come up with creative, tangible, and fairly priced rewards.
First. Your primary rewards should be the things made by the project itself. Following the example before, if your project is to record a film, then your rewards should include a copy of the movie.
$35 – 22997 Backers
“You will receive a digital version of the movie within a few days of the movie’s theatrical debut, plus the T-shirt, plus the pdf of the shooting script. Naturally, you will also receive regular updates and behind-the-scenes scoop throughout the fundraising and movie making process.”
Second. When determining what rewards to offer, ask your friends, “If you left your wallet out in your car, would this reward make you want to get up and go outside to get it?”
$150 – 414 Backers
“Want to give out some LithiumCards to friends and family? No problem! With this perk, you buy 3, get 1 free! Choose from the following fine brushed finishes…”
Third. Give your backers the feeling that they are important to you and your project, no matter what incentive they go for.
$25 – 9333 Backers
“Backer-exclusive limited edition CD, beautifully packaged backer-only version of the CD in a hardbound case. includes a 24 page art booklet. PLUS deluxe digital download & thank-you card.”
Pricing and tiers
The rule of thumb is to price your rewards fairly, the same as retail cost or at a discounted rate. Before framing your rewards scheme, though, research 10-15 campaigns that have funded within your niche and look at:
1. Average number of rewards offered
2. Most popular funding tiers by dollars
This information will give you an idea of the tiers that are typically most lucrative. Statistically, the $25 tier is the level most donors contribute to across crowdfunding platforms. This makes sense as it allows people to get involved with a low-risk commitment. For higher tier rewards (usually reserved for very unique experiences), there is more leeway to set the pricing according to your audience’s perception of value.
In any case, start your campaign with 6-8 quality tiers to attract different levels of funding. Make each tier creative but also simple to understand. Having more rewards can be overwhelming and end up backfiring. You want your backers to be able to differentiate the value in each item you are offering.
Some reward inspiration
Thank you. Give different type of credit to your supporters, from mentioning them on social media to putting their names on the product itself. Share photos, updates and cool stuff with them.
Merchandise. Reward them with hats, t-shirts and other cool collectables (who wouldn’t love an original Apple t-shirt today?).
Product. Offer an exclusive first run of your product or service (also known as pre-orders). Do this just for a limited time or amount to spark demand.
Early Access. Grant access to a few to be your first users.
Customization. Enhance users experience by providing personal options such as engraving, color choice, etc.
Subscription. This is a great idea for businesses with membership models.
Bundles. Combine the above rewards to create a higher tiered incentive.
Meet & Greet. Have fans come and meet you and your team, offices, etc.
Participation or Collaboration. Let people become a character in your game, name a flavor after them, act as an extra in your film… If you are targeting experienced professionals, you might even want to invite them to collaborate in deciding the future of the project.
Events. Have backers come to your launch party, give them access to backstage, throw a special gathering for them… The possibilities are endless.
Photo credits: Adam Gimpert