You may well have heard of crowdfunding as a way of raising money for projects of all kinds. Kickstarter is one of the names you are probably aware of. However a recent news item about Kickstarter shows that crowdfunding is more than just raising money.
That news item describes how the video game Shenmue 3 smashed the Guinness world record for the fastest video game crowdfunding. The surprising item here is that Sony is one of the backers of the project. Surely they had no need to use this particular vehicle for raising cash. However they and the games creator, Yu Suzuki, said that the game would not be developed and promoted unless it could raise $2 million on Kickstarter. In fact that goal was achieved in one day.
What we see here is that in an innovative way the crowdfunding process was used as part of the marketing strategy.
2 Critical Problems for startups
Any observer of the startup scene knows that the two critical elements for success are financing and marketing.
It hardly needs to be said that any start up must be able to survive the period before it becomes financially viable. Inevitably costs mount faster than revenues. Unless the entrepreneur has a pool of funds, they may well starve or give up before they have achieved success for the project.
The other critical activity for any project is marketing. You must put in enough effort in the right way to ensure potential clients are aware of your products and are ready to commit to purchase. Inevitably there are competitors who may have been in the marketplace longer. It can be challenging to stand out from the crowd and persuade potential clients that your product or service is superior to any other.
That marketing process can take some time and the important element is to start this marketing process early enough.
Happily crowdfunding brings a needed discipline to the marketing strategy and success is more likely if this is tackled sooner rather than later.Any approach to the crowd for funding can only be done well when the whole marketing process has been defined.
The only way a marketing strategy will succeed is if it employs a customer centric approach.
The customer centric approach requires that you put yourself in the shoes of the customer and look at the situation from their point of view. With that optic, you must as a start determine the answers to each of the following four questions:.
Who Are They
The first question to ask yourself is who exactly will be your customers for your new product or service. You cannot hope to produce something that everyone wants. It is essential to focus so that you can design your product with that particular customer in mind.
What Do They Need
Knowing who you are wishing to serve, you must then decide what they will be looking for when they consider possibly buying your product. Ideally it should be something they really must have. Anything less and you may find that your product will stay on the shelf.
Another critical factor is who else is attempting to supply the needs of your target customers. You should put effort into finding exactly what they do. Your potential customers will certainly do their research and you should do no less in making sure that you are not offering merely a me too product
Finally and perhaps most importantly you should aim for a product that will have a USP. That stands for Unique Selling Proposition. It is an old concept by now but it nevertheless is exactly what you should do. Your product must stand out from the competition by offering something that uniquely meets the needs of your potential clients. They should see it as a must have product.
Plan Your Crowdfunding Strategy
Having done this essential homework, you are ready to map out your crowdfunding approach. You have your ideal product and you know who you are trying to sell it to. How can you get those very same people to commit some amount of money however small to help bring the products to the marketplace?
You can see this as almost a dry run for the eventual marketing of the product when it is available on a commercial scale. The very same persuasion arguments you might use to sell the final product will certainly be applicable in getting the very much smaller commitment to support your start up..
Your crowdfunding strategy involves four steps.
- Create Your Supporter Community
- Keep Them Committed
- Encourage Them to Share with their Friends
- Enjoy the Mutual Success
Create Your Supporter Community
In many ways getting someone to support your program is more important than the cash they might offer to confirm that support. You should therefore think carefully of the different levels of support and make sure that every potential supporter can find something that fits them.
Keep Them Committed
The hardest step is to get that initial commitment by a supporter. Once you have achieved that, then it is very much easier to retain that support and strengthen it. This requires an ongoing process of communication so that everyone is aware of how well the launch is going.
Encourage Them to Share with their Friends
The least costly and least effort way that your supporters can help is that they pass on their enthusiasm for the project to their friends. You should make sure that this is easy for them by supplying the marketing materials that they may need.
Enjoy the Mutual Success
You and your supporters have a mutual interest in the success of the project. Make sure that they can enjoy every successful moment as the startup succeeds.
If Not Kickstarter
One thing to be aware of is that not all projects are acceptable to Kickstarter. It is intended very specifically for creative projects, most often in the arts. For other projects, the two main crowdfunding platforms are Indiegogo and Gofundme. Developing a crowdfunding project on either of these will provide the same advantage in making sure that you handle the marketing early and effectively. By doing this, you will avoid the problem that often kills many startups.