Kickstarter (and other crowdfunding sites like Indiegogo and RocketHub) have been around long enough that most people who shop online have some experience with them.
That’s not to say that every consumer’s experience with crowdfunding sites is positive across the board, and there are many tales of project backers being burned by shady project creators. Despite some growing pains, the crowdfunding segment of the online industry has come a long way in just a few years.
When established e-commerce brands see the gobs of money that project/brands like Baubax, Peak Design or Pebble have raised over the course of 30-45-60 days, it’s hard not to be tempted to try and replicate their success. Generate $9MM in less than a quarter with minimal upfront investment?… it looks like a gold rush, right?
Before digging into all of the elements required to pull off a successful campaign (or an EPIC campaign), the most important question you need to ask is whether Kickstarter is a good fit with your e-comm strategy. (But, you know, phrase that in the form of a question.)
Having worked with an absolute start-up, an established company, and a very established company on their crowdfunding campaigns, here are some tips (disguised as questions!) to break down whether crowdfunding is the right strategy for your company:
Is your goal to raise money, to gain marketing/brand exposure, or both?
Bootstrapped brands see crowdfunding as a way to generate sales before investing in expensive tooling, or coding, or production. It’s a proof of concept and a proof of interest rolled into one.
If you represent an established brand, the money raised may ultimately be inconsequential. $100K would be a home run for most crowdfunding campaigns, but could represent a month’s office supplies budget for a major brand. It’s all relative, and the need to raise money is either an important goal or not (as long as you hit your crowdfunding goal, that is).
Marketing exposure and being perceived as “hip” (a word which is, ironically enough, is the opposite of hip) are usually by-product goals of small brands seeking money through crowdfunding, but may be the primary goal of larger brands using crowdfunding.
Consumers who are into backing crowdfunding projects are many times VERY into crowdfunding, so planting a corporate flag on a winning crowdfunding project can be a powerful way to get your company on the radar of these backers as something special.
What is new and different about the crowdfunding product you imagine vs. what you currently sell?
New and growing brands use crowdfunding as a platform to show off their innovation, or to evolve their product line. For more established e-comm brands with multiple items and a history, it’s pretty clear to crowdfunding supporters that you don’t need the cash to get a product off the ground… so there is extra scrutiny on what it is you are offering.
If your company sells sneakers, launching an innovative design of shoelace that will revolutionize the market (or not, if people hate it) would be a good use of a crowdfunding platform. Launching yet another sneaker – but in blue this time – is not.
Part of the excitement of crowdfunding as a platform is that there is RISK involved, and the project may not work if there is not enough interest. So be sure your product is different enough from your current line to be perceived as innovative and bold.
What is the advantage of sending your current customers through crowdfunding vs. straight to your current site to buy something?
For new brands that are launching a crowdfunded product as their first step in creating a company, this is a moot point: all roads lead to your project.
But the most established a company is, the bigger the questions of splitting marketing attention (and dollars) between promoting an experiment vs. promoting the tried and true, bread and butter, (insert other cliches here) of business as usual. Promoting crowdfunding campaigns use most of the same techniques as promoting your online store, so be sure you are dilute attention from the store if you put a solid effort into crowdfunding.
This is especially true when looking at your current customer base. You have a choice: send an email marketing message (or social media, etc.) to send them to your site for a purchase… or to send them to a crowdfunding site (conversion rate unknown). Weigh it out.
Do you know the additional fees/costs involved?
In the course of daily e-commerce operations, there are known costs: credit card processing fees, platform fees, shipping, etc. In the world of crowdfunding there are the same types of fees, but they may be more than you typically pay (or less in some cases).
Look into the terms and conditions of your crowdfunding platform, crunch the numbers and make a decision based at least in part on the cost structure. If you layer additional resources for crowdfunding order management like BackerKit (which we HIGHLY recommend), there are additional fees. Some specialty crowdfunding marketers also charge a percentage for their services, so be sure to do the math before getting too deep into the dream.
Do you have creative resources (writing, video, photography) that can produce KS-quality and KS-style work cost-effectively?
Fees and percentages go along with the territory of crowdfunding, but years of successful (and failed) projects have set a standard for the level of creative that is expected from a winning campaign.
There are more words on a project page than you have on any product page on your e-comm site (I guarantee it). There are more photos and diagrams, too. Video?… there is an entire style of video that editors use as shorthand to describe the look and feel they are going for… “a Kickstarter-style video.”
So don’t expect that even a crack team of e-comm creatives can pull together a brilliant campaign in an afternoon. The time and cost investment to create crowdfunding-worthy content should not be underestimated.
Bottom line: if you need funding to launch an innovative product that takes a risk in the marketplace (not just a new color of something established), and/or if you want to use different positioning/marketing to hit a NEW audience, then crowdfunding may be a good strategy for you… as long as the fees and creative requirements fit with your budget.