Using Crowdfunding to Pre-sell a Product
Apart from raising investment funds Crowdfunding is used by an increasing number of companies to launch new products on the market before they have been produced i.e. (Pre-production Sales).
Crowdfunding has become a flexible and important option and is now being used,
- Creating cashflow by offering product deals pre-production. In this instance crowdfunding platforms will require you to specify the stage at which your product is at. This option has the advantage of raising cash through sales that can be used to fund production.
- Introducing new products to a global market. This option is now being used by established companies who are not raising equity and often have a product developed and ready for release
There are many crowdfunding platforms to choose from and these can be easily found on-line including:
- Funding Circle US
Crowdfunding Statistics – 2019
The Crowdfunding scene has become very competitive for companies that plan to sell their product and a well planned and executed campaign is necessary to achieve success. The following statistics have been published by Fundera:
- There were 6,455,080 worldwide crowdfunding campaigns last year.
- Successful crowdfunding campaigns have raised $28,656 on average.
- 4% is the average success rate of crowdfunding campaigns.
- And there are projected to be 12,063,870 campaigns by 2023.
- Kickstarter has had 319,051 completed projects—the most overall for any platform.
Crowdfunding should be taken as a serious exercise and planned accordingly. Success can be significant but is not guaranteed so every dollar you spend needs careful consideration.
- Create a Crowdfunding Action Plan
- Search crowdfunding websites for recommendations about your;
- video content
- funds requested
- Consider expanding your reach through referral sites e.g. Kickbooster.me
- Consider using a media release service e.g. Krowdster.com
- Try to raise 25% of your target in the first week to attract attention of the crowdfunding platform you have selected which assists in the chance you will have of being a ‘staff pick’ which will get you more exposure.
- Stick to a well thought out plan.
|· Does not involve giving up equity.||· Requires a well-planned campaign strategy including multi-faceted social media co-ordination.|
|· Can be used at concept stage, prototype stage, pre-production stage or new product.||· Pre-launch period activity is vital to success.|
|· Raise funds based on future sales of a product.||· If you set a ‘fixed’ target and do not reach the funds are returned to the buyers.|
|· The buyers take the risk of you meeting your promises.||· Once the funds are raised you are under pressure to deliver.|
|· Campaigns have a set duration that you establish up front. If you meet your target||· Crowdfunding platforms charge a fee as a percentage of funds raised.|
|· Sales can continue after the campaign ends as crowdfunding platforms offer an after-campaign sales platform for similar fees.||· Every campaign requires continual attention and communication with buyers.|
Action Plan for pre-production Crowdfunding sales of a product
|Lead up to Launch – (4-8 weeks)|
|Collect emails||· Create web page for subscribers|
|Customer Avatars||· Create a series of Avatars for each demographic|
|Social media||· Create social media accounts for Company and Product|
|Website||· Create landing pages to collect email addresses|
|· Use an email responder e.g. Mail Chimp, Active Campaign|
|· Connect website and social media to ensure email addresses are collected|
|· Set up Google Analytics and add to landing page|
|Paid Ads||· Set up Facebook ads manager|
|· Add Facebook pixel to landing page|
|· Consider Google AdWords|
|Public Relations||· Create media hit list and rank by relevance to demographics|
|Content||· Create 5-10 pieces to share|
|· Send one email every 1-2 weeks to the growing email list|
|· Regularly post on social media|
|· Open a Facebook and Instagram group for the launch|
|Crowdfunding Page||· Create video/s|
|· Create reward packages|
|· Use professional lifestyle photos|
|· Create Kickstarter or Indiegogo account|
|· Turn on Facebook ads and start test different audiences|
|2 weeks prior to Launch|
|Video||· Finalise pitch campaign video|
|· Write story and campaign page copy|
|· Finalise reward and early bird pricing|
|· Build crowdfunding page|
|· Submit project for approval|
|· Create campaign tagline and compelling headline focusing on why your offer is unique and beneficial|
|· Send a survey out to audience to confirm which features are they most excited about|
|Paid ads||· Scale ads to build email list|
|Awareness||· Ramp up frequency of posting on social media|
|· Build buzz with audience by releasing sneak peak of your product or service|
|· Follow up with influencers that agreed to cover the launch or have not yet replied|
|· Reconnect with people in the network that have agreed to spread the word|
|· Consider using referral services such as Kickbooster.me|
|1 weeks prior to Launch|
|· Announce launch date to the network|
|· Continue to pitch and follow up with influencers and media|
|· Incentivise audience to buy on the 1st day|
|· Email audience 7 days, 3 days, 2 days and 12 hours before launch|
|· Consider a media broadcast service e.g. Krowdster.com|
|To Go Live||· Live stream the launch using Kickstarter Live of Facebook Live|
|· Press @launch Campaign@ button|
|· Tell everyone and repeat|
|Backers||· Send campaign update to backers after first 24 hours thanking them for their support|
|· Send updates twice a week|
|· Respond to customer support inbox and campaign comments|
Using Crowdfunding to pre-sell a product can be an attractive option, however, like most campaigns a lot of work is required prior to opening the campaign, throughout the campaign and in following up with purchasers and delivery. Successful campaigns are often characterised by having 25% of sales in the first three days which means that a company has to do a lot of promotional work before launch and have committed sales/pledges that will be activated by purchasers within the three day timeframe.