Scott Steinberg is a leading expert on leveraging new technology trends to enhance business strategy and family life. The noted industry consultant and bestselling author has a new book The Crowdfunding Bible, which is free to download here.
Interest in crowdfunding continues to skyrocket, thanks to the record-breaking success of campaigns like the Pebble: E-Paper Watch, and Double Fine Adventure. The recent passage of the JOBS Act and the popularity of websites such as Kickstarter, RocketHub and IndieGogo have only reinforced its popularity.
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But for every successful crowdfunding campaign you hear about, many more have utterly and completely failed to meet funding goals. The reasons? Well those are plentiful. Based on the research I did for my new book, here are several common characteristics that appear to lie at the heart of disastrous ventures -- all worth heeding before hitting the launch button.
1. Nobody Knows Who You Are
Among the most common reasons that campaigns croak is the lack of a meaningful brand identity. Projects with existing followings or known personalities attached (e.g. Wasteland 2) often do well. Unproven or obscure projects, such as Class of Heroes 2, don’t fair as well. In fact, according to Kickstarter, 75% of projects fail just in the video game space alone. It makes sense that building and maintaining trust and awareness is imperative in connected world where the options, particularly to invest, are many.
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This is where, when possible, it’s a good idea to tie your project to an existing brand, fan base, or personality. Also, recruiting testimonials (including videos) from well-known industry celebs and support from other creators can build trust and help raise awareness. Pairings should be both genuine and synchronous, however -- appending Kim Kardashian’s likeness to your family hot sauce recipe or line of drink holders won’t do anyone favors. Consider the case of Shadowrun Returns, which piggybacks on a sci-fi role-playing franchise popular in the early ‘90s. Creator Jordan Weisman, who appeared in pitch materials, made impassioned pleas to potential investors. It worked. The once-dormant franchise raised $1.8 million in pledges.
2. No One Can Tell What You’re Talking About
Crucial to any campaign is your ability to clearly and concisely explain and illustrate a projects’ core value proposition and benefits. There are too many examples of campaigns that have generated good traffic and awareness, but have failed to monetize it because customers don’t understand the project or key sales points. Getting a lot of questions about your concept, supporting features or how you plan to accomplish building it? Consider those red flags.
The good news: Extensive pre-launch preparation, including testing and screening campaign pitches and materials by presenting them to objective third parties can help you avoid this trap. You should also review successful examples and failed projects alike to see which ideas, rewards, and promotional activities click. Also vital is that you understand who your target audience is, how big it is, how to best reach them online.
3. Nothing Sets You Apart From the Competition
If you’re pitching a movie, video game or even smart watch that sounds like dozens of others, why should people invest in yours? Finding ways to quickly and neatly position your project uniquely is vital. One to three core benefits and vital sales points should be communicated in all supporting messaging and assets. A good examples is the Pebble watch, which summarizes itself with the tagline: “Customize your perfect watch – it’s as easy as downloading an app.”
4. You Fail to Ignite, Engage, or Connect
Ever wonder why a great project, campaign, or video pitch consistently fails to raise money online? It could be suffering from a lack of consumer awareness, a terminal condition caused by insufficient or ineffectual public relations (PR), marketing, or social media tactics. Competition is higher than ever, and backers’ attention span more fractured. To generate awareness, don’t just look to social media services or press mentions. Also consider building unique and/or exclusive rewards; develop an eye-catching video; and team up with other creators and industry celebs to raise awareness. And definitely don’t forget to listen to fan feedback. Backers will let you know what’s resonating, and how to tweak campaigns, promotional activities, and rewards to better spark interest.
5. You Don’t Maintain Contact with Supporters and Backers
Maintaining a running dialogue throughout campaigns in the form of project updates, newsletters, and social media outreach is crucial. Thank contributors often, and keep them abreast of new developments worth passing along. Outreach should occur on a daily basis, as it’s imperative to stay top of mind, and may help spread the word, or lead to invaluable suggestions.
Similarly, other campaigns may have generated media attention and buzz, but little in the way of actual cash. As Ed Petterson of The Giuseppi Logan project points out, it wasn’t until an appearance in The New York Times that the campaign truly took off. But the write-up wouldn’t have happened without he and his wife working on daily outreach to bloggers, critics, and collectors to raise awareness. Likewise, Wasteland 2 creators recommend constantly reviewing which rewards connect with donors. In that case, the game’s $15 rewards generated huge donations out of the gate, its $30 pricing tier quickly stalled. Once the team revised the $30 offering to be more attractive by adding new bonuses, and introduced more rewards such as a novella and video blog, this pricing level began to pick up steam.
6. You're Greedy or Clueless About Fundraising Goals
How much is too much to ask for? Tough to say, but the smartest thing you can do for your campaign is set funding goals to the plausible minimum required to realize your vision, as the more reasonable the figure, the likelier fans are to believe it’s attainable and contribute. To improve your chances of getting funded, start by right-sizing products, trimming extraneous features, focusing only on the elements needed to deliver a high-quality and compelling value proposition. Estimate conservatively and provide some financial cushion -- e.g. a 20 to 30% buffer -- in your budget in case of unforeseen mishaps is wise as well. The more realistic you are about audience size and funding goals, the safer you’ll be. Remember, any money earned above and beyond initial targets can always be reinvested into new project expansions.
This story originally published on Mashable here.
