Crowdfunding for Products – Where to Start
Crowdfunding is a form of alternative financing that’s very effective, but it may be overwhelming to get started with crowdfunding for products. Start here – we break the process down into 4 simple steps:
- Allocate A Real Ad Budget. Rainfactory recommends an ad budget of at least $50,000 to start, though smaller ventures can get away with considerably less. Advertising is the only thing that gives your campaign legs and makes it predictable. So, build advertising into your budget, and if you’re fundraising, start with at least that much. Grassroots isn’t dead, but it isn’t growing either.
- Invest in Testing. Collect all the data you can. Figure out what you need to spend to acquire one new customer. Scale that to 10. Test this over and over. You should test a variety of media (video, display, text, etc.) and ad channels (social, search, PPC, etc.). If you have a solid product and stay diligent, you will reach a point where you’re spending what you need to spend on each customer to make long term money
- Build Margin For Long-Term Marketing. If a product’s margins are 50% or greater, advertising that delivers a very reasonable 2x return on ad spend can be profitable. Teams with these numbers can spend to drive traffic while still making a profit.
- Plan Your New Storefront. Use your crowdfunding page as your storefront and your eCommerce engine. Learn all the benefits and pitfalls of selling something online – many are doing this for the first time. When your crowdfunding campaign is over, be ready to make some tweaks and turn the design and all your learnings into your store. This way, all your crowdfunding efforts will not be wasted.
There are many factors that affect a crowdfunding campaign and we are proud to have worked with many of Indiegogo’s and Kickstarter’s top campaigns. Every campaign has the same tools to tell its story. It’s about how well you use them that’ll make the difference. Our guess is, there are some things you’d be better off leaving to the pros.
We are passionate about continuing our mission of helping entrepreneurs scale their business through creating effective strategies. Download our Crowdfunding Handbook here to deep dive into the creation process of a dramatically successful crowdfunding campaign.