Crowdfunding as a product launch platform attracts new startups. Some developers believe this to be an easy way to raise funds for their startup. However, I can certainly say that one needs to be aware of a multitude of details and nuances to successfully use Kickstarter to enter the world market.
Developers that choose this way to fund their products face a number of challenges. And having accumulated substantial experience, I will tell you about the six components of a successful crowdfunding campaign.
Plan your budget
It’s often said that crowdfunding is a virtually free way of entering the market. But you should not forget that you need to record a video ad, design your project page and have funds to spend on marketing
Prices for hiring videographers and building page layouts vary — results depend on what kind of product you’re dealing with and the script you wish to use for your project page.
Most of our project’s expenses (the Vasco Packing Kit) went towards Facebook ads, you should plan to spend 30% of the sum of funds you are expecting to raise. In addition, it’s necessary to create landing pages for the pre-launch subscription collection and pay for the services and tools – all these expenses need to be calculated in great detail before launching the campaign, in order to be ready.
Our product – Vasco Travel Kit
Gain your initial audience
The first priority for a good campaign is to obtain the initial audience. Doing so will ensure the project doesn’t end up buried in the Kickstarter’s list. If it reaches the top of the Trending page, it’ll draw more attention and you’ll get organic traffic. Roughly 300 projects are launched on the platform daily, and you need audience to rise in the rankings.
New startups should forget about expensive video clips and designer “bells and whistles”. The main point is to collect subscribers before the project launch. To do that, create a landing and a Facebook page. Post the information on your invention to all known forums and platforms, write feature articles. Find people who might be interested in the product using properly set-up targeted advertisement. We’ve used all sorts of ways we came up with to generate enough audience for the Vasco Travel Kit. As a result, we’ve had 5000 subscribers prior to launching on Kickstarter.
To promote a crowdfunding project, I suggest creating about five simple landing pages and setup advertisements targeting all possible types of audience.
This will help you understand your target audience’s portrait clearly before the launch and generate a suitable mailing list. You can calculate the necessary number of backers with this formula: $10,000 (the minimum amount) divided by the multiplication of $100 (average price for a reward) by 2% (subscription conversion, varies depending on the reward’s price). In our case that’s 5000 subscriptions necessary.
Head of the Digital Marketing, Vasco
Subscription collection can be financially profitable with very few exceptions, you need it only to make your project launch, get noticed and lower the backer acquisition cost post-launch. It’s a lot harder to convince a backer to buy your product when it has collected the grand total of $0. After launching you have to focus all your efforts on promoting in Facebook and working with journalists.
Vasco crowdfunding statistics
Prepare in advance
The preparation phase is the most important. There are ten people in our team, and without counting the product design and prototyping process we’ve spent two months on the project preparation. When we’ve been working on our first product – the LeverAxe – we committed certain mistakes: we didn’t tell about the project in advance and did not collect feedback. The project was saved by the existing email list – the axes were already getting sold locally. It’s unlikely that we could’ve collected the necessary amount of money without this background.
Be ready for any setbacks in advance, but better yet, prepare for what you’ll do after raising the required amount of funding. Think the delivery through – make a deal with a good, reputable courier. If the product you’ve promised arrives to backers but they’ll have to pay half the amount of its price for import duties (or the product never arrives at all) it is unlikely they’ll be grateful to you.
Study all the necessary pre-campaign stages and fully prepare before you start your crowdfunding project. And once again – the preparation phase is the most important!
Use Services and Media
After having calculated potential expenses, determined your target audience, conducted a thorough preparation work, you are ready for the next phase – promoting your product. Apart from the Facebook ads, landing pages and the video clip, we reached out to many mass media outlets for Vasco. We’ve sent 500 emails in total and ended up featured by 10 media sources, including DigitalTrends. Prepare a few product prototypes and send them to major Mass Media and bloggers before you launch the project. Don’t neglect the smaller crowdfunding community forums.
As you launch on Kickstarter be prepared to have your email overwhelmed by various offers of incredible promotion services. We’ve tried a lot of marketing tools – press-release distribution services, advertisement on Instagram pages, collaboration with popular bloggers – and we didn’t get any significant results.
Of course, we didn’t try everything out there, but we can highlight the most efficient platforms from our experience -The Gadget Flow and Backerclub. These resources aren’t free, but they have their own large lists of backers. We’ve got 103 backers from The Gadget Flow and 99 from Backerclub.
Sources of backers
Analyze the Market
In 2016 we were launching Arnimate – Educational Toys with Augmented Reality. Similar projects already existed on the market, but they did not use Kickstarter as a means for product launch.
We’ve launched without conducting a proper market analysis and have failed to raise funds a month later. There were two reasons – kids (and their parents) don’t want to wait for the toy, they want to have it right away. Those people that are willing to risk and wait are often geeks and innovators, especially if we’re talking about a product which they won’t find at stores. But not kids. Therefore using a crowdfunding platform to launch a kids product isn’t a good idea.
The second problem was that the Augmented Reality wasn’t that popular in 2016. People didn’t understand how kids were supposed to play with toys like that. Perhaps launching a similar product in 2018 could be successful due to the rising popularity of the technology thanks to Apple.
Thoroughly analyze the market and understand the essence of the product before launching it on Kickstarter. It could be the case that crowdfunding isn’t the best option in its case. Right now we’re testing Vasco on the Japanese crowdfunding platofmr (Greenfunding) and we’ve raised over $83,000 there so far. This will help us understand the product’s relevance in different regions and will allow us to lower costs when entering the local market.
Be ready for the unexpected
The Arnimate’s Kickstarter campaign has failed, but it wasn’t the end for us. A supplier of the QVC TV Shop has noticed our project. If you’ve seen the movie Joy (starring Jennifer Lawrence) you know how awesome that is! We struck a deal with them and managed to turn a profit without crowdfunding.
In 2015 we met representatives of largest retailers after the LeverAxe’s Kickstarter campaign. Thanks to that, our axes started getting sold in Lowe’s, which consists of roughly 1800 stores.
Kickstarter is getting monitored by not just startups, but also large company owners. Don’t be surprised if they reach out and offer to cooperate. If you’ve been somewhat intimidated by this article, then I hope that this last paragraph will motivate you to try yourself at launching a crowdfunding campaign.