Crowdfunding platforms offer entrepreneurs the chance to raise large amounts of money through creative and engaging campaigns, but the disappointing truth is that most campaigns fail to reach their goal. Kickstarter has only a 36% success rate, and Indiegogo’s rate is around 9%. The good news is that there are simple strategies you can use that have already helped successful campaigns raise billions of dollars each year. With a little planning, you can dramatically increase your odds of success.
1. Decide on the scope of your goal.
Some platforms may let you keep whatever money you raise, but many of the big ones (including Kickstarter and Indiegogo) have an all-or-nothing system in place. You will only receive money if you reach 100% or more of your goal. For this reason, you will not want to set your goal so high that even a large number of supporters can’t help you reach it. In fact, research has shown that while the most commonly set Kickstarter goal is under $10,000, the average successful goal is under $5,000.
On the other hand, you do not want to set such a low goal that you end up losing money after you meet it. You must not only price out the manufacturing cost of each unit, but also factor in additional expenses such as administrative time, marketing, fulfillment expenses and platform fees. Marketing expenses should include the cost of a pitch video (which does not need to be long or expensive to significantly boost your response rate) and seven to ten quality photos. Fulfillment expenses are frequently underestimated, especially when a small staff tries to manage it themselves, which is a contributing factor to the majority of Kickstarter’s top products shipping late.
2. Plan for the non-monetary benefits of a successful campaign.
If you are already putting in the effort to crowdfund your campaign, you might as well have your effort help you meet more than one goal. Some possibilities include creating ways for your investors to opt into receiving emails, newsletters or other notifications; promoting social media links that anyone who visits your campaign can click on, whether they contribute or not; or finding a newsworthy angle to your campaign that you can promote after you meet your goals.
3. Check if your goals are SMART.
SMART is the popular goal-setting acronym first coined in 1981 by George T. Doran, and it stands for Specific, Measurable, Attainable, Relevant and Timely. This tool can help you narrow your focus and attach your goals to concrete actions.
An example of a goal that is too vague is, “We want to produce and sell the new fitness tracker we invented.” By using the SMART principle, you can reimagine your goal in a way that gives you more direction: How much specifically will you need to raise? Is your goal realistic based on your market research? Does the message of your campaign contribute in a relevant way to the image you want your business to project? When can you expect each stage of the process to be completed? Thinking through your goals in detail like this can clarify your objectives and make your efforts more efficient.
4. Make the most of your pre-launch.
Before your official launch date, schedule an unofficial prelaunch where you reach out to all of your contacts, especially those in your targeted market, and try to engage them in your campaign. Plan a soft date for your launch when your contacts will agree to make their contributions. Then set a hard date, ideally 48 hours later, and promote that date to the public at large. Your objective for this phase is to raise at least 20% (and preferably more) of your goal before the campaign even officially begins.
There are two important reasons for making this goal a priority. The first is that you are testing out your campaign with a market that already has some familiarity with you. If you find that you are struggling to meet this amount, it can give you time to step back and rethink your campaign before taking it public.
The second important reason is that the more you are able to raise at the beginning of your campaign, the greater chance you have of succeeding. Very often, people are reluctant to contribute to a campaign unless it already seems to be doing well. Campaigns that have no money raised at the beginning only have a success rate of 15%, but once at least 5% of the goal is reached at the beginning, the success rate leaps to 80%, and at 30% of the fundraising goal, the odds of success reach 90%.
Fewer than half of crowdfunding campaigns will meet their goals, but the strategies listed above will help your campaign become one of the success stories.