Crowdfunding is having monumental impacts upon all across all areas of entrepreneurship. Founders who would once require tens if not hundreds of thousands of dollars in seed rounds or bank financing are skipping altogether the cumbersome and costly route of equity and debt based funding and instead coming to Kickstarter.
This is changing the face of business as we know it. With just Kickstarter campaigns raising over $112 million in the first quarter of 2014 and $144 million in the second quarter; it’s clear crowdfunding is becoming a prolific player in the power struggle for startup growth.
But launching a crowdfunding campaign is no guarantee of success. I want to focus on the common failure points for Kickstarter campaigns, examine why promising startups fail and learn how to avoid these hurdles all together.
Fatal flaw #1: Poor product showmanship
As a whole, Kickstarter backers are the early adopters, the individuals always looking to get their hands on the next-gen, hip and trendy products before they hit the market. It’s absolutely exhilarating browsing the startups and innovative ideas flowing through the platform.
To maximize your success, though, you need to minimize risk for backers. Overcoming their doubts, fears, and objections is what ultimately advances you, your campaign and your business.
Keep that in mind. Your customers have never seen, felt or much less experienced your product in action. You need to make them feel as if they have. Showcase stunning product photography. Include videos of the gear in action. Anything you can do to make it real, make it tangible in their minds and desired in their hearts will help radically raise the conversion rates of your campaign.
The most powerful method, though, is testimonials. Show proof of the product, ecstatic reviews and helpful videos of users loving on you and your invention. This, the strongest form of social proof, is often underutilized, yet it bolsters support and confidence unlike any other aspect of your pitch.
Fatal flaw #2: Arriving empty-handed
Kickstarter’s a powerful platform. It generates close to 16 million unique visitors a month and can be explosive for generating viral, hockey-stick startup growth.
There’s a catch-22, however; you need to bring your own crowd. It’s BYOB if you’re looking to be the life of the party, and most campaigns arrive empty-handed. This does not work! The problem stems from the crowdfunding business model itself. Kickstarter, Indiegogo and companies like them make money when campaigns succeed. Their velocity based algorithms show the top money makers, the hottest campaigns and those people are most likely to back first. It’s called the Popular pages and you need to get here in order to succeed.
So how do you game the system and raise ridiculous funding? To avoid the trap and first-day failures most campaigns fall victim to, you need to come out with a BANG. You need to leverage the heck out of your personal networks and storm the gates come launch day.
The best way to do this? Pre and post-launch emails. Get your friends, family, loved ones and everyone in your rolodex on the lookout for your campaign. You need to stress the significance of launch day support, shares and backing. Realistically, campaigns need to reach at least 20 to 30 percent of their goals within the first two days to stand a chance, so come out strong, export your Gmail, LinkedIn and Facebook contacts and work your magic.
Fatal flaw #3: Waiting on marketing
From dozens of interviews, countless consults and actively engaging in the crowdfunding community for quite some time, I’d say that more than any other misconception, this one plagues and crushes Kickstarters most often. We’ve established the need to start strong and the importance of early launch day success, yet founders fail again and again.
Inventors, innovators and product creators often fall victim to the inventor’s trap. They believe, quite falsely in fact, that their products are so good they will sell themselves. A pitch here, a demonstration there and their awe-inspiring inventions will be all the rage across the internet. If this seems humorous, childish or even arrogant, it should … but time after time we suffer from the same systemic beliefs.
To succeed at crowdfunding you need to put aside the passion and countless months (if not years) of product development and put your money where your mouth is. Spend several months leading up to your launch by building buzz and publicity and pitching publications for coverage. It takes an inhuman amount of effort to choreograph a killer Kickstarter launch, but by lining up press in advance while also pulling in your own network, you’re setting the stage for success. Months of effort become an overnight success.
Fatal flaw #4: Focusing on features
As inventors, entrepreneurs and of course nerds, we’re all too obsessed with numbers and metrics. This is an enormous problem, not just with crowdfunding campaigns but across the landscape of business. Commonly cited stats, specs and facts fall flat when it comes to sales.
People are emotional, irrational creatures. We don’t buy the best, fastest or most powerful … though we often believe that we do. Instead, our actions are based around desires. How will a product make us feel? Why will our lives be new, better, more exciting?
These are the effects of powerful copy. This what crowdfunders must strive for in their own campaigns. So next time you’re crafting your campaign, listing features or even putting together a sales page, be sure to focus upon the benefits. Appeal to both the head and heart and you’re sure to see conversions soar.
Matt Ward runs Art of the Kickstart, a podcast and blog helping inventors and entrepreneurs launch innovative products and businesses into the world through crowdfunding. Through this he’s interviewed and catalogued 80 crowdfunding creators’ stories, strategies, mistakes and lessons learned. He’ll be in the comments of this post answering questions about how to make crowdfunding work in your business.