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Crowdfunding: Another Tool in Your Marketing Tookit

Crowdfunding: Another Tool in Your Marketing Toolkit

“I’m a marketing consultant, what do I really know about Crowdfunding?” was the dialogue going on in my head when I received a phone call from a respected agency in Massachusetts asking if I was available to develop a presentation on Crowdfunding for their semi-annual meeting of non-profit agencies.

Fortunately, she couldn’t hear this brief, internal conversation and over the years I have learned not to share my every thought. I was grateful that my inner-entrepreneur immediately took over the real conversation and said, “While I’m not an expert on this hot topic, I have been watching it from my ‘marketing chair’ and see it as another tool in a small business owner’s marketing toolkit to help promote and grow their business.”

Sold! She loved this angle so I was hired and began to think of the best way to put together a dynamic, one-hour presentation on Crowdfunding, making it valuable for folks contemplating a campaign to raise funding for their business venture and educational for individuals not ready or just curious to learn more.

Most of you know my perspective on luck, we create our own as we proactively do the ‘right’ business activities. So, as luck would have it, one of the women I’ve been mentoring over the last 10 years, Joanna Alberti, approached me as I was searching for the right story to share. She asked me if I thought it was a good idea to create a Kickstarter campaign to fund a booth at Surtex, one of the top licensing shows held annually in NYC.

small version of sophie on broadwayIf you’ve read either (maybe even both) of my books, you are familiar with Joanna’s story.  In 2005 she launched PhiloSophie’s®, a stationery and card business featuring the fabulous and fearless character, Sophie.  Joanna has already experienced a lot of success having been named the “Top 25 Under 25 Young Entrepreneurs” by Business Week and her cards can be found around the U.S. in stores like Target and Wegmans.

Now Joanna wants to take her business to the next level and was curious to learn if Crowdfunding was a good way to support her dreams. Damn – some times things fall perfectly into place and this was clearly one of those times. I definitely thought this was a great idea (not just because I needed a case study) but because Crowdfunding is a perfect match for her business.  To scale, Joanna needs more exposure, the kind that requires licensing her products to manufacturers. Combined with the fact that she is a part of the creative economy this was, without a doubt, a perfect fit.

So we were off and running at lighting speed. My presentation was in 3 weeks and we knew we needed to get the campaign completed before then, not just so I could feature her as a case study but to also ensure she had enough time to raise the funds required to pay for her booth at the Javits Center in NYC (not an inexpensive venue). So much to do… so little time to waste. If you’re considering launching a Crowdfunding campaign, below are the 9 steps that Joanna and I pursued. Trust me, the payoff has been significant. Within 72 hours, Joanna raised more than 50% of her $3,000 goal. Click here to check out Joanna’s campaign

9 Steps to Successful Crowdfunding

1)     Start with a SMART Goal. You’ve heard me talk about SMART goals before. Make sure your goal is Specific – Measurable – Actionable – Realistic and Time-Based. Of critical importance is ensuring your results are measurable in terms of dollars funded for your project, profit after fulfilling perks, exposure to new potential customers, and ROI on your time to create and fulfill the campaign.

2)     Think Location, Location, Location. Even online location matters so review the different Crowdfunding platforms. You have likely heard of the two major players (Kickstarter and Indiegogo), but there are do-it-yourself models and lots of other small players. They all have different audiences, criteria, and success rates. For example, Kickstarter campaigns have a 44% success rate, as opposed to Indiegogo whose success rate (according to sources like TechCrunch and the Verge) is only 9.3%. Data shows that 83% of Indiegogo companies have not raised at least 25% of their goal.

It’s important to understand the differences amongst the various platforms. Below I have provided details about Kickstarter and Indiegogo. However, there are many important details to consider when selecting your host location, so make sure you ask the right questions before you select a site.

  1. Kickstarter is an all-or-nothing model, meaning that if you don’t hit your goal you do NOT get to keep any of the money. However, if you don’t hit your goal you are also not obligated to fulfill the perks. If you do meet your goal you will be required to pay them 5% of what you are funded (plus an Amazon processing fee).
  2. Indiegogo will allow you to keep all of the donations you receive (even if only raise a buck), but if you do not hit your target donation goal you will pay them a 9% fee (to keep the funds). If you hit your target you only pay a 4% fee, lower than Kickstarter. However, if you don’t hit your target and keep the money donated, you must fulfill all of the perks promised.

3)     Perks Engage and Support Your Brand. Give yourself time to develop perks that excite and interest your audience. Remember, these are branding opportunities so make sure whatever you give away, it is related to your business to help build your brand power. That means don’t give away a toaster if you’re a video producer. For PhiloSophie’s® Joanna decided to create 3 Limited Edition versions of Sophie in New York City. These are beautiful renderings only available to Kickstarter donors – something you will NOT find on her website. Depending on how much is donated, the design is offered in different formats ranging from notecards and prints to recyclable totes and trays.

revised kickstarter4)     Perk Fulfillment Must Be Realistic. Make sure your perks are cost effective so that fulfilling them doesn’t equal (or exceed, yikes) the price of the donation or you’ll find yourself in the same or worse financial position as you were at the beginning of the campaign. Easily said, this needs to be strategically determined. For example, offering mugs can be twice as expensive to fulfill as recyclable bags when you consider packaging and shipping costs. Plus, how many people are going to see a mug on the donor’s desk (unless they’re wildly popular) compared to the number of people who will see your design on recyclable bags every time the donor takes them to the store.

5)     Understand Donor Categories. Most people will donate at the lower end ($50 and under), so make sure you offer and can easily fulfill those perks so you’re not tarnishing your brand by not sending the promised items out in a timely manner. Joanna and I created an excel file with all the perks, cost, and profit for each and how many we would need to meet her donor goal and her actual profit (amount funded minus the cost of goods sold, including her time).  Again, you don’t want to spend 50 hours on a project that ultimately only generates a couple hundred dollars (you could work at a fast food chain and make more money).

6)     Determine Approximate Range of Donors Required for Profit. Create a simple excel file that shows donation total, profit, and number of funders in each category. Manipulate the cells for the “number of funders” to see how much donation revenue and profit you’ll make depending on how many people donate in each category (i.e., 50 donors give $10 and 2 give $150). This creates a visual starting point so you understand approximately how many folks you need to make enough money to take your business to the next level. Continue plugging the actual numbers into the excel file as the campaign progresses so you know how profitable the campaign will be.

7)     Remember, this as a Marketing Campaign. A Crowdfunding campaign can and should mimic a typical marketing campaign. Let’s consider all the benefits that can be generated by a campaign.  To name just a few:

  1. Raise or generate money
  2. Uncover customer needs and interest in your product
  3. Validate a concept and/or identify key value proposition
  4. Test messaging
  5. Generate interest or create a buzz about your product or company
  6. Create brand awareness
  7. Create early adopters, raving fans, promoters, and a solid customer base

Notice how these benefits are precisely what you will achieve from a marketing campaign to promote your business. I know you wouldn’t dream of putting together a marketing campaign and not follow through with the all activities to ensure its success. Crowdfunding is no different. Focus on ensuring its success to achieve benefits that exceed the donation amounts.

8)     Launch an Integrated Campaign. Once you recognize the critical marketing benefits you can achieve, now is the time to create and launch your fully integrated marketing campaign. You want to ensure that your friends and family are not the sole sources of your funding. If that is the only audience you reach then you have lost an important opportunity to expand your reach and target new customers. To expand your customer touchpoints you need to focus on a variety of online and offline tools. For PhiloSophie’s® this included: email blasts, Facebook posts, Blogging, Tweeting, LinkedIn shares, newsletter outreach, and partnering with other brands to promote the opportunity. Don’t underestimate the time it will take to develop and run the campaign for the 30 days (or whatever time period you select) until you are completed. Many donations come in at the very end… you will want to ensure you have the ‘marketing copy’ ready to roll out the campaign before you launch (remember, you’re still running your business while managing this campaign).

9)     Measure, Analyze, and Course Correct as Needed. You must review the metrics that tell the story of your campaign’s success (or failure – but hopefully not). Even if you hate number crunching, this process is critical to ensure you are achieving your stated goals and can make changes as required if something isn’t working as anticipated. Here are some numbers you should focus on, but each campaign is different. Most of the Crowdfunding sites offer tools to help you do this.

  1. Number of visits each day and after marketing pushes
  2. Number of video/site views and percent that pledged
  3. Contributions after marketing pushes and by contribution amount
  4. Pledges from external referrers (outside the platform)
  5. Popularity of each reward category
  6. Visits from your website and other social media sites

So, are you excited about the opportunity or have I scared you off? Here’s a summary of the Lessons Learned from the PhiloSophie’s® Kickstarter Campaign:

  • Select the right venue (location, location)
  • Advanced planning drives traffic
  • Perks are a branding opportunity
  • Make sure you understand profit not just donations
  • Analyze, analyze, analyze
  • Remember – this must be an integrated approach

Best of luck growing your business and using all the marketing tools available to build your brand. If I can be of any assistance, don’t hesitate to email me at beth@m-edge.com. Click here to check out Joanna’s campaign!

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Why Is Walking Away So Darn Hard…Even When It’s the Right Decision?

I haven’t slept well over the past few weeks plagued by a ‘Go – NO Go’ decision over a major contract that was certain to have a huge impact on my business and my personal life.  Why is walking away ALWAYS so darn hard, even when you know it’s the right decision?

A few years back I was involved with helping a non-profit organization create a curriculum for a program to educate inner city businesses throughout the U.S. They ran the program through the SBA and now, in its fifth year, the program is offered in almost 30 cities. The contract with the SBA to run the program recently became available for bid and boy, did I want it. I really, really wanted it (did I mention that I wanted the contract?).

The current program is excellent and I have a lot of respect for the organization running it but, like every entrepreneur, I was (and still am) confident that I could make it even more effective in terms of its economic impact on urban businesses. I’ve run a variety of uniquely designed business accelerator programs since then for a number of organizations engaged in helping small business owners grow, including the state of Massachusetts. So taking the lessons learned, I am totally confident that I could deliver one heck of a program. So, what’s the problem? Why not go for it?

Well, honestly I wish it wasn’t such a complicated decision but the bottom line is, I don’t currently have the business model nor infrastructure required to effectively run the program in so many cities (30 simultaneously). My fear is that running a program of that scale would either destroy my current business model  or my mental stability or both. The thought of not sleeping for an entire year is not very appealing. Have you been in a similar situation where you really (REALLY!) wanted to do something but your gut told you, Stop and evaluate what this will mean in terms of your business and your life? It’s akin to a chef who loves to cook opening a chain of restaurants across the country all at the same time. She might be able to handle running one (although preparing amazing meals and running a business are different) but a chain, I don’t think so!

(Continue Reading on the Marketing Edge Newsletter Website…)

Beth

 

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Biz-Edge Video Series: Episode Nine – The Importance of Understanding Your Competitors

Welcome to Biz-Edge where we answer YOUR business questions. In the ninth of the Summer 2012 Series, I address a question about understanding who your competitors are, even when they don’t look nor act exactly like you.

Competitors don’t always offer the same product as you do. Therefore, in understanding and clearly defining who your competition is, it’s critical to think of them in terms of the solution they provide because that’s what you will end up competing on. Watch how I respond to a question about defining competition to grow a business.

Have a question about business growth? Here’s your opportunity to ask questions about business challenges you face so you can gain an EDGE in business. Plus, hear advice that we’ve given other small business owners and entrepreneurs to help them make bold leaps forward. Complete the form at the Biz-Edge Website and I will try my best to answer it via video.

 

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Biz-Edge Video Series: Episode Eight – Gauging Interest in a New Product

Welcome to Biz-Edge where we answer YOUR business questions. In the eighth of the Summer 2012 Series, I address a question about how to best gauge interest in a new product.

Market research is not just an option for large businesses. If you are thinking about launching a new product, it’s critical to gauge customer interest before you release it, to ensure the best outcome. Watch how I respond to a question about how small businesses can learn more about their customers’ needs.

Have a question about business growth? Here’s your opportunity to ask questions about business challenges you face so you can gain an EDGE in business. Plus, hear advice that we’ve given other small business owners and entrepreneurs to help them make bold leaps forward. Complete the form at the Biz-Edge Website and I will try my best to answer it via video.

 

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Biz-Edge Video Series: Episode Seven – Do You Have A Branding Problem?

Welcome to Biz-Edge where we answer YOUR business questions. In the seventh of the Summer 2012 Series, I address a question about the importance of aligning customer perception with reality to secure a solid brand.

Branding is all about the customer experience and perception IS reality. Watch how I respond to a question about the challenges and danger of misaligning one’s brand/value promise with what the customer actually experiences when they interact with a business.

Have a question about business growth? Here’s your opportunity to ask questions about business challenges you face so you can gain an EDGE in business. Plus, hear advice that we’ve given other small business owners and entrepreneurs to help them make bold leaps forward. Complete the form at the Biz-Edge Website and I will try my best to answer it via video.

 

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Biz-Edge Video Series: Episode Six – Is Goal Setting Really Worth It?

Welcome to Biz-Edge where we answer YOUR business questions. In the sixth of the Summer 2012 Series, I address a question about the importance of setting goals as it relates to business success.

Research proves that if you set very specific goals (SMART ones), your chances of achieving them increase significantly. Watch how I respond to a question from one of the entrepreneurs participating in a business growth program that I teach in Massachusetts who wonders if it’s really worth his time to set goals.

Have a question about business growth? Here’s your opportunity to ask questions about business challenges you face so you can gain an EDGE in business. Plus, hear advice that we’ve given other small business owners and entrepreneurs to help them make bold leaps forward. Complete the form at the Biz-Edge Website and I will try my best to answer it via video.

 

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Biz-Edge Video Series: Episode Five – Are Business Cards Passé?

Welcome to Biz-Edge where we answer YOUR business questions. In the fifth of the Summer 2012 Series, I address a question about the importance of physical business cards in the networking process.

With the prevalence of technology engrained in almost everything we do, is it time to get rid of physical business cards and begin using a v-card?. Learn how I responded by watching this week’s video.

Have a question about business growth? Here’s your opportunity to ask questions about business challenges you face so you can gain an EDGE in business. Plus, hear advice that we’ve given other small business owners and entrepreneurs to help them make bold leaps forward. Complete the form at the Biz-Edge Website and I will try my best to answer it via video.

 

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