Reward Crowdfunding: How Student Founders Can Find Their First 100 Supporters!
Talk is cheap, show me the money, then we can discuss business. Reward crowdfunding is an effective way to gauge the interest of your potential customer toward your product or service. If someone is willing to pour money before your product hit the market it means that you probably did something right. Recently we had a session with Mifzal Salihin from AfterKelas.com where he shared a few golden nuggets on how to create a successful reward crowdfunding campaign. One of the most important things that he highlighted is giving a tangible reward. So here, we list down a few examples of campaigns that manage to craft an amazing reward for their backers.
Bantal Pillow: Pre-sell your product before you launch!
They crafted a clear video to showcase the problem that their product is solving.
They managed to raise HK$1.8mil from 2800 backers. Their strategy is to actually pre-sell their product and a near-cost rate. Their aim is to introduce their product to potential customers as well as fund the first round of production. This is also effective if you never tried producing your product at a large amount.
The biggest challenge of pre-selling a product is to truly show that you have a better solution as compared to your competitor in the market. Make sure you share a compelling story that can capture the heart of your potential customers.
Exploding Kittens Put Effort Into Making Your Campaign Visually Attractive
Tell me that this is not a cool video. I mean, I would just give them money for their effort.
Sometimes, you don't know what the customers want, or worse, you don't even know who is your ideal customer. So instead of whining and wasting time figuring out their minds like Professor X, just put some time into grabbing as many eyeballs as you can. Create attractive visuals to explain your idea. Take some time to craft some custom designs.
While some ideas are just too good not to be backed, others need to put some extra effort into attracting visitors. Make sure you do everything to gain an edge so that people know that you are serious, even if you are not doing something serious. Exploding kittens got about US$8 million from over 200,000 backers.
TYNKER Rewarding Backer With Exclusive Premium Features and Content
They did a great job of highlighting testimonials in their promo video.
If you are thinking of building a mobile app, website, or game, rewarding backers with exclusive features or skills might be a great idea to attract potential customers. While the biggest hurdle of crowdfunding an app is to build the actual software itself, make sure you prepare a sketch or a working prototype to show that you have the technical capability to build your idea.
They did their campaign back in 2015 and manage to raise around US$100k from 500 backers. The biggest takeaway from them is to really understand their customer segment and its behavior. Because their main user is kids, they know that they need to appeal to both parents and kids in their offering.
Pebble Getting People To Back Your First Prototype
Pebble is one of the first startups that kickstarted the Smartwatch revolution
Pebble is an interesting story about understanding what works and how to do it again. Their first crowdfunding campaign raised about US$10mil and they only have a few working prototypes. They crafted a unique strategy for leveraging reward crowdfunding to test their idea.
After successfully launching the first version of their product, they did another campaign that raise US$20 million. For their second campaign, they launched a wide range of products that appeal to normal consumers.
On their consumer version of the product, they manage to nail down all the functions based on users' feedback. They manage to keep constant communication with their early backers and when they doubled their raise on the second try, it is not because there are double the number of people coming to support their campaign, it was because people are willing to pay double the original value.
AfterKelas Offering A Premium Bundle For Their Services
They did their campaign while they are in their first year of university.
If you are dabbling in services, why not offer something extra if they backed your campaign? In the case of AfterKelas, they provide tutors for high school students who are taking their SPM examinations. Before doing the campaign, they have a track record by actually doing quite a number of tutoring with high school students and they needed the money to grow their current operation.
They showcase what they currently do and highlighted the impact that they have made for the students and also for their tutors. They manage to garner support not just from parents, but also from lecturers, friends, and their network who really care about the cause.
While crowdfunding for service-based business is quite tricky because you do not have something tangible, you can either create an offering that enhances the experience of your service or productize your service to be offered to your potential backer.
Conclusion 1: Reward Crowdfunding is not an Investment for your company.
Reward crowdfunding is not a means of investment. The main goal is to test the demand for your product, understand the production process of your product, and identify key values that attract potential customers to your product. It's a way for you to find your early supporters; people who really care about you, your mission, and your idea.
Conclusion 2: Make Sure Your Backers/Donors/Potential Customers are REWARDED with something!
This is a great way to test out different pricing mechanisms for your business model. Different people will pay different amounts depending on how confident they are in you solving their issues. It's also a good way to understand the purchasing power of your potential customer segment.
What's Next?
In creating your first reward crowdfunding campaign, it is very important to understand that you are actually asking for people's help. Make sure you always show your human side instead of your business persona.