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In today’s digital age, many entrepreneurs use crowdfunding to raise capital. This practice allows them to launch new products or services, start companies, and gain exposure with little or no investment. The money comes from funders or contributors, including family, friends, early adopters, or people you may not know who believe in your idea.
Chances are, you’ve heard of Peloton, Allbirds, or Oculus. These billion-dollar companies found success due to crowdfunding. The same goes for Pebble, Glowforge, Tile, and the “Veronica Mars” movie.
For example, Peloton raised a whopping $307,332 through crowdfunding in 2013. The brand is now worth millions of dollars and has a global presence.
However, crowdfunding involves a learning curve and requires creativity. The success of your campaign relies on the tools and resources used to promote, track, and communicate with potential backers.
With that in mind, let’s take a closer look at the role of crowdfunding and the tools you need to succeed.
Why Start a Crowdfunding Campaign?
A successful crowdfunding campaign could be what you need to turn your idea into reality. This fundraising method allows you to raise capital with no upfront fees, and there’s no obligation to repay the money you receive.
Unlike banks, crowdfunding platforms have minimum requirements and don’t require a credit score. Their fees range between 5% and 12%, but that’s still lower than what you’d pay for a loan. Plus, you don’t have to deal with brokers, loan officers, or government bodies to get the money you need.
This fundraising method is particularly appealing in the digital age because it fosters community and engagement. Campaign creators can interact with their fans and backers in real time, share content online, and build social proof early on.
Crowdfunding platforms also provide transparency and accountability, which helps build trust among donors. At the same time, they eliminate the need for traditional gatekeepers, such as venture capitalists, allowing creators to connect with their fans on a personal level.
Need one more reason to give it a try? You’ve recently launched an online store and want to attract more customers.
Crowdfunding can help your eCommerce business expand its reach and build engagement. It lets you see how people feel about your business idea before investing in new products or equipment.
Moreover, a well-thought-out campaign can boost your marketing efforts. If you have a strong message, your campaign may go viral and attract new investors.
But, as mentioned earlier, crowdfunding doesn’t work like magic. You still need to put in time and effort, commit to continuous learning, and prioritize relationship-building.
Communication Can Make or Break Your Campaign
Most crowdfunding managers communicate with their audience through images, videos, and written text.
For example, they may set up landing pages, share social media content, and send newsletters. Some go as far as building a website or app to promote their campaigns and offer more information about the project.
Their goal is to lay the foundation for effective communication. You can only expect people to invest in your project if you’re willing to answer their questions and build engagement.
Potential backers need to trust their money will be used as promised and that the project will meet their expectations. For this reason, it’s crucial to keep them informed and engaged every step of the way.
Good communication also ensures transparency. Donors want to know how you use their funds, the progress made, and the challenges you face. One way to address these aspects is to build an email list. This approach would allow you to build lasting relationships with potential backers and turn them into paying customers.
Your website or landing page cannot replace an email list. Email lets you communicate directly with potential donors and investors, increasing transparency. It’s an effective way to address their concerns, send targeted messages, and share regular updates.
For best results, send out emails at least once a week. Write catchy subject lines, ask open-ended questions, and make every word count. Introduce your team to potential backers and share behind-the-scenes shots to give your business a human face.
Last but not least, end with a strong call-to-action (CTA) and use these closing email phrases every marketer should know.
For example, a closing phrase like “Looking forward to your support” can evoke a sense of community and anticipation. You could also say, “Stay tuned for more updates” or “Until next time” to spark curiosity and open the door for future communications.
Your email communications should be an extension of your site or crowdfunding page. Use the latter to build interest in your project or cause, and then send email updates to drive engagement. Add social media marketing to the mix to gain exposure and grow your list.
Use the Right Tools for Crowdfunding Success
Most crowdfunding platforms have all sorts of features for managing your campaigns. But even so, you still need third-party tools to communicate with your team and backers, collect feedback, and track your progress.
For example, the data collected from crowdfunding platforms only tells part of the story. Some donors will come from social media or discover your website online and send the funds directly to your bank account. As a crowdfunding manager, you’ll want to know who these people are and what they expect. You should use web analytics, survey tools, and feedback forms to gauge their needs.
Are you still trying to figure out where to start?
Here are some essential tools and resources for crowdfunding success.
Most crowdfunding campaigns take place online, so using digital tools to reach potential investors and donors makes sense.
First, determine how you’ll communicate with your backers and team members.
For example, ProofHub and other collaboration tools can streamline project management, teamwork, and internal communications. These platforms enable users to chat live, assign tasks, share files, and create workflows, all from one dashboard.
Next, decide which tools you’ll use to communicate with your audience.
These may include:
- Customer relationship management (CRM) systems (e.g., Zoho CRM, Pipedrive)
- Social media management tools (e.g., Hootsuite, Buffer)
- Email marketing platforms (e.g., iContact, Mailchimp)
- Community forums (e.g., Reddit, Discord)
- Live chat software (e.g., Zendesk, Tidio)
- Messaging apps (e.g., WhatsApp, Viber, Telegram)
Leverage these tools to personalize your outreach, improve team morale, and build engagement.
For instance, you can use messaging apps to share quick updates, behind-the-scenes shots, motivational quotes for work, or weekly wins.
Crowdfunding managers who keep their supporters up-to-date receive 126% more donations. On top of that, people make 17% of all donations on mobile devices.
Data Analytics and Insights
Crowdfunding has the advantage of introducing new brands and products to potential customers. Many of those who invest in your projects are early adopters, and they’ll stay loyal to your brand if it meets their expectations.
However, different people have different reasons to support your projects. The more you know about their needs and wants, the higher your chances of success.
For starters, use analytics tools to collect intent data. You need to understand why these people care about your cause and what they expect in return.
But what is intent data in the first place?
This type of market intelligence provides insights into consumer behavior, preferences, and purchase intentions. Therefore, it can help you identify potential backers and customers while fostering highly personalized communications.
For example, you can use Facebook Audience Insights to identify individuals actively interested in your brand or products. After that, leverage this data to personalize your messaging and build lasting relationships.
The result? Higher engagement, increased brand awareness, and more donations.
Promotion and Marketing Tools
In 2020, there were over 6,455,000 crowdfunding campaigns worldwide, a number that’s increasing year-over-year.
Crowdfunding isn’t supposed to be a competition, but most people have limited resources and will choose one project or cause over others. Additionally, many campaigns need more attention and may need more traction in search results.
Given these aspects, using the best marketing tools and resources you can afford makes sense.
Here are some options to consider:
- Content creation tools (e.g., Canva, Adobe Creative Suite)
- Influencer marketing platforms (e.g., Grin, Creator.co)
- Social media outreach tools (e.g., Buzzsumo, TweetDeck)
- Social media marketing tools (e.g., SocialPilot, Agorapulse, Brand24)
- Referral and affiliate programs
- Live streaming platforms
- Paid advertising
A good starting point is to partner with influencers and industry experts who can promote your campaigns to their followers. Depending on your budget, you can also run paid ads to reach potential backers and re-engage visitors who have shown interest in your campaign but have yet to donate.
Meanwhile, use social media marketing tools like Brand24 or Agorapulse to track brand mentions across various channels and keep your audience engaged. Go one step further and set up a referral program to incentivize backers to promote your campaign.
Another option is to create press kits for media outlets and influencers. These resources will allow them to spread the word about your campaign without diluting your marketing message.
Campaign Management Tools
Most crowdfunding platforms have built-in tools for setting up, tracking, and managing your campaigns. Often, these features need work.
One option is to use IgnitionDeck, which offers everything you need to run a crowdfunding campaign. Users can create and track projects, store customer data, accept online payments, send personalized emails, and more.
Alternatively, you can use dedicated tools for specific tasks like order fulfillment and automatic donation data reporting.
For example, Unbounce makes it easier to create landing pages with eye-catching graphics and interactive features. Other tools like Shipwire and Fulfillrite can streamline order fulfillment for crowdfunding campaigns.
But if you’re just getting started, using a crowdfunding platform with built-in campaign management features is best. This option is often cheaper and more convenient than investing in multiple tools.
Feedback and Survey Tools
Crowdfunding does more than just help you raise capital for a business or project. It’s also an excellent way to collect customer feedback and test your products before investing more time and effort into their development.
Your backers will likely share how they feel about your business idea. Later, you can leverage their input to improve your products and gain a competitive edge. Their feedback can also guide your marketing and branding efforts. If you understand what resonates with your audience, you can create more relevant content and get better results.
First, decide which tools you’ll use to gather feedback and insights. Let’s see a few examples:
- Google Forms
- Social networks (Facebook, LinkedIn)
- Online forums (Reddit, Quora)
Choose one or more tools, collect data from multiple sources (e.g., Facebook and Quora), and then act upon the feedback received.
This approach can help you build trust and demonstrate your commitment to delivering a high-quality product or project. Additionally, your supporters are more likely to remain engaged with the campaign if they feel their opinions are valued.
Better yet, start your research early in the process. If you want to start a company, look for professional business examples or samples.
Use these for inspiration to create a business plan for your venture, and then seek feedback from industry experts, potential clients, investors, and other parties on LinkedIn, Quora, or PickFu. If everything looks good, create a crowdfunding campaign and take it from there.
Get the Most out of Your Crowdfunding Campaign
Having a great business idea doesn’t guarantee success. You also need a well-thought-out plan, technical know-how, and the right tools, among other resources.
Similarly, you can only expect your crowdfunding campaign to be a hit if you have a brilliant idea. To succeed, it’s crucial to prioritize relationship-building and effective communication. Moreover, you must continuously update your toolkit and make data-driven decisions.
Intent data is particularly important because it allows you to segment your audience and deliver personalized communications. Personalization enhances the user experience and makes people feel valued, which can lead to more donations.
Note that what works for one business or brand may not work for another, so you’ll have to experiment with different tools and strategies constantly. Consider your budget, business size, niche, target audience, and the type of project you’re working on.
Use this guide as a starting point and continue to refine your approach over time. Remember to seek your supporters’ feedback and act upon it to meet their expectations.