Crowdfunding is a powerful way for business owners to establish their companies without much capital investment. Rather than buying loads of inventory in advance, crowdfunding allows entrepreneurs to gauge the demand because of their product while supporting them finance their first production run.
So how would you ensure you've optimized your campaign for success? We've reviewed recently funded projects in order to identify some of the techniques, strategies, and crowdfunding secrets that will provide you with the best potential for meeting your goals
All or Nothing Model
Most crowdfunding platforms run on two basic models: 1) Keep it All 2) All or Nothing
Keep it All
The creator of the campaign can keep all the funds even though the fund hasn’t reached its goal
All or Nothing
The creator of the campaign keeps all the fund, only if he has reached the funding threshold.
When the founder chooses the Keep it All model, it is perceived as a project that is being underfunded and might fail because the crowd bears the risk that an entrepreneurial firm undertakes a project that is underfunded and hence more likely to eventually fail.
While All of Nothing is a clear signal to the crowd that the entrepreneur commits not to undertake the project if not enough is raised, which reduces the risk to the crowd.
Breakdown of Funds
Why do people donate for charities? The Bekkers and Weipking found out that one of the main reasons were efficacy. How their donations are making a change.
Most campaigns on Kickstarter or even Indiegogo are based on aggregate framing. All they tell you is, they need $X to create a project and then they go on describing the project, why it’s great etc.
With that approach potential donors can’t appreciate the value of their donation.
Past Record
“This project is great because Blah Blah Blah”
“This Project is great because blah blah blah. I can help it succeed because of my expertise in ABC”
Education and past successes play a major part in the fundraising process on crowdfunding platforms. A guy that holds a doctoral or a MBA degree is more likely to be trusted than a graduate from a two-tier town with no experience.
Donating other projects
There are two rules of Influence (Robert Cialdini):
If you provide value to someone, that person feels obligated to give back to you
If you give value to someone, others feel obligated to give it back to you
Before launching your campaign, build your community reputation. Donate to other projects so that you can trigger indirect reciprocity.
Shorter Project duration
When structuring your campaign, you can often choose the duration of your project. If so, you should choose a shorter duration (Kickstarter recommends 30 days).
A research firm analyzed 48,500 projects and found that projects with shorter durations were more successful. Why? The researcher suggested that longer durations signify a lack of confidence.
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