Crowdfunding might sound like a great way to earn money without ever having to leave the house or talk to anybody, but actually it is anything but. To have any kind of success with your project, you need a crowd. The larger and more active the crowd, the better. And while some projects do “go viral” and create their own momentum, most successful crowdfunding campaigns fit the description of “an overnight success 20 years in the making”. Okay, maybe you won’t need 20 years of preparation to have your campaign be a success, but you may need two years.
Crowdfunding Requires a Platform
Why so much time? Because it takes time to build up a crowd. Most successful crowdfunding campaigns happen because they have an existing crowd of avid fans. These fans, and how they are communicated with, are typically referred to as a platform. Having a great platform is a key part of crowdfunding success.
There are many ways to build a platform. Writing a blog and building up followers that way is a proven technique. If you can incorporate a popular Facebook page and engage several thousand Twitter followers, that will go a long way, too. Capturing email addresses and building a relationship with your crowd through regular email messages is an excellent choice. The key is to always be interesting and always engage.
There is a saying among public relations people that “advertising is the price of being boring”. This is a key thing to understand about crowdfunding. While you may need to buy some advertising and solicit some press attention, the real engine of your campaign is in your followers.
How much of a crowd do you need? It depends on how much money you need to raise, how good your campaign materials are, what your rewards are, and how avid your followers are. A rule of thumb is for 10% of your followers to actually fund your project. So if you have 12,000 people through Facebook likes, Twitter followers and email subscribers, you can optimistically expect about 1,200 of them to be willing to put up $10-15 to fund your project. Realistically, though, you would do better to expect 5% of your followers to fund you. That means 12,000 followers might net out to $6,000-9,000 of funding.
The Best Rewards Come From You
Don’t get crazy over that $6,000-9,000 yet. A key part of getting that money will come from how good your reward structure is. Your reward structure is what you are offering in exchange for the pledges you’re getting. Reward structures are tiered so that different pledge amounts give different values. A $15 pledge amount, for example, might result in someone getting a free pdf book you’ve written, or a downloadable piece of software. A $1,000 pledge might earn having lunch with you. It’s the “you” part of the rewards that is important here. Personalized rewards work better, especially for cause or art-related crowdfunding. You’ll need to make each supporter feel they have a personal connection to you.
As you do your budget for how much money you’ll need to raise, be realistic about how much each reward is going to cost. If you have to spend $5 for every $10 pledge you get, that might leave you with far less money to actually go out and do what your campaign was supposed to fund.
Be Prepared to Answer a Lot of Questions
One of the biggest surprises veteran crowdfunders report is how many questions they had to field during their campaign. Successful campaigns that generated $300,000 or so in funding also generated a mind-bending 20,000 emails. What’s even more mind-bending is that successful campaigns actually answered all those emails, even if it meant they had to hire interns and have them work late into the night. Somehow, every question was fielded, especially if it came from someone who pledged any money. Often the personality behind the campaign was the person to answer questions from pledges.
Make Yourself as Visible as Possible
During your campaign (which usually lasts 30 days), you need to be as public as possible. Get speaking engagements. Appear on TV if you can. Make YouTube videos daily. Update your campaign pages. Send out high-quality messages to your followers. Successful crowdfunding campaigns typically require that everyone at the company drop everything else and do nothing but promote and support the campaign. It is not a month that you are going to be getting a lot of work done on other projects, and you many not even get a lot of sleep.