Most people think of crowdfunding simply as an alternative to traditional financing for products and ideas. It’s actually much, much more than just raising funds. It’s also a great promotional tool and an effective way to build a community of supporters.
Here are reasons why you should consider crowdfunding:
- Market Validation: Because “the crowd” very literally votes for good products with its pounds, a crowdfunding campaign that’s popular proves that there is a market for a product or idea. The success of the campaign, as well as feedback from contributors, can help determine the future of the product after it’s funding. Moreover, crowdfunding platforms such as Indiegogo also offer pre-commerce services such as InDemand – a service that enables successful campaign owners to seamlessly transition into the next phase of operations, and getting feedback from contributors as they continue taking preorders.
- Database Building: Preparation is key to a successful crowdfunding campaign, and part of this process is building a strong database of potential supporters. The larger your database of possible contributors, the more chance of success you have. Generally, mailing lists should begin with the campaigner’s existing personal network (friends and family) and then expand through events, word-of-mouth, and social media channels. These lists are useful far beyond the launch of your campaign as these are the people who will continue to support and evangelize your product as you grow your business.
- Research & Development: The process of product creation involves reinventing the idea multiple times before it goes into production. As I mentioned above, continuous insight from backers can help you refine your product or idea before you go to the market. Allowing your contributors to have an impact on the end result also makes them feel like they are part of the process, and will be more likely to support future ideas. In the past, market research was an expensive and long process and often an impossible undertaking for brand new companies, but crowdfunding has made it easier to get insights from millions of people around the world.
- Marketing and Publicity: A crowdfunding campaign can be a great complement to all the other marketing activity you have planned. It can be a media event, and is a great opportunity to drive traffic to your website and social media platforms. Even if you’ve already reached your goal, bringing eyes to your campaign will continue to build brand awareness far beyond your crowdfunding campaign. It will also help you bring in new backers who may be outside of your immediate personal network. This publicity is valuable when marketing future products and ideas because it raises your media profile and builds the public’s trust, which sets you up to get future media coverage.
Besides raising funds to help your business scale, crowdfunding is also a great way to build a community, test your offering, and most importantly raise awareness and build trust around your new product. Have a look here for more tips on how to set up a crowdfunding campaign.
By Joel Hughes UK Design, Technology and Hardware Manager at Indiegogo