At The Crowdfunding Formula, it’s our job to talk about the benefits of crowdfunding. If you dig in our site a lot, you will know by now it’s not all about the money. Yes, the money might be the driving factor behind your campaign, but you stand to gain a whole lot more from crowdfunding. Here’s our quick rundown of the 10 (yes, ten) BIG benefits of crowdfunding:
OK, so funding isn’t everything but it is important, and it was obviously going to make the list. Next…
2. Market Research
Crowdfunding might just save you as much as it makes you thanks to this handy benefit: free market research. Your crowdfunding community are the perfect guinea pigs; they’ll help you assess demand for your product. If your really good idea gets absolutely no backers, then that’s a pretty good indication that there isn’t a market for it. Imagine if you’d gone the traditional funding route, you might have ended up with stock manufactured and sitting in a warehouse before you realized no one wanted to buy it.
The crowdfunding community is also very vocal. They’ll tell you what they like about your product and share their ideas for improving it. Your backers will invest in your story (emotionally and financially). They’ll become more than just another customer; these guys will consider themselves a part of your project. They’ll take pride in your success and are much more likely to get involved in helping spread the word than a traditional consumer.
Your crowdfunding campaign is basically a place to selling a product or concept before you’ve brought it to market. Pre-sell a lot of items, and you can start production with little or no financial risk. For many people, this is THE big benefit of crowdfunding — there’s even platforms that specialize in pre-selling.
The media likes crowdfunding. To your average journo, crowdfunding is full of unique, inspiring human interest stories. It is the place to find innovators, entrepreneurs, and The Next Big Thing. Everyone wants to be a part of a success story and, if yours is newsworthy enough, you might just find yourself with free PR and a wealth of eager backers.
There’s no question about it; crowdfunding builds you a team of loyal customers. They are part of your success; they’re not going to ditch you for the next flashy competitor who comes along. These guys are going to be the first ones to buy your latest product and respond to your surveys. It’s the kind of loyalty brands like Apple spent decades cultivating, and you get it (albeit on a smaller scale) absolutely free with a crowdfunding campaign.
7. Word of mouth
Cultivating thousands of organic users who share your product or service is very, very hard to do with traditional marketing. But crowdfunding doesn’t have a commercial image, so everyone’s that much more inclined to help you out. And if you get enough people sharing your campaign, it might even go viral — which means more backers, a bigger community to research and more chance of attracting media attention.
8. New partnerships
You’re not just targeting backers and the media. Create a buzz around your crowdfunding campaign, and you could draw out potential partners as well. It might not be the primary focus of your campaign, but don’t underestimate the power of a professional network. Optimize your crowdfunding campaign to attract new partners by ensuring your campaign is literate and includes testimonials from people you’re already working with.
With backers pouring in (we hope), you’ll find creating a strong database of customers remarkably easy. This is the data of highly targeted and potentially loyal customers — and it’s priceless.
Investors are always looking for successful companies. A large number of people interested in your project is a great asset; it shows investors that you have market appeal and a solid community behind you. It’s not uncommon for crowdfunding projects to receive greater funding from investors after their campaigns. The best example is, of course, Oculus Rift. In September 2012, they raised a cool $2.4 million through Kickstarter, prompting a $2 billion buyout by Facebook only six months later.
Best of all… It costs (almost) nothing, and you walk away with the funding, insight and support to make your dreams a reality.