5 Dirty Secrets of Crowdfunding

Email Conversions are Low. Even to friends and family, the amount of pledges per email sent is very low. I have heard an estimate from successful campaigns that they experienced 1 pledge for every several hundred emails sent. In my own personal experience, it was 1 per 42 emails sent. We did not send the large volume of emails that many big campaigns send.  One founder of a successful campaign shared that they had a conversion rate of 1:80. Follow this recent Quora post about email conversion rates.

Most people don’t know what crowdfunding is. When I did a crowdfunding campaign, we were surprised how many people did not not know what crowdfunding even is. If you are reading this post, you are likely to know what Kickstarter, IndieGoGo, Rockethub etc. are all about. Keep in mind that crowdfunding is still in the “early adopters” phase of the innovation adoption lifecycle. These means that 8 out of 10 people are largely unaware, or many not even heard of, crowdfunding. That being said, when conducting a crowdfunding campaign, you may want to use terminology that is more familiar to a broader audience like “pre-sale” or “product launch”. Crowdfunding, to some, may seem mysterious and potentially dangerous, so keep the stated objective simple, especially if you are targeting a less tech-savvy audience.

Most funders are existing network connections. Estimates are that most campaigns have 90%+ of project backers come from the project owner(s) existing network. This was definitely the case with my own campaign. Rarely does a campaign go viral where they get a majority of traffic from outside of the campaign owners’ network. The punchline for 99% of campaign owners: your network and marketing efforts will determine the outcome of your campaign.

A lot of work. Sorry to break it to you, but crowdfunding campaigns aren’t easy! Many people have a misconception that crowdfunding is an easier way to get money and attention to a business / project. That is not necessarily the case. I know of a successful campaign that had 3 people working full-time on the campaign leading up to and during the campaign and here is a Quora post of a campaign backer that spent every waking hour on his $20,000 campaign.

Crowdfunding sites don’t get much organic traffic. Most of the traffic to a crowdfunding project comes from the marketing of the project sponsor, not from loyalists actively browsing the site for cool projects. Yes, to some extent, Kickstarter is the exception. The crowd is not waiting to come across your project. The high majority of traffic to any crowdfunding project is getting their from direct links to digital media posts about the project. Once again, the marketing is in the hands of the project owner.  The only way to get to the front page of a platform is to have enough momentum from pledges.  The only way to create the momentum is to make it happen initially with your network.

So why bother with crowdfunding?! Crowdfunding does have a very important role for small businesses. Used correctly, it is a great tool to get publicity, and even get paid for it! Learn about the tactics required to successfully use a crowdfunding campaign with our course “Crowdfunding: It’s NOT for raising Money!”. The first 100 students get FREE access to our course. JOIN TODAY!

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