Many entrepreneurs have been there; they are strapped for cash and they’ve spent months or even years creating the product, advertising, traveling, holding meetings, phone conferences, etc. Finally, they launch their “baby,” only to find out, to their dismay, no one uses it or even wants it!… The old adage; “If you build it, they will come” has gone out the window. With the emergence of The Lean Startup methodology, it preaches that you have to do some kind of public marketing survey; acquiring various aspects; need, want, and/or demand for your product, without wasting time and money. Crowdfunding is a great way to test your product to see if there is demand for it before you dive in head first and end up truly broke. Even large companies like (GE) General Electric, are using crowdfunding platforms to validate their products before putting them into full production. Below are a few tactics that can be used to help you decide whether there is a market for your product or not.
Find Your Price: How Much Are Your Customers Willing To Pay?
Pricing your product is a difficult task. During the onset it is mostly speculation and blind guessing as to how much your product should cost. Hardware projects have to account for production, storage and shipping costs before they even make a profit. Underpricing your product can put you out of business from the start and, overpricing can leave you with no customers! In your campaign you will have multiple rewards levels, with different prices of the product. In the example shown below you can view the chart and note the disparity in the number of backers. This campaign received 63% of its backers from their $49 reward level. The next two reward levels to the right, priced at $59 & $79, respectively, received a total of three pledges. Although the $49 reward level may have been an early bird special, you can see that this is the price consumers are willing to pay for the product (considering, the next two higher price levels received a minuscule total of three backers combined). In this case, if $49 is enough to create the product and make a decent profit, the producer of the campaign is on the right path. This in no way is a suggestion of how to price your product outside of a crowdfunding campaign as there are many more factors that will come into play that will affect your pricing structure.
Views & The Number of Backers
For a successful campaign you want to have a conversion rate of higher than 8-12%. To get this number you simply take the number of backers and divide it by the number of page or video views your campaign received. If your campaign has 20,000 video views and 2,000 backers, simply divide 2,000 / 20,000 and you’ll get .1%, which is a 10% conversion rate. You can start measuring this after the first day of pledges to see how the number changes as both pledges and views increase. If your number is low you can try adjusting the prices, edit the copy and content on your page, and even edit your video to make sure the majority of the visitors are completing your video.
Monitor Social Media
The best marketing is free marketing! Word of mouth is the “holy grail” of marketing. You can measure that by monitoring social media channels; check Twitter and Facebook to see who has shared your campaign. An excited backer of your campaign will share your campaign with their personal social networks. If you don’t see too much action you can get the sense that people aren’t excited about your product or campaign. A bit disparaging? Yes. The ball is now in your court and it’s up to you to engage and figure out, why?
Talk To Your Backers
There is no better place to get feedback than from the people who have backed your campaign. Start by sending a message to each of your backers, personally, and thank them for backing your campaign. Then ask them two questions regarding why they decided to back your project. You can create these questions tailored specifically for you and your product. Two example questions would be…
-Why did you back our campaign and product?
-What were you looking for in the market that you couldn’t find?
These two questions above allow you to determine exactly why someone purchased your product and what they are actually looking for. Document all of these responses and you will start to see trends between your backers that will help guide you moving forward.
Want more crowdfunding information like this to help you blast through your crowdfunding campaign? Download our FREE crowdfunding guide HERE.