What rocket fuel (or resources) do you need to crowdfund?
Short on time? Watch our video for 3 tips in just 1 minute
Here are the three actions you can take to make sure you have enough rocket fuel to power your crowdfunding campaign.
To put it another way, this Marketing Nugget looks at the crowdfunding resources you need to help you succeed when offering rewards.
Crowdfunding resources – action one
Really know your products
Understand the margins
If you’re going to offer a cracking deal on your products such as a ‘Double your money’ style reward, it’s really important that you understand the cost price of your products and your margins. This is perhaps the biggest thing to consider when you’re looking at crowdfunding resources.
Ultimately, it will be your margins that take the hit so knowing what they are is essential. It’s all about what happens between your cost price and your retail price. Once you know this figure, you can work out how flexible you can be when offering a deal-based reward.
Keep in mind how long the rewards will be valid for
Your crowdfunding supporters will be redeeming their rewards over a considerable amount of time. It could be even a year or two. When you’re deciding this timeframe, you’re likely to be guided by the purchasing behaviour you see from your customers.
The hit you take on your margins is most likely to be slow and steady (rather than once and done). This could impact your profit and loss figures for a couple of years. It’s important to be aware of this and understand that it’s happening as a result of having the crowdfunding investment the business needs to grow further.
Consider if you want to offer any extras
If you’re looking at adding in any extras to sweeten the deal, you’ll want to consider these too. Are you offering some merc such as a branded glass or t-shirt for customers who support you by taking up rewards of greater value? Say for example, someone wanted to invest £500 on a ‘Double your money’ style reward. Would you want to give them something else in recognition of the amount they contributed?
If the answer is yes, it will be important to consider the margins on these items too. They might only seem like little things, but they all add up and they’re part of the crowdfunding resources needed.
Crowdfunding resources – action two
Crunch the numbers
Calculate the costs of promotion
Another thing to consider when it comes to crowdfunding resources, is the costs associated with using a crowdfunding platform and shouting about what you’re doing. The crowdfunding platform will most likely have a percentage fee for using their services. You’ll probably also want to invest in some marketing activity so that you can let your customers know what you’re doing.
The easiest way to approach this could be to consider these costs as part of your initial crowdfunding target. The thinking here is that they’re a key element of what you need to bring your crowdfunding vision to life.
Look at the figures from a different perspective
Once you know how much you need to raise through crowdfunding, you can look at the situation from another point of view.
Taking a different perspective on crowdfunding resources can shine a whole new light on the situation. Think about what reward most people are likely to want and what the most likely investment will be. You can then see how this works with your initial target.
If your initial target is £35,000 and you think most people will invest £50 you can calculate how many people will need to support you:
£35,000 initial target / £50 investment per person = 700 people
The reality will be that some people will invest more than £50, but this provides a good baseline to start from. It’s a great way to consider if crowdfunding is a viable option for the current stage of business growth you’re at.
Consider return on investment
You could also do a return on investment calculation. We’ve broken down the calculation into three steps in our nitty gritty guide to crowdfunding and also provided an example too.
Doing this would give you a good basis for considering the size of the business opportunity available. It will also help with putting the crowdfunding resources required, such as the costs of the platform fees and crowdfunding marketing agency, in context of the overall potential reward.
Crowdfunding resources – action three
Keep your eye on the clock
Estimate how long you think it would take to fulfil experience-based rewards
If you’re also offering experiences, you’ll probably want to calculate how long it would take for them to be delivered. This is because there’ll be a resource impact and it’s likely that you won’t have time to do something else in the business.
Time is one of those things that’s easy to overlook, but there’s a resource implication to it. This is especially true when calculating the crowdfunding resources you’ll need.
It will also be important to consider how you can be flexible with the times when you offer your experience-based rewards. You’ll want to meet the needs of your customers who’ve invested in your crowdfunding.
Is there anything you could stop doing or do differently?
It’s unlikely that you’ll be able to absorb the time needed to offer experiences into the normal running of the business. Given this, you might have to stop doing something for a while or think creatively about how you could do things differently.
For example, if you’re offering behind-the-scenes access would you have to do some processes at another time? Every business is unique and the solutions will therefore be quite different. That said, the one similarity is that it’s worth considering these things early on.
Look to the future
You could also think of time in a different way and consider where the business might be in a couple of years. If you’re doing rewards-based crowdfunding now, you might want to offer equity in the future.
If this is something which is quite likely to happen, then you could tentatively mention it in your rewards-based crowdfunding campaign. You could let the customers supporting you now know that you’d offer any equity opportunity in the future to them first.
Loving this Marketing Nugget?
We’ve boiled down this Marketing Nugget on crowdfunding resources to just three sentences. Hopefully these are easy to remember and put into action:
- Really know your products – consider the impact on your margins and how long this will happen for
- Crunch the numbers – look at how many people would need to support you and do a return on investment calculation
- Keep your eye on the clock – consider the impact on the often-overlooked resource of time
Fancy a chat?
If you’re thinking about the rocket fuel (or crowdfunding resources) you’ll need and are looking for a crowdfunding marketing agency to help, please just give us a shout. We can have a chat over a coffee underneath the space rocket in our office.
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