Crowdsourcing can be an excellent way to fund product development. But to maximize your shot at success, be sure to avoid making these five mistakes!
1. Jumping the gun
You’ve got a great idea for a brand new product. The first step is to head to a crowdsourcing site such as Kickstarter or GoFundMe, and ask everyone you know for money to make your dream a reality, right? Wrong.
Many entrepreneurs “jump the gun” when it comes to crowdsourcing. You should never consider starting a crowdsourcing campaign until you perform extensive market research, have a clear business plan, have a prototype in the works, and have exhausted all other sources of funding (angel funding, venture capital, business loans). Successful crowdsourcing is used to fill gaps in the budget of well-developed, well-thought out products. Don’t try to raise your entire product budget using crowdsourcing sites, especially when you are still in the idea development stage.
2. Not including a budget
If you’re going to ask people to give you money, give them a heads up as to where that money will be going. If you are opening a new brewery, and plan to use the funds to offset taxes, provide this information. If you are developing a new high-tech coffee maker and are crowdsourcing to put together a prototype, be sure to mention it! The bottom line is that you need to include a detailed, itemized budget so your backers have an understanding of the financials of your project, and don’t feel like they are just funneling money into a black hole.
3. No personalization
Don’t send a mass email to everyone you know soliciting a contribution to your campaign. Personalization is the key to success. If you can send a personalized email to everyone, at least segment by demographic.
4. All text, no visuals
The point of crowdsourcing is to tell an effective story for the sake of accruing backers. Visuals are absolutely key. If your campaign is comprised solely of words and no visuals, it may be time to go back to the drawing board, and add in compelling videos and pictures.
5. Generic reward offerings
On crowdsourcing sites such as Kickstarter, you have the opportunity to offer rewards in exchange for project funding. Take time to put serious thought into your reward offerings, and be creative. Offer things that backers otherwise wouldn’t be able to receive. For example, if offering standard company merchandise as a reward may not cut it, considering consumers could probably buy that same merchandise without backing the campaign. As a general rule of thumb, offer backers something unique they wouldn’t otherwise be able to purchase or access.
Pivot International is a product design, development, and manufacturing firm with strengths in software development, electrical engineering, mechanical engineering, and industrial design. If you are interested in engineering a new product or updating an existing product, contact us at 1-877-206-5001 or request your free consultation today.
