There are a lot of things people do right when it comes to Crowdfunding. Conversely, there are a lot of things people do wrong. Luckily for you, Nalin has broken down some of the biggest mistakes people have made in the past so that you can go out and crush your crowdfunding campaign with more success in the future.
In this episode you will learn 4 of the most common reasons crowdfunding campaigns fail, as well as, learn how you can avoid them.
And, be sure to check out the blog post that inspired this episode – “10 Ways to Fail at Crowdfunding” to get more insight on what has the potential to hurt your campaign.
[1:27]: 1- Making Things Too Complicated
Many people make crowdfunding way too complicated when, in actuality, it’s quite simple. Let’s talk about just how simple it really is.
[2:34]: K.I.S.S. – Keep It Simple Stupid
Although very straightforward at the outset, a lot of entrepreneurs have trouble making sure this actually happens.
[3:02]: The 4-Step Sequence
Follow this 4 step sequence and you’ll be sure to set yourself up for success.
[7:14]: 2- Not Having A Defined Audience
Who wants your product? Who loves your product? Who will be willing to pay? We can’t stress enough how important it is to find your audience.
[8:48]: The Importance of a Niche
The issue of saying this is for “everyone.”
[11:45]: 3- Setting Unrealistic Funding Goals
Sure you want to make the big bucks but – (1) Do you really need them? And (2) Are you setting yourself up to actually make them?
[16:08]: 4- Having Unattractive Rewards
Backers want something valuable in return for spending their time and money to help you bring your project to life. Let’s talk about the impact a good reward can have and how to do it right.
[18:09]: Recap of 4 Reasons Your Campaign Could Fail
Recap of four reasons your crowdfunding campaign could fail.
Resources From This Episode
crowdfunding, people, campaigns, crowdfunding campaign, indiegogo, product, project, audience, reward, launch, kickstarter, backers, email list, crush, fail, simple, reasons, money, entrepreneur, goal
This is the crush crowdfunding podcast, the number one place for people who want to launch on
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get you launched and fully funded.
Welcome to another episode of the crush crowdfunding podcast. I'm so excited to have you here for another session. We're going to be talking about four reasons campaigns fail to get funding and what you can do about it.
This is a topic that's particularly near and dear to me because I spend literally 99% of my time talking to people and helping them get through these reasons they might fail, as well as help them reconfigure how they approach a campaign for launch. So, again, it's really near and dear to my heart. This podcast is actually inspired by a blog post that I recently wrote on The Crush Crowdfunding blog titled - “10 Ways to Fail at Crowdfunding.” If you want the full 10 reasons, head to The Crush Crowdfunding blog and read the full post right now. For now, we're doing an excerpt of the four different reasons campaigns fail and what you can do about it.
1- Making Things Too Complicated
One of the reasons that campaigns typically fail on crowdfunding is because they make things way too complicated. People make crowdfunding campaigns so freaking complicated that when I come in as a consultant/crowdfunding expert and when they pull me on as someone to help envision their crowdfunding campaign I just go - “What is going on?”
It really is simple, guys. Crowdfunding is really, really simple. The process and the system to launch is really simple. And, the way you execute is going to be different for each campaign, each entrepreneur, and each creator. Everyone's going to have their own specialty, their own kind of spin to it but, it's all essentially really simple. Don't complicate it.
My seventh grade humanities teacher’s name was Mrs. Kramer. Side note, one of the things that I remember about her is that she is a huge Green Bay Packers fan. So, if you know Mrs. Kramer, who taught seventh grade humanities in Thailand, give me a shout out because I would love to talk to her again. Anyway, my seventh grade humanities teacher always reminded the whole classroom about “Kiss.” Kiss: keep it simple, stupid. Although very straightforward at the outset, a lot of entrepreneurs have trouble making sure this actually happens with their crowdfunding campaign, project, and also with planning their startup, manufacturing, and everything else that they have to do for launching a business.
When it comes to launching an idea and a crowdfunding campaign, sometimes less really is more. At its core, a successful project is really about the sequence: one, you create a product that actually solves people's problems and meets people's needs. Two, you find an audience that will respond to that solution and problem that you're solving. An audience that will respond to the novel idea and innovation that you have thought of. Three, you rally them together to support your idea by gathering them into an email list of interested fans. And, four, you push all these interested fans to your crowdfunding platform of choice (Kickstarter or Indiegogo). Again, it's very simple- have a good product, find the right audience, make sure that audience is collected into your own email marketing list or notepad, and lastly, push those people to your crowdfunding campaign page; be it Kickstarter or Indiegogo.
Yes, everything in all these four steps is very different for every entrepreneur, business, product, and project because audiences are going to be different. Similarly- solutions, products, needs, and the email marketing platform are all going to be different. It's going to be different whether it's Indiegogo or Kickstarter because the details are all different. However, the core sequence of launch is the same. Forgetting one of the parts of this sequence or forgetting to dive deep into any one of these will be problematic.
For example, if in this sequence you forget to find the audience and you have products and you try to go to email and you go to Kickstarter or Indiegogo but you don't have an audience- how are you going to collect the right people in your email? How are you going to collect the right fans and audience that will be pushed to your crowdfunding campaign? There’s no way! You can't forget that sequence. If you have a look at the sequence and you forget the whole email list thing where you collect a potential audience or potential fans into your email list that’s not going to work. If you forget that point then you have a product and group of people who potentially are interested but there's no way to actually drive people to your Kickstarter or Indiegogo campaign. So, at the end of the day, crowdfunding is really simple and it should be approached in this really simple sequence.
Look at your product and make sure that it solves a problem and is unique and innovative in some way. Find the people who will be excited about that product; the ones that are super excited enough to potentially pay for it. Collect them into your email marketing list so that when you do launch you can tell them about it and say- “Please back me.” That way they'll be directed to your Kickstarter or Indiegogo campaign.
So, again, at the core, crowdfunding is really, really simple and a lot of people just complicate it. A lot of people have these millions of ideas that dilute what you actually have to do. Some people go and say - “Hey, I have to actually grow my Instagram followers to10,000 people so I have the swipe up function.” Some people go and say - “Hey, I need a million Twitter followers,” or some people say - “I need to have this email for this specific group, another email or for this other group, and like 300 types of emails or 300 types of groups.” But, it's okay to just keep it simple because the most effective campaigns and the most effective marketing solutions, projects, and launches keep it simple with this type of sequence.
Find your audience, capture them, have conversations with them, and send them to your campaign page. That was number one.
2- Not Having A Defined Audience
The second reason a lot of campaigns fail is that they don't have a real true defined audience. I really can't say this enough - you need to find your audience! It's step two of number one that we talked about, right? Step two was finding that audience. I can't say this enough.
A lot of campaigns that fail on crowdfunding don't have a defined audience. They don't know who wants their product. They don't know who loves their product. They don't know who is going to be willing to pay for their product and their idea. Kickstarter and Indiegogo aren’t the mass markets. They are launch platforms for products that solve very specific problems. People who head there are looking for innovative ideas that they cannot find elsewhere. Knowing this audience, it’s really of no use to say that your product is for “everyone,” because that isn't a true category to market to. That's why on Kickstarter and Indiegogo there are categories. That's why projects are put into different categories in different niches because people who come to these platforms look in specific niches. Some people love backing film projects so they're going to go and click to back a film project in the film category. They're not going to go around and click into art or design or anything else because they're just interested in this specific niche. Saying that your product is for everyone means to me and to everyone else looking at your page that your product is for no one.
The best projects really hone in on a very specific group of people also called a “niche” and speak directly to their passions, their wants, their desires, and their fears. So, if you're trying to pitch to people who aren't interested in your product, you'll fail every time. That's why you need to know your audience. That's why the idea of a product market fit is so important when it comes to crowdfunding. Yes, you have a cool product, which is step one, right? You have a cool product that solves a problem that is innovative and is a solution to something really cool. But, the second part is that you need to know your audience. You need to know your niche. When you pitch to people who don't care about what you're talking about you'll get either bad responses, people just kind of booing you off stage, or no responses which is completely demoralizing as an entrepreneur.
A lot of the time campaigns fail when they come to crowdfunding because they've chosen the wrong audience to talk to. The audience that they chose either didn't want to pay for their particular project to make this thing come to life or they just didn't take the time to define an audience in general. It just says this is “for everyone.” For example, it's like saying- “This iPhone case is for everyone,” or “This phone case is for everyone because everyone has a phone.” Firstly, not everyone has a phone. Secondly, if it's an iPhone case, not everyone has an iPhone. So, projects fail because they don't define their audience properly.
I actually recorded a different podcast about this that was about defining and knowing your audience and figuring out who your audience is before going into crowdfunding because it's such a very important part of the crowdfunding process. It’s a process that I think everyone really needs to know because that’s one reason why a lot of campaigns fail. So, you really need to know the type of audience for your campaign and the type of people who will respond to your project, product, and to all the content that you're releasing. It also just makes you feel better, right? If people respond positively to what you're saying it makes you feel better. When people are cheering you on and saying - “You got this,” it will make you feel so much better. Also, people will actually pay for your idea if you find the right people. If you're trying to sell iPhone cases to people who have no phone or have an Android, you're not going to get responses or people backing your idea. So, make sure to find your audience and define that audience to really know who they are, where they're talking, and what they care about. That way you are able to present your product in the right place at the right time to the right people in the right way.
3- Setting Unrealistic Funding Goals
Another reason campaigns fail on crowdfunding is because they set unrealistic funding goals. This one is really a tough topic to discuss. A lot of people say to me, “I want a million dollar campaign.” and I'm like, “Great. We all want a million dollar campaign. We all want a million dollars.” It's great. It will mean thousands of backers and lower MOQ's and it'll mean lower supply costs because you can negotiate bulk purchase. Everyone wants a million dollar campaign, but funding goals should be realistic. You don't want to overshoot or undershoot. You'll just end up either not having enough money to do what you want to do or scaring off backers in general. So let's make this more tangible for everyone out here.
If you have an email list of 1,000 people for a $20 reward you probably won't hit $500,000 on launch day if you list $500,000. That's just impossible. If every single person in your thousand person email list pledges $20 to your campaign that will still only be $20,000 and you will not hit $500,000. In this case, change your funding goal so that it makes sense with your project and objectives. Everyone wants to raise a million dollars, but not everyone can and that's okay because not every project needs that amount of money.
Going back to that thousand person email list and $20 reward that you're listing, if your goal is to hit $500,000 and that is what it takes to manufacture your product and your idea, then something's going to give. Either you have to work with a different manufacturer to make sure that your costs for production are a lot lower for 1,000 people with a $20 reward, or you have to do the work to get more people on your list. Your 1,000 people x $20 reward = $500,000 goal math doesn't add up. So, you might need 10,000 people on your list or even 200,000 people on your list. Getting those people to corral into your campaign and then start to activate the different algorithms on Kickstarter or Indiegogo to get more people to your page. Anyways, 1,000 people times a $20 reward can't list a $500,000 goal and, just so you know, raising one hundred thousand dollars and above requires a lot of upfront investment in terms of marketing. If this is what you're aiming for, make sure that you either have the investment to fuel that or change your funding goal.
A lot of people come to me and say, “Hey, I want to raise $500,000 but I have $200 when it comes to a marketing budget.” Okay. I’ve had to take a little bit of pause there because a lot of people come to me and say, “I want to raise $500,000 and I haven't done any preparation. I don't have any people in my network, but I want to raise $500,000 and I have $200 that I can spend. What can you do?” You know this stuff irks me because people think that crowdfunding is magic. People think that crowdfunding is something that you just put a project on crowdfunding and it just happens. That people just flood to your campaign and throw money at your campaign because your ideas are so good. However, the unfortunate truth is this is not how crowdfunding works.
If you have a $500,000 goal there are a lot of things that happen under the surface that requires a higher budget. It includes things like getting in touch with PR, creating multiple types of samples to send out, or hiring someone who actually knows what to do with an app in advertising and using your money to reach people in the most faraway places. There's a lot of things that go into this. Many people set unrealistic funding goals which does not set them up for success. Set a realistic funding goal that meets your minimum requirement for production. Make sure that you take into account the list that you have and the efforts you can put into creating your list. Creating a goal that is more realistic in that way will help set you off on the right foot.
4- Unattractive Rewards
The fourth reason campaigns fail a lot of the time is because the rewards are really unattractive. Backers who come on crowdfunding don't invest just for the sake of backing. Backers really want something valuable in return for spending their time and money to help you bring your project to life. That's why it's so crucial for your campaign's success that the rewards are attractive enough to make backers pay attention and really want to get in on the action. Creating your crowdfunding rewards might sound like an easy task, however, the true test that really separates a phenomenal campaign from the rest of the other campaigns is how you set up your rewards.
You really need to set up the reward so that when visitors come to your page they immediately want to back your project and immediately understand what they're getting by contributing to your project and helping you make this idea come to life. Crowdfunding rewards are so important.
For example, if you're trying to launch a product that is a new type of jacket or a product that is a new type of multifunction tool, or a new type of lighter then you want to make sure that those rewards relate to the product. Those rewards are what people actually want when they come to your campaign. There's no use offering a t-shirt, headband,or a sticker if your particular project is a multifunction tool. It doesn't make any sense. There's no connection between your campaign, what you're trying to put to life, and the type of reward that you're offering. When it comes to crowdfunding campaigns, you need to make sure that your rewards are attractive and make sense to the backer.
These are four reasons campaigns fail and what you can do about them. Again, this was inspired by a blog post on The Crush Crowdfunding blog that I previously wrote that explains further into not 4 but 10 different reasons campaigns fail and what you can do about it. For now, these are four reasons. If you want the full list, be sure to check out the blog on The Crush Crowdfunding blog and let me know what you think.
A lot of people go into crowdfunding thinking that it’s really easy, but there's a lot of obstacles, mistakes, and trip-ups that you can potentially encounter. Read the blog and make sure you're not making any of those mistakes.
Thank you so much for listening to this episode of The Crush Crowdfunding Podcast. If you enjoyed this episode or found it helpful in any way, be sure to leave a review so that other people will have an easier time finding this crowdfunding content. I hope that this podcast was helpful in your crowdfunding journey and I can't wait for you to go out and crush it.
Thanks for listening to The Crush Crowdfunding podcast at crushcrowdfunding.com. Tune in at the same time next week for more ways to crush your launch.
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