Crowdfunding rewards is the one thing that all backers must experience.
Some backers don’t watch your video. Some don’t care much about anything but the video. Some are such believers of crowdfunding that they’re sold right when they get an ad. Others were already sold to the idea ever since you hooked them during your pre-launch phase.
No matter what your backer cares about on your campaign, the one thing every visitor-turned-backer must experience is your rewards.
Creating your crowdfunding rewards might sound like an easy task. Yes, you already have exactly what you’re offering, whether it’s a book or a portable projector or a board game. However, the true test that separates a phenomenal campaign from the rest is how you set up your rewards. You must set it up so that visitors who come to your page immediately want to back your project.
The best rewards blend a touch of human psychology and a bit of creativity.
Let’s step into the world of rewards!
5 Key Concepts To Keep In Mind While Creating Rewards
If you haven’t yet, be sure to get familiar with all the numbers associated with your reward pricing. Once you do, there are five key concepts to keep in mind as you’re creating your crowdfunding rewards. Each concept serves a key function in the customer psyche and comes together to create a menu of enticing rewards for backers to want to back your project.
Below is a snippet of the key concepts, with a deep dive further down this post!
- Price anchoring – create a high anchor price so everything else looks reasonable
- Scarcity – create a limit to supply so people experience FOMO i.e. only 150 available at this price tier
- Urgency – create a limit to time so people experience FOMO i.e. get it now or else prices go up!
- Paradox of choice – the fewer options we have, the better
- No-brainer price – create a price tier that is absolutely irresistible
1. Price anchoring: create a high anchor price so everything else looks reasonable
This is something you’ll usually see at restaurants. The restaurant will create one main course that is drastically more expensive than anything else. There might be a bit of caviar or a dash of gold flecks in it – whatever they have to do to bump up the price. This is so that whatever else you choose, you’ll always think you’re getting a deal.
You can seamlessly translate this experience into your crowdfunding campaign. Crowdfunding backers already know that by supporting a crowdfunding project, they’ll receive somewhat of a discount off the final retail price. That’s the price vs. risk tradeoff, they’re accepting a higher risk (you not delivering the product) for a lower price. Beyond the walls of crowdfunding, a product is already on the market and there is almost no risk of paying for a product so people expect to pay the full price.
The price anchoring technique goes beyond this crowdfunding risk discount.
By creating one high anchor price, every other reward will seem like an incredible deal. This usually is in the form of a “Kickstarter Special” or “Indiegogo Special” that is at the highest possible discount available. You’ll leave this particular price as visible throughout your campaign.
People will see that your product is discounted from the MSRP and also that there is a high anchor price. This means that whatever tier you’re currently offering, like an Early Bird price, will look incredibly reasonable compared to that high anchor price.
An example of what this looks like for a product with MSRP of $295:
|Early Bird Special||$95 (67% off)||Price you actually want to get people to pre-order the product at|
|Kickstarter/Indiegogo Special||$195 (33% off)||High anchor price|
There’s no limit to how many pricing tiers you create as long as you keep that high anchor price visible and follow the other concepts below.
2. Scarcity: create a limit to supply so people experience FOMO i.e. only 150 available at this price tier
Imagine Black Friday sales.
Places like GameStop offers a special for a gaming console, but only at limited units. You’ll see that only the first 50 people will get access to this unit at this special Black Friday price. Just with this messaging, GameStop will see hundreds of thousands of people lining up outside the door in order to be one of the few people who will get access to the deal.
Make use of this scarcity for your campaign.
Even though you might have more rewards leftover, you want to always create a limit to supply. This psychology concept of scarcity is proven to drive people to action.
If you have 50 total rewards, it’s never in your favor to release all 50 at once. Better yet, plan to release these units 10 at a time so when people come to your page they’ll think “wow, there are only a few units of this product!”
Not only that but once people start pre-ordering and new visitors see that there are only say 2 left to claim, those new visitors will want to jump at it immediately. This is especially true if you offer this at a certain, very attractive pricing compared to everything else on the page (see point number 1 above).
With this strategy, once you get to 1 left, add another 10. Keep doing that until you get to all 50 total rewards that you have banked for the project at that price.
That way, everyone who comes to your page will always see that there are a limited number of units left and they always will have to jump on the opportunity before the units at that special pricing disappear altogether.
You can even use tools like StockLimits to automatically do this throughout your campaign rather than checking back to keep increasing the quantity as they get to the end.
3. Urgency: create a limit to time so people experience FOMO i.e. get it now or else prices go up!
Think about a Summer Sale at a shopping mall. You’ll see signs everywhere screaming at you that “sales end August 20!” This gets people going big time. Shoppers know that if they don’t buy the item on sale by that end date (in this case, August 20) they’re out of luck and will have to buy the item at full price.
And really, that’s why sales have a start and end date. There are those people who plan for it and get in right when the sales start and others who roll in right before the clock hits midnight and the sales disappear forever. That end date gets people acting.
Give them a reason to set their clocks and pre-orders your rewards early!
In crowdfunding, there are a few ways you can create this time-based urgency for your rewards. Here are three ideas for you to get started.
For one, you can offer a time-limited launch day special sale. Here, you offer a reward, your biggest discount yet, for just 24 hours. This gets those on your email list, who have already expressed an interest in your project, enticed to back your project on the launch day. Get people revved up and excited for that first-day launch so that your project gains the momentum it needs to trigger algorithms on the crowdfunding platform.
Another tactic you can use is to create discounted rewards for a limited time throughout your campaign. For example, after the launch day, you can create another level of discounted rewards for the next 5-7 days of the campaign. Let your email list know that this next tier is only available for a limited time (pro tip: remove people on your list who HAVE pre-ordered from any further salesy emails). If they missed the launch day discount, they are still able to snag the product at a price that is still quite low before you move onto another price tier.
If your project coincides with a holiday, what better way to leverage that national hype than to offer a holiday (time-based) discount. Create a special holiday-themed reward and send this offer to your remarketing efforts (best to do this via ads!). That way, people who might be on the fence about your project have another reason to act quickly before that holiday offer ends.
4. Paradox of choice – the fewer options we have, the better
As my humanities teacher in 7th grade always said: Keep it simple, stupid (yes, she did say stupid).
Sometimes I get to a campaign page and see 15 rewards running down the side of the page. At this time, I’m thinking to myself: what? But which one should I pick?
Really, go to Kickstarter or Indiegogo right now and browse through a few projects. You’ll see some campaigns that post an onslaught of rewards on the side of their project page. And to be honest, all this does is confuses the potential backer.
No, offering more options is not always better.
There’s even been a well-known study done about the detriment of options. Here’s the boiled-down version of the study: Two teams went out and offered people the opportunity to sample jam. One team had many flavors of jam for people to sample, while the other had just one jam for sampling. At the end, which team had more people buy jam? The team with one jam sampling. Surprise! The key takeaway here is that having too many choices ends up paralyzing us.
So yes, keep it simple, stupid.
If you want to release a book, distill it down to ONE main reward. From there, tier it into different price levels. Anything else beyond the “core” product (aka the book in this case) is an add-on or a stretch goal that you can add later on in the campaign.
If it’s two different versions of a product, create a version A and version B reward and tier up pricing from there. Possibly even include an option to get both if it’s something you see people requesting.
But in the end, make everything as simple as possible for your launch!
5. No-brainer price – create a price tier that is absolutely irresistible
Sometimes I see a reward level that is so tempting that I can’t help but overlook the additional few dollars it costs.
See this in action here with this campaign by Moonrakers. They created a price tier at $55 where a backer can get the base game. But for $10 more, the backers get an expansion included with the game and alternate box art. Talk about value-added! And for just a measly $10 more.
The results speak for themselves here. The base reward has about 100 backers while that no-brainer reward level has over 3,000 backers.
What they’re offering is essentially the same product. But the team behind the project has gone and added so much value to the $65 reward tier that people can’t help but go directly to spend just a little more for it. That’s the no-brainer price in action; it’s absolutely irresistible!
So what else needs to be in your reward strategy?
You really can’t think about rewards in a black hole without thinking about stretch goals or add-ons.
Release Stretch Goals to keep backers engaged
Stretch Goals are additional milestones you can offer to your backers to keep them jazzed about the campaign. This does two things:
- It keeps backers coming back to the page. Great for you since the more people visit the page, the more Indiegogo and Kickstarter algorithms love your project.
- It sets everyone on a journey together to help get the campaign to the next level. An idea like this pairs incredibly well with messaging about a referral program.
Stretch Goals can come in many forms. You can opt for the traditional monetary stretch goal that tiers up from your original goal. For example, “yay, we’ve reached our $50,000 goal. Now if we reach $75,000 we’ll offer every backer an additional doodad with their pre-order.”
As crowdfunding evolves, we’ve seen other very interesting Stretch Goals come into play.
For one, some campaigners are encouraging people to share the project to unlock a stretch goal. For example, if the sharing hits a certain number on a platform, a Stretch Goal gets unlocked. A campaign can “if this project reaches 500 shares on Twitter, we’ll add a Kickstarter Edition badge to the product”
This not only gamifies the sharing and word-of-mouth effect for the project, but also gets people involved in the project even if they’ve backed on the first day and are twiddling their thumbs until the end of your campaign.
Build add-ons to reward superfans and dedicated backers
Once someone becomes a backer for your project, it isn’t the end of their contribution to the success of the overall campaign. It’s always wise to dream up add-ons that are only available to backers. This not only keeps people engaged with your campaign as you release new add-ons, but it also helps to increase the AOV (average order value) of each backer.
Here you can see that beyond that base reward people get, backers can add additional contributions to the campaign to claim other add-ons. Peak Design even makes this easier for backers and offers a simple graphic to illustrate how to add additional funds to the campaign.
3 Steps To Get Started With Your Crowdfunding Rewards
Now that you have a grasp of the big ideas underlying crowdfunding rewards, the next step is to put theory into action! Here are the steps to get started with your crowdfunding rewards:
1. The best way I’d recommend to start is to open an empty document (or grab a piece of paper and pen if you’re so inclined) and write down all your ideas. Take yourself through a huge brainstorming session and write down all possible rewards, stretch goals, and add-ons that you can possibly can dream of.
In a world where anything is possible and nothing is too crazy or too wild, what would you like to provide to your backers for this project? Here are 66 ideas to get you started!
2. From there, start narrowing down rewards that aren’t feasible to deliver. If you wrote that you want to send a horse to each backer as a thank you for backing your equestrian-themed project, that’s probably not possible. Also, cross out rewards that are not feasible to create (like a private recording of David Bowie saying thank you to [backer name]). Here is where you want to make sure that the cost structure for your project makes sense. Be sure to get familiar with it so that you don’t under-price for a costly project.
3. Split the rewards into core rewards that you’ll offer during the campaign and ones that can possibly be stretch goals or add-ons. Your core rewards will be the ones that are key to your project. If you’re launching a new smart drone, you’ll want your core reward to be the smart drone rather than additional removable batteries or an extra propeller. The items that you’ve come up beyond your core rewards can easily transform into stretch goals or add-ons.
Some Final Words On Crowdfunding Rewards
Creating your crowdfunding rewards might sound like an easy task. Yes, you already have exactly what you’re offering, whether it’s a book or a portable projector or a board game.
However, the true test that separates a phenomenal campaign from the rest is how you set up your rewards so that visitors who come to your page immediately want to back your project.
The strategies you see above are some ways you can action on your own rewards strategy. It’s the human psychology behind why people want to put money behind your project and buy what you’re offering. As you’re embarking on this journey, there are ways to make sure that you’re on the right track:
1. Get the tools to help. I’ve compiled templates and worksheets to help you figure out the best rewards to create for your audience. Check it out in the crowdfunding resources section.
2. Don’t work in a vacuum. The audience that you’re building is there for a reason. No, they’re not just there to be your initial backers on launch day, but they’re also there to help you answer some of the tougher questions you might have. For one, if you’re not sure what add-ons they’d want beyond the core reward, just ask! People who want your product are likely going to let you know. If you want feedback from other entrepreneurs on the same journey, join the private Fully Funded Facebook group and drop in your idea.
3. Work with me to get yourself ready. If you think you’re ready and want a set of expert eyes to review your reward strategy, get in touch.
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