Crowdfunding has existed for at least 126 years. One of the first documented crowdfunding projects was conducted by the newspaper The New York World and its publisher Joseph Pulitzer (yes, the prize guy) to fund the construction of the pedestal that the Statue of Liberty now rests upon. This was in 1885, and over 160,000 Americans contributed to the cause. Why did over 160,000 people contribute to this cause? Most likely it was so Lady Liberty stayed in New York City. Other cities (Baltimore, Philadelphia, and San Francisco, to name a few) offered to fund the pedestal if the statue was relocated to those cities. So in order to keep the prized American symbol from moving, the people of New York City funded a campaign to keep the statue where they believed it truly belonged.
Thus, we have unearthed the most problematic issue facing crowdfunding campaigns and their creators—belief in a brand or product—also known as trust.
Trust is the #1 issue when it comes to people’s decision to back a crowdfunding campaign. With this being the case, how can creators build trust between potential customers and their unknown brands? The answer is easy: earn it. Earning it, however, is not easy. It takes communication, patience, and creativity. Fortunately for creators, all the tools necessary to earn the trust of your audience are readily available.
The first way to develop trust in a campaign is communication, the open and transparent kind. Not just about the good things that are happening. If something bad and ugly occurs, let the audience know. This communication should commence prior to the launch and continue during and after the campaign. The audience will appreciate it, and vulnerability like that strengthens trust over time. How should you execute this open and honest communication? There are multiple ways: email marketing, videos, Facebook groups, sharing stories about the team that makes up the company, and however else the creator decides to engage their audience.
There are many stories of wildly successful campaigns that failed to deliver a product that caused the problem of trustworthiness in crowdfunding. Remember the Coolest Cooler and Pando Daily campaigns? While those are extreme examples, their negative impact is still relevant and lingering around all campaigns to this very day. As a creator, you must be upfront from the beginning about who you are as a brand and product. This helps overcome the apprehension and questioning that comes with being a new brand and asking someone to entrust their hard-earned money to your company.
How to Communicate
As written above, there are multiple ways to communicate with your audience in order to build trust. Email marketing is a very good way to educate your community about your product, your team, and your upcoming campaign. Organize a schedule of when emails will be sent and develop content relevant to the timeline of your launch so it engages the audience and further builds trust. Video content is another effective way to engage an audience. The video can demonstrate your product’s functionality and how easy it is to use, store, clean, etc. How this video content is disseminated is up to the creator.
Always have an objective that you want to achieve with each video or email and when/where it is posted. Like most situations in business, timing will play a significant role in the success of something. Allowing an audience to see the creator and the product working builds credibility, which builds trust.
Here at LaunchBoom, one of the most effective tools we use to nurture the creator/audience relationship is a Facebook group for all the community members who place a reservation on the campaign. This VIP group gives the creator a line of direct communication with their community and vice versa. When a person interested in backing a campaign can interact with the campaign creator, the likelihood of conversion increases exponentially. In this group, a creator can ask questions, post videos, and conduct surveys/polls to receive feedback and input from the people who have already invested in their campaign. This is the beginning of building an image. The value coming from that engagement and direct feedback cannot be fully appraised. It cultivates the needed trust in the brand and product that the creator is seeking from the community.
|A Facebook group gives you the chance to answer questions and build trust in your crowdfunding campaign.|
Another way a new brand can build trust is by selecting the correct crowdfunding platform. According to GoDaddy, there are at least 21 crowdfunding sites on the internet that a creator can choose from when looking to launch a campaign. Choosing the right platform will impact the success of your launch.
Creators should use a credible platform with a history of successful campaigns that generates a significant amount of traffic. If these traits are present, then the sought-after trust will be as well. Depending on the type of campaign being launched (reward, equity, charitable) and what the money being raised is for, the creator must be thoughtful in the selection process.
Crowdfunding campaigns are launched for a myriad of reasons and there are plenty of options to choose from. Kickstarter, Indiegogo, and GoFundMe are the heavyweights; however, that does not mean they are the best fit for a non-profit organization’s campaign or for an entrepreneur looking to crowdfund to start a food truck. If the platform fit is not right, trust will not be there. If something smells funny or doesn’t look right on the platform or your campaign page, apprehension will set in. Apprehension = no backers. If the platform is reputable and makes sense for the creator’s goal, trust is much more likely and the decision to back a campaign is easier.
Another way to build trust with an audience is highlighting the product itself. Share the unique selling points (USP) your product has, especially if it’s patented. A patent is something that accentuates innovation and proves that your brand is not just a replication of something that is already available to consumers. A patent provides immediate credibility and accelerates the trust your campaign is searching for.
Additionally, as you showcase the product and the ways it problem-solves for users, ask for feedback. Remember the Facebook group we discussed? That is a perfect tool for feedback. The only thing you MUST be sure to do with received feedback/input is acknowledge and respond to it. Don’t ignore the audience! You asked them, remember; acknowledgement and gratitude will continue cultivating trust. These community members will become advocates for your brand. The acknowledgement and response to the community doesn’t require an extravagant production. Utilize your email marketing to say thanks or post a 30-second “thank you” video on your Facebook page. Actions like this show the community you are, in fact, a real person. Being human is the one thing we can all relate to. When audiences see the creator or team, barriers are broken down.
When you begin the process of highlighting your product, don’t be selfish and just focus on your brand alone. Share content that is relevant to the overall category your brand resides in or the category you hope to start. This shows your community the dedication your brand has to the greater good and that you are not a greedy, self-centered entity worried about your own ego. No one wants to trust that.
The final piece when it comes to building trust between a new brand and its crowdfunding audience is patience. It is going to take time. When we launch a campaign here at LaunchBoom, it’s after 90 days (or more!) of work put into building and communicating with the campaign community. This is a relationship, just like all the other ones people have. How many people do you meet and trust immediately (and vice versa), especially when the relationship involves something valuable (like money)?
Think about how you select the daycare your kids go to, or the contractor who is going to perform the renovations on your house. You rarely make a selection after a single meeting. There is usually a follow-up discussion, research done to find reviews, or conversations with people you know who previously worked with these entities. Those conversations and that research is what instills trust in who is selected.
Now your brand is in the same situation; however, there are no reviews or past client references your community members can connect with. This makes your brand’s task more challenging and time-consuming. You need to create opportunities for your community to experience your product and leave their own comments for others to read and consider. While this does seem daunting, it is not impossible (see the included examples from a Facebook group). The entrepreneurs we partner with here at LaunchBoom do it every day, applying their individual (or collective) skill sets using the tools discussed to build the trust needed for someone to put their hard-earned money behind a new brand.
Trust is Important in Crowdfunding
Trust is the most important factor in any relationship, whether personal, professional, or business. If the parties involved believe the other will carry out their agreed-upon duty, the relationship is set up for success. When it comes to crowdfunding, both parties are new to each other, so the process of building trust and credibility needs to be conducted. The campaign creator must be proactive in initiating this trust-building process, since they are the ones asking someone they have never met to spend money on something they want to create. Creators have an abundance of tools at their disposal to build and nurture the trust needed for people to spend money on something they believe in. When done properly, this relationship will become the pedestal for your company in 2021 that it was for the Statue of Liberty 126 years ago.
Learning how to build trust is one of the very first and most important parts of setting yourself up for crowdfunding success. Want help with your trust-building strategy or any other part of the process? Apply to work with us today!