Crowdfunding campaigns are a fantastic way to raise awareness and capital, but it’s easy to make a mistake and lose money. Here are the four most costly mistakes to watch out for when planning your launch on Indiegogo or Kickstarter.
Crowdfunding mistake #1: short term thinking
One of the most important business principles I’ve ever learned is “don’t use short-term solutions for long-term problems.” You see, while it’s easy to get excited about launching your product and sharing it with the world for the first time, the crowdfunding campaign will be only a small part of your company’s journey. Chances are, it’s going to be one of the easiest and most enjoyable parts of running your business.
The real challenge begins the moment you actually have to fulfill the orders and continue to grow past the successful campaign. Launching in hopes of that one “big score” that will magically solve all your problems is just asking for trouble.
After analyzing hundreds of different crowdfunding campaigns, I’ve realized that focusing only on aggressive, short-term expansion at all costs can severely hurt your long-term growth. Think about it: do you have a growth plan for post-launch?
One example of a successful transition from a fantastic campaign to even better business growth was 3Doodler. You might remember the world’s first 3D printing pen that launched on Kickstarter back in 2013. They’ve raised over $2.3 million in a very short time for their innovative, mobile, pen-shaped 3D printer. Their product was fun, easy to use, and unique—crowds instantly fell in love with it. The 3Doodler inventors could have stopped there, collected the profits, and called it a day. Instead they have dominated that self-created niche and smoothly branched into another market: 3D printing pens for children. Today, the creators of 3Doodler have sold over 2.5 million products and still continue to grow, because they didn’t rest on their laurels and had a solid growth plan for the future.
My point here is, I’ve seen many companies raise over $1,000,000 on the crowdfunding platforms and… fail soon after because they neglected the most important aspects of running a business: long term thinking and actually delivering a fantastic product (or delivering it at all!). This brings me to the next point, which is…
Crowdfunding mistake #2: not focusing on business fundamentals
A successful crowdfunding campaign can be great for validating an innovative product and getting the market’s attention. But chasing numbers and forgetting about business fundamentals are some of the main reasons so many ambitious pioneers fail.
What do I mean by “fundamentals?” Well, for starters, if more people focused on providing backers with the most incredible high-quality product, developing genuine relationships with the audience, or being able to fulfill on time instead of fixating on the amount raised… the crowdfunding world would be a much better place.
That might sound obvious, but you’d be surprised how many entrepreneurs lose their focus once the orders start rolling in. It can feel intoxicating to crush goals within hours of launching your product, but remember: manufacturing and fulfillment take time. If you want to grow a real business and develop solid relationships with your audience, the last thing you want is for them to have a negative first experience. Don’t think they’ll come back if you aren’t able to fulfill orders on time or, even worse, ship sub-par products.
If you are aiming for a big product launch, plan accordingly, consider the manufacturing and fulfillment timelines, and focus on the business fundamentals. Make sure your future clients are more than satisfied.
Crowdfunding mistake #3: unreasonable goals
That big, imposing number of $1,000,000 is often a goal for innovators looking to launch their products. But is it necessary to aim that high? Actually, a little over 0.08% of all campaigns ever reach $1M. Remember the story of Pebble? They hold the record for the largest Kickstarter campaign ever, and… had to sell all their assets just 3 months after their latest multi-million dollar campaign. Here’s the big thing I don’t want you to miss: while there isn’t anything inherently bad about aiming for a large crowdfunding campaign, you need to get over the idea that it guarantees success. Your product can have a much smaller launch than your competition and still win in the long run if you have a solid marketing strategy. There’s no need to aim for the sun and stress about it.
Also, many entrepreneurs believe that having a large and very successful campaign is the key to attracting investors. While it may feel good to brag about a 7-figure product launch, the truth is… most investors are aware that a massive crowdfunding campaign doesn’t necessarily translate to post-crowdfunding success. If your business, product, and marketing are fundamentally strong, believe me—you will have no problem attracting high-level investors even after a modest campaign. If done correctly, crowdfunding will skyrocket your business results, but it’s not a magic trick for becoming a billionaire overnight.
Crowdfunding mistake #4: not adopting a testing mindset
Many people ask if there’s a way to make sure that a campaign is going to be successful before launching. My answer is absolutely. How? It’s simple—we test it.
One of the biggest mistakes that people make is investing huge amounts of time, effort, and money into their launch…without actually testing the product in the market beforehand. Developing your product positioning strategy from the “ivory tower” is a bad idea. Not testing the waters before the launch can significantly set you back and even cause the entire campaign to fail. As a matter of fact, 63.5% of all crowdfunding campaigns fail, and I believe the main reason is not enough testing in advance.
The difference between a well-crafted message that communicates the value of your product and resonates with your target audience and a piece of copy written in a vacuum can be staggering. I’ve seen situations where one ad had an ROI of 1300% and another, slightly different, lost money. It’s all about positioning, and the best way to dramatically reduce the risk of failure is to run various tests and analyze the data from advertisements to improve your marketing message.
There are no shortcuts here, but there are certain frameworks, systems, and strategies that you can apply to your crowdfunding campaign to achieve the results you dream about. If you’d like to learn more about how to launch your product successfully and make it go viral, check out our brand new book: Crowdfunded: The Proven Crowdfunding System For Launching Products, Raising Millions, And Scaling Brands Using Indiegogo and Kickstarter. Inside, you will find years of compressed crowdfunding knowledge and all the best-guarded product launch secrets.