By Joel Hughes, UK & Europe Head of Technology and Hardware at Indiegogo.
Crowdfunding has come a long way over the last few years. What started as a way for startups and entrepreneurs to gain access to capital has transformed into a successful industry that has raised over $34 billion. As crowdfunding has evolved, businesses of all sizes are using it for a wide variety of reasons.
Crowdfunding began to help early stage businesses fund their businesses without involving banks or VC’s, but recentlyit has become popular with larger and more established businesses. Crowdfunding provides a unique opportunity for larger corporations to connect with new and existing customers and gain valuable insight into their latest products and services. They are able to gain product feedback, market validation and engage with their customer base. Crowdfunding platforms such as Indiegogo have launched programs to support these larger businesses as they embark into the unknown world of crowdfunding. From brainstorming campaign ideas, to analytics, to strategy, there is help along the way.
Hasbro, the global play and entertainment company, launched two successful crowdfunding campaigns on Indiegogo. The Next Great Game campaign looked to the community to find the next innovative party game idea, and as a result, “Irresponsibility, the Mr. Toast Card Game” was created and launched in 2015. After receiving so much interest during their first campaign Hasbro launched another challenge, calling on game designers in the US, UK and Canada. By getting potential customers involved in the creative process, Hasbro was able to build relationships with their customers, gauge customer interest, and gather feedback throughout the creative process.
Here are a few reasons why your business should consider crowdfunding, regardless of whether it’s a startup or already well-established:
Product validation is crucial when creating something new in order to assess demand and potential success. Crowdfunding gives you access to real-time customer feedback – whether you’ve created a product or are still in the planning stage.
The funds you raise can help you measure how excited customers are for your product or service. If a campaign has reached its funding goal, there is clearly a desire for it in the market. On the other hand, a campaign with little or no funding might need to take their product back to the drawing board to fine-tune it.
Research and Development
Focus groups and surveys were once the cornerstone of research and development, but are both expensive and time consuming. However, most businesses had no choice when it came to getting insight from consumer to guide their decisions.
Another major benefit of crowdfunding is a faster and more streamlined approach to collecting feedback from customers. Successful campaigns are generally between 30 and 60 days long, which allows businesses to collect insights from real customers. For example, your customers may decide they want your product in green rather than red, or they may ask for a feature that your team would not have thought of. Unlike ever before, you can incorporate the improvements that your customers want before manufacturing your product.
Build your business profile
Regardless of the stage and size of your business, continued success is impossible without finding new ways to reach customers. A successful crowdfunding campaign can be an effective way to generate publicity and build your brand, and your success will show potential investors and competitors the strength of your market share and the positive relationship you have with your customers. The campaign can also be a great hook to get media to spread the word about your new product or service and increase your potential customer base.
By getting real customers involved in the process your business builds a community, promotes customer loyalty, and makes your consumers more likely to support you and provide feedback on future product and ideas.
Crowdfunding is still a great method to fund young businesses, but it’s becoming an integral way for companies of all sizes to build strong relationships with their fans and create products that consumers are excited to purchase.