How to Set Up a Successful Crowdfunding Campaign

By Alesia Hsiao

Crowdfunding is massive. In 2014 it grew by 167 percent. It’s enabled entrepreneurs to get the funding they otherwise wouldn’t have had a chance of obtaining.

Crowdfunding is a highly competitive industry, though. For every ‘‘miracle’’ where an idea attracts millions of dollars, there are hundreds of other ideas that don’t attract a cent.

Look at this statistic direct from Kickstarter. Only 39 percent of all projects launched are actually successful, and that doesn’t include the number of campaigns rejected by the platform.

If you don’t want this to happen to your crowdfunding campaign, read on for some great tips.

Attractiveness works

Presumably, you’re going to have someone who’s going to act as the ‘‘face’’ of your campaign; this face should be smiley and attractive. It sounds shallow, but countless studies have shown this increases your chances of running a successful campaign.

Dr. Hanna Zagefka, a social psychology reader at the University of London says that attractive people are generally seen as more popular, more successful, and more intelligent. Furthermore, the effect on potential donors is profound. According to Dr. Zagefka, attractive people put donors in a better mood and promote generous actions.

Not planning to create a face of your campaign? Think again because you’re missing out on that emotional connection. A quick look at any successful campaign will show you there’s always a human face representing the business.

Target a piece of social media well

Don’t believe the hype about social media reach. Yes, while it’s always good to reach millions, this isn’t necessary for a successful campaign. Indie band Bigtree Bonsai launched a campaign on crowdfunding platform IgnitionDeck. The band successfully raised almost double their target with the #letsmakearecord hashtag. Using this tag, which isn’t a trending tag, netted them $6,956.

Research your market and narrow down precisely where that audience is going to be. It doesn’t matter if you can only attract a few thousand people. All you need are a limited number of donors and things will start to roll.

Shoot a video

If you’re unwilling to make a video, forget about getting your campaign off to a good start. A video says what a piece of writing or a photograph can’t. It also offers a more enhanced view of the project someone is potentially donating to. On the darker side of things, a video makes a campaign more likely to be genuine. A scammer is unlikely to waste time on a labor-intensive task like a video; they just want a quick fix.

As we said, a video is labor intensive, and an amateur video can damage your campaign. This is where you have to spend money to make money. Look at similar funded campaigns and see what they used as a video. It’s important to meet your market’s expectations.

Respected entrepreneur Seth Godin tested the power of a video. The campaign he ran managed to meet a lofty funding goal within three hours, and he credits much of it to the video he created.

Community interaction

Nothing says best practices like a business that regularly interacts with people through its campaign page. You’re inevitably going to come up against good and bad news. If there’s a setback, keep your donors informed about it. You don’t want to get into a situation where things are happening and you’re spending days updating everyone.

Piwik is a web analytics tool successfully funded through a crowdfunding campaign. Matthieu Aubry, who ran the campaign, says any backer or potential backer should know what’s going on within hours of it happening. This applies during the build-up of your campaign launch, during the campaign, and even after it ends.

More articles from AllBusiness.com:

• 8 Tips for Communicating With Your Angel Investors
• 4 Tips for Getting a Meeting with a VC
• The Founder’s Guide to Startup Fundraising
• 10 Things Entrepreneurs Should Never Say to Potential Investors
• Tips for Practicing Your Investor Pitch Ahead of the Big Meeting 

Do you offer something life-changing?

So many projects fail because they’re no better than someone going out onto the street and asking for cash. Want to fund your next hiking trip? Forget about it. Looking for someone to buy your art materials? Keep walking. Need someone to fund your grandmother’s hip replacement? Probably not going to happen.

Crowdfunding is not a place where you can get free money. The most successful crowdfunding campaigns are innovations. People want to change the world with their dollars. They want to see the next big thing and say, “I had a hand in that.”

Here’s one example to show you how it works: The 3Doodler.

This product was a 3D printing pen released in 2013. Over time it became more popular and gradually got to a point where it achieved worldwide exposure. Yet the founders of the company Wobble Works weren’t high profile. One was an inventor at MIT and another was a toy manufacturer.

Yet they raised $2.3 million. Look at why. This was the first 3D printing pen in the world. It met its funding goals easily, and that’s because it changed the world. It altered people’s lives.

Is your business offering anything that could do that? In terms of conventional reward-based crowdfunding, this is crucial. Reflect on what your company has to offer first.

Utilize an existing fan base (if you have one)

Businesses that are already in operation will likely have a small number of loyal customers. Begin by leveraging these loyal customers before you concentrate on anything else. These people already have an attachment to you, and that makes it more likely they’ll donate to a new project.

Don’t take this support for granted, though. To start with, you should look at how you’re going to make these people identify with your goals. As we discussed before, the donor must get something in return. They must feel part of something much bigger than themselves. Highlight how your next project will benefit existing customers.

Expand to the audience that doesn’t know you

Once you’ve managed to deal with your existing supporter base, it’s time to look at who else you can possibly reach. If you’ve researched your market and studied what appeals to them, you’ll already know the direction you want to go.

Offering rewards to this new audience will do much to bring in new interest. You don’t always have to offer something physical and expensive. Things like special access to exclusive updates and credit for new software can do a lot to encourage people to donate.

Back To The Roots is one company that managed to work out a suitable rewards scheme while raising funds for its AquaFarm. It managed to raise $248,873, despite only having a goal of $100,000. It offered rewards that included a $1 reward for "behind-the-scenes access" to updates and a $500 reward for a donor's name to be permanently engraved on the bottom of every kit the company sells.

The rewards you offer should appeal to as many people as possible. Remember, donors want to feel good and they want to get something out of it. Altruism alone is not enough to run a successful crowdfunding campaign.

The technical aspects

Okay, so we’ve gone through what you need to offer and how to reach your audience. We’ve even discussed how you should conduct yourself during your campaign. Here now is the technical side of things and the way to set things up.

Timing: Use the principle of urgency. Everyone knows a sense of urgency makes someone more likely to act, and in terms of crowdfunding, this applies. To start with, you should never have a campaign that only lasts a few days. This creates too much urgency because you don’t really have the chance to update your subscribers on your progress. Alternatively, a few months is much too long. The sweet spot is around two to three weeks. Start your campaign at this level.

Setting goals: In terms of your funding goals, never ask for the maximum. It’s insanity. If you’re even a dollar short of a lofty goal, your donors get all their money back and you’re left with nothing. This ends up being a massive disappointment for all involved.

Instead, determine the minimum amount you need to get started, and set your campaign goal at that. Anything else you get will only make your job easier later on. And if you meet your minimum goal, you’re going to get your business off the ground.

The golden rule of campaigning

Finally, the golden rule of campaigning is to offer something worthwhile. What you’re asking people to fund should be something they can’t find anywhere else in the world. Above all the rewards and above all the personality you put forward, this is what will determine whether you can run a fantastic campaign or not.

RELATED: Can Crowdfunding Help Save American Small Businesses?