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4 Tips for Rewards-Based Crowdfunding Success

Mihir Gandhi

Rewards- and donation-based crowdfunding models often get confused as the same thing. They’re not. Donation crowdfunding relies on donors who do not receive anything in return for their financial contribution. Rewards-based crowdfunding involves giving a, well, reward in recognition of the pledge.  It’s understandable that there is confusion because many donation based crowdfunding campaigns now offer rewards.  In fact, if you think about it, donation campaigns have always crowdfunded and usually have offered rewards.  Remember the telethon fundraising campaigns that offer incentives for donations?  They’ve been around ages longer than Kickstarter or Indiegogo.

Choose the Right Rewards

Choosing the right rewards can make or break your crowdfunding campaign. You want to offer rewards that are interesting enough to draw funders in, but they have to be realistic for you to create, coordinate, offer and deliver.

The types of rewards you can offer in exchange for funding are as varied as your imagination will allow. Rewards can include credits, products, discounted services, special VIP treatment, or anything else that’s relevant and representative of the purpose for which funds are being raised.  Sometimes the silliest rewards, such as having a character in a video game named after you, are the most enticing.  You can set a tiered approach to rewards, where the size of the donation determines the specific reward.

Know the Cost

Understanding all the costs of the rewards you choose – out-of-pocket financial as well as time commitments from your team – is a critical step in ensuring you come out of the crowdfunding campaign ahead of the game.  Don’t get carried away with rewards and remember to factor in the cost of those rewards.

Write a Plan

The more detailed you can get in writing the plan for your rewards-based crowdfunding campaign, the more likely you’ll be to spot – and correct – possible pitfalls, where you’ll need extra help, and exactly how you are going to deliver on your commitment to deliver the rewards. Research tells us that many of the rewards committed to during the crowdfunding phase are delivered late, and sometimes not at all. Don’t risk the damage to your credibility that being unable to deliver on time will generate. Be brutally honest in your plan and be sure you will be able to hit your commitments on time.

Think Hard About Hiring Professional Marketers

The key to any successful campaign is getting the word out. It can be all consuming, filling up all of the blocks of time you’d planned to spend actually working on your business.  There will be a budget associated with hiring a professional marketer for your campaign, but it will be well worth the significantly increased chances of reaching your funding goals.  Don’t forget the video.  In today’s crowdfunding world, the video is king of marketing.

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