In a previous blog post, we discussed the importance of selecting the right crowdfunding platform for your product. Today, we will discuss the rewards-based crowdfunding model to help you decide if it’s right for you.
Rewards-based crowdfunding is when a non-monetary incentive is offered to those who pledge money towards a campaign. Just like when you’re taking your product to the market for the very first-time, this is your opportunity to offer exclusive deals to your early supporters/customers.
I’ve compiled a list of five simple tips to help you decide how to structure your rewards.
1) The amount donated reflects on the worth of the reward
The reward you offer should be relatively equivalent to the actual donation made. For instance, if someone donates £1 it wouldn’t make much financial sense to offer them a piece of merchandise worth £50. Though you want people to know the extent of your gratitude it shouldn’t be to the point where it has a negative impact on your financial viability. You should aim to break-even on each reward at the very least.
The rewards should be tiered, therefore each reward or rewards bundle must correspond with the increase in donation. It wouldn’t be fair if the gifts offered to someone donating £150 matched the gifts offered to someone donating £10, otherwise people will feel more inclined towards donating the lesser amount to obtain the same rewards.
Offering pre-orders of your actual product gives people a direct insight into how their money will be spent, but also, they will be buying something that they truly want, helping validate your business. With that stated I feel it fundamental to mention that there should be a minimum of 5 rewards packages offered and a limit should be put on the number of supporters who can access the more expensive rewards. Giving off the impression of exclusivity generally makes merchandise more coveted. For example a reward package worth £2,000 could be limited to 5 supporters, whilst a reward package worth £8 could be unlimited.
The reward/gift you offer will give people a glimpse into what you’re trying to achieve. Therefore it is a direct marketing tool. You want to ensure that the gift you offer is of good quality to be certain that you’re not sending out an inaccurate image of both your company and your product.
Also Minimum Viable Product’s (MVP) don’t usually work as rewards as people want to be sure that their money has been put to good use and an MVP isn’t the best indication of that. A crowdfunding campaign should demonstrate how you plan on taking your MVP from a work in progress to its final stages.
4) Cheaper Alternatives
If you haven’t got someone on speed dial who can offer you a van full of free or discounted merchandise then you may have to seek out cheaper alternatives to demonstrate your gratitude. If you are in a position where you have a very limited budget there are various other routes you can take, for instance more sentimental gifts. Although a tangible gift has its benefits don’t take for granted the power of a thank you message. Its the simplest and most cost effective way of showing gratitude. A personalised touch wouldn’t be a bad idea either. Outrightly including someones name in a thank you message whether it be a video message or electronic one creates so much added value.
Ultimately you want to offer a reward that sums up your appreciation. Receiving a gift is always a nice thing so don’t overthink it, people are more likely going to be happy with the fact that they’ve contributed to the development of something they believe to be potentially great.
Featured Photo by Gavin Whitner