Yes, there is no doubt crowdfunding offers a lucrative, feasible, and streamlining alternative for individuals to raise or inject funds for their project compared to the majority of lending options. Nonetheless, the harsh truth is that only one out of five ventures profit from a successful crowdfunding campaign.
Before the crowdfunding market hit its enormous success, it was possible to launch a campaign, and still, with minimum promotional efforts, it would go viral. However, most campaigns have failed to hit their targets due to high competition ( everyone wanting to ride on this bandwagon ). Thus, even with a good and innovative idea/product, a prominent platform, zest, and a video, individuals find it challenging to launch their products through crowdfunding.
So, what’s the reason behind the failure of crowdfunding campaigns? In this detailed masterpiece, we have highlighted the top mistakes campaigners make on their crowdfunding journey. Even better, we will give you insights on how to avoid these oversights and have a successful crowdfunding campaign.
Top Reasons Why Crowdfunding Campaigns Fail
First and foremost, with the right strategy and preparation, your crowdfunding campaign can reach incredible highs. Still, learn how to avoid the following pitfalls:
Failure to Build a Community Before Launch
The first blunder campaigners make is launching a campaign before generating buzz around their idea/product. Your launch shouldn’t be the first time people hear about your product. If few people, or worse, no one is familiar with your products before launching it on most platforms, it’s unlikely you will feature on the first page of any crowdfunding website. As a result, backers will hardly discover your innovative project.
Bear in mind, before making it on the first page of most platforms such as Indiegogo or Kickstarter; you ought to have generated some traction and significant traffic. That is constant engagements from your community and current backers.
Instigate a pre-launch buzz by having a solid online process, an amped-up following who are excited about your launch. Also, you might consider launching your product first to a select group of individuals in your email list, gathering appropriate feedback, and some funding before the official launch.
Not Setting a Realistic Funding Goal
Setting an illogical target is a significant reason why most campaigns go down the drain. As per most platforms, such as Kickstarter, employ the all-or-nothing model. After the end of your campaign, if you haven’t hit your target, you will receive nothing, and the raised amount will find its way back to the backers’ pockets.
On the other hand, setting a low target might as well be useless and a waste of resources. You will lack enough funds to hit your goal, and potential investors will take your campaign as a joke.
Also, it’s best to have already gathered some funding before launching your campaign on any website. Most visitors want to back up winners, so if your campaign falters at the start, it’s unlikely you will hit your funding goal.
Unrealistic or exaggerated goals, hoping you will allure more investors, is a turn-off. Therefore, set logical numbers with a budget sheet that accounts for each dollar.
Not Being Strategic About Rewards
Regardless of the type of crowdfunding, backers want something valuable in return for contributing to your project. So even if it’s donation-based crowdfunding, it would be best to send a grateful message or a shout-out to your backers.
Campaigners shouldn’t resonate with the fact that supporters only push your agenda forward out of their goodwill. Partly it may be accurate, but prospective investors will feel good if they get something back in return.
Creating a fantastic reward program that doesn’t overwhelm your project’s operation yet incentivizes backers to sponsor your cause is vital.
Additionally, failure to fulfill rewards is a key challenge and drawback overshadowing the success of crowdfunding.
Adverse Timing or Rushed Executions
Timing is a critical factor when it comes to crowdfunding campaigns. For instance, launching at the same time as too many other projects, or worse, several other projects, won’t generate enough traffic.
Also, if your project isn’t ready, for example, you are missing a crucial element, you can always postpone the launch. The first few days or precisely the first day of your campaign is the most important on your journey. Also, consider the timezone of your defined audience. You don’t want to launch when most of them are asleep.
Lack of Marketing
As already outlined, gone are the days campaigns would go viral with little or no marketing strategy. Besides the marketing strategy you employed before the onset of your campaign, capitalize on social media networks such as Facebook and Instagram to update and inform your followers on your campaign.
If possible, use a PR team and content creators to reach out beyond your community and help other people discover your project.
Making Things Too Complex
It’s reasonable enough that you want to provide enough information about your product. Still, please don’t overdo it. As per most crowdfunding sites, a rule of thumb is that the most straightforward yet quirky and creative projects tend to have immense success.
Yes, give the appropriate information but not too much to the point it overwhelms your audience to the state of boredom. Instead, highlight the essential features that solve your customers’ problems.
Other Reasons Why Crowdfunding Campaigns Fail
We have highlighted the most prevalent and overlooked causes why crowdfunding campaigns bite the dust. Still, don’t fall for the following mistakes:
- Failing to interact with your supporters. Don’t keep your backers in the dark. Instead, update them with the progress of your company and answer any queries as promptly as possible.
- Lack of trust and credibility. Again, fraudulent campaigns are on the rise on most platforms. Consequently, backers are vigilant than ever and might have tightened their pockets before supporting a project. It would be best to build credibility and legitimacy to win the trust of your well-wishers.
- Underwhelming visuals and components. Also, an uninspiring video, or worse, no video at all. Create an elegant page that’s an eyecatcher to visitors.
- Lack of frequency and consistency.