How to Create Winning Rewards for Your Crowdfunding Campaign
There's a lot of psychology that goes into crowdfunding.
There's psychology at play when creating a financial goal (that's why all-or-nothing campaigns perform better than flexible funding schemes). Create an awesome crowdfunding video and you can captivate your audience. Most of the top crowdfunding platforms understand that and have created their products to fully take advantage of this psychology.
One of the best examples of how successful crowdfunding entrepreneurs can leverage the psychological factors of their potential backers is with their rewards programs. Look at any list of the best crowdfunding rewards and you can get a feel how projects can lure in excited backers.
So, how do you create a reward system that contributes to running a successful crowdfunding campaign?
Research Your Audience
Do the market research and try to identify who your target audience is. If they're 18-24-year-old male gamers, that piece of information is going to contribute to the formation of your reward program. Identify and review competitive or complementary campaigns that have marketed to your audience. Do they hang out on Facebook? Can they be reached online as well as offline? How expensive is it to reach them?
To your backers, rewards have the feeling that they're kind of "free".
But to you, as a campaign organizer, these rewards definitely have costs associated with them. A signed postcard has shipping costs associated with it -- anything bigger has to be assembled and shipped. As you begin to define your rewards program, make sure you're' simultaneously budgeting for the cost of your reward program.
This is a critical stage and many campaigns go bust (even AFTER raising significant money via crowdfunding) because they fail to take into account the work and cost of supplying a reward program.
Start with the Basics
With an idea of what could motivate your audience, start creating the highest priced rewards possible and move down toward the cheaper rewards. This attention to the high-cost, high-value rewards assures that you maximize your campaign around the more expensive rewards (not the lowest cost ones). You're going to want to create a few really expensive rewards here and offer just a handful of them. Try to devise rewards that aren't necessarily more expensive to deliver but instead, promise a different experience for a special backer or two (this can come in the form of access to the team or special acknowledgment or special early-bird pricing).
Next, work your way down to lesser expensive rewards. If you're essentially pre-selling your product, create multiple tiers of the product that differ only in their timing. Your earliest backers will get the best deal. That incentivizes backers to get in early -- it's like the clock is ticking with rising prices.
Research shows that backers can and will come in for higher priced rewards over time if your campaign gains steam.
So, keep that in mind as you structure your reward program.
At the lowest end, envision a set of rewards for people who aren't going to pony up to pre-purchase your product but who want to feel a part of your crowdfunding campaign, nonetheless. These can be as simple as an acknowledgment on your website. At the low end, try to avoid anything that needs to be shipped. Don't underestimate these rewards -- while they don't bring in a lot of money per backer, getting a lot of $1 backers helps to get the attention of Kickstarter staff or reporters following the site.
And Stretch It
One great way to expand your crowdfunding campaign off of some early momentum is by creating stretch goals. These are rewards that would only kick in if you (and your backers) hit your financial goals. This could be a different version of your product (or a different color, for example) that backers could choose from -- only if you hit your goals.
Getting good stretch goals can take your campaign into a higher gear late in your campaign's timeline.
Don't forget: Rewards Reward Your Backers
Sometimes, crowdfunding entrepreneurs lose sight why rewards exist. They are a way for you to reward your backers. At the end of the day, your backers are everything in your campaign. Without them, you don't have anything. Rewards play into the human psychology that we like to be reciprocated when we do something for someone else. Rewards are the way you psychologically thank the backers of your campaign.