The ABCs of Crowdfunding: R is for Rewards

In perk- or rewards-based crowdfunding, contributor rewards are your primary way of eliciting support. For most small businesses and cultural enterprises, they represent a pre-sale of products of services for which the funds are needed to develop.

There are a few simple rules of thumb:

From the current campaign for John Early's Tales of a Modern Nomad (click on photo to go to campaign!)

From the current campaign for John Early’s Tales of a Modern Nomad (click on photo to go to campaign!)

    • You should have a minimum of 8-10 reward levels with the minimum at $5.
    • You never know what’s going to float people’s boats, so make sure you have a good variety of perks, even if your main thing is going to be a particular product/service.
    • Be creative and think outside the box. Not all rewards have to be physical. Sometimes people just need something clever to throw a few bucks in for. (See example right)

 

More than money

A creatively-drawn set of rewards can do much more than just raise funds—they can establish or build brand; create longer-term buy in/membership of customers/clients, or even help you conduct market /product development research.

Here are some rules of engagement you can use to develop your perks offers:

1. Offer branded freebies as part of your perks packages. Maybe you have a branded screensaver that’s super-cool that you can offer. You can do things like hats and t-shirts, but only if they tie in directly to your product/service line, as they will cost money to make. Make sure the price of your perk exceeds this cost.

2. Offer naming rights. If you have anything that lends itself to naming, or another kind of VIP recognition, consider offering it as a higher-end reward on its own, or as at the high end of an accelerated tree of reward packages. Maybe your highest end package provides some kind of longer-term benefit for the contributor, such as a role on a customer-based product development committee.
3. Offer a discount membership. If your product/service is something that might be used multiple times, or you have a suite of products/services, offering a year-long membership for $25 that will give the contributor an ongoing 20% discounts on these is a great way to build a customer base. (See example left)

The Physiclo campaign promotes a compatible campaign, bringing more value to their backers and ensuring that teddystratford.com promotes them as well.

The Physiclo campaign promotes a compatible campaign, bringing more value to their backers and ensuring that teddystratford.com promotes them as well.

4. Consider affiliating. Maybe there’s a win-win by offering something free from other campaigns that offer complementary products/services and have similar values. They do the same and you both increase your exposure to new networks.

5. Conduct market research. Thin Ice gave people the opportunity to weigh in on which style of hat and pants they preferred to be produced by buying a vote for $5. (See below) It gave people the opportunity to be involved in the product development process for a minimum contribution. By engaging them in this way, they could launch the winning product as a stretch goal later in the campaign and go back to those contributors to say, “Hey, we’re making your pants! Click here to contribute to get your pair before they go on the market!” The beauty of this approach: Instead of product development research costing them money, they were actually paid to do it.

 

A creative way Thin Ice approached market and product development research using voting perks.

A creative way Thin Ice approached market and product development research using voting perks.

 

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