Kickstarter recently reached $1 billion raised for projects and startup companies. This should be a wake-up call for brands and agencies. Crowdfunding is not just for buzz and brand building – it’s a key channel for product design, customer insight, sourcing innovation, and talent acquisition.
Crowdfunding is a true business case for the social Web that can directly connect revenue generation to social media activity with measurable ROI.
Leading agencies and the brands they represent should be taking action now to consider how to leverage this global shift in communications and innovation to grow engagement, reach, and sales.
This is not just for tech companies – there are brands in agriculture, financial services, consumer packaged goods, and other sectors that are already launching initiatives to take advantage of these new opportunities.
The difference between "Would you buy this?" and "Did they buy this?" is the new world of product design and customer insights. Entrepreneurs seeking to discover product market fit are posting their designs and products on crowdfunding sites as product pre-sale campaigns. Essentially, the reward for contributing is that you receive the product being sold.
The most successful of these campaigns was the Pebble watch that connects to your smartphone via Bluetooth. The campaign raised more than $10 million and launched a company.
With crowdfunding, major brands can take a new design prototype and create a campaign to determine true customer interest. Nothing helps a brand understand what the customer will buy more than actually selling the product to a customer. Crowdfunding can do that.
Set the fundraising goal for the amount of money needed to justify producing the item for the test, create the campaign, and launch it via your social media network.
Most crowdfunding campaigns last between three and six weeks so you can get rapid feedback and either move forward with further validation, or go back to the drawing board if the campaign fails.
A crowdfunding effort allows you to fail quickly and cheaply, which is a great thing. It may allow you to shorten your product development cycles to get better, or targeted products to market faster, and can also help kill projects that underperform before you spend money and time on a full launch.
Also, where are you recruiting talent from to bring new innovation and action to your organization? Looking for people with great ideas is the wrong talent search goal.
Finding people who are passionate about what they do and obsessively use their creativity and drive to turn that idea into a real product or service is the right goal in sourcing talent and product innovation.
While we hear of "acqui-hires" in Silicon Valley, global brands can create similar strategies to utilize crowdfunding websites as talent and innovation sourcing platforms. Brands can find companies and projects that interest them and contribute and invest in them, and see how the entrepreneur and their team does in execution.
It provides a great try-before-you-buy model for hiring and acquisition that has never existed before. Creating the right strategy here can radically accelerate the global reach of your business development function as your company finds teams and products that can be partners or acquisitions to meet your needs.
Globalize and localize at the same time. Crowdfunding provides fast and inexpensive ways to connect with customers in different markets and countries and determine product fit and messaging effectiveness in real time.
By combining a social media strategy with crowdfunding, you can tune both the product features and the messaging in direct ways. It also opens a channel of communication to solicit feedback on local innovation to increase accuracy in how you speak to customers in these markets.
What started as a great way to convert an entrepreneur in a garage into a thriving small business has now matured into actionable strategic opportunities for brands and their agencies to connect, target, innovate, and acquire in new ways.
So, who is in charge of creating a crowdfunding strategy at your organization and when are they launching their plans? l
Jason Best is cofounder and principal of Crowdfund Capital Advisors.