Pre-sales, handcrafted merchandise, a wine-tasting course or appearing in the credits of a film. Among the different crowdfunding models reward-based crowdfunding is a great way to gather funds for start-up businesses, art projects or local initiatives. Campaigns that work with rewards typically offer supporters the opportunity to choose an amount of money to be invested in return for special perks. The more money supporters spend, the greater is their reward.
The beauty of crowdfunding lies in the special relationship between the project leaders and their backers. Different from a traditional transaction between buyer and seller, donating money towards a crowdfunding campaign is the start of a collaborative process between the entrepreneur and the crowd. When done right, rewards can be a wonderful way to establish this relationship. Not only are rewards a fun way to get the masses behind a project, they simultaneously allow entrepreneurs to thank backers for their support.
“Would I spend money on this?” is the first question that entrepreneurs should ask themselves when designing a rewarding system. Rewards need to be truly compelling to effectively get people excited to spend money. Though it may seem obvious, many entrepreneurs tend to forget that perks should reflect the value of the backer’s donation. Nobody wants to spend 25 euro’s on a sticker and a pen! Attractive perks, however, can add tremendous value to a project by sending out the message that the investment is worth money and effort.
The rewards of successful crowdfunding campaigns boast some kind of physical, creative or experiential value that emotionally ties the backers to the project. Pre-selling the finished product is an easy way to achieve this and is especially helpful when producing a gadget, film, book or CD. For instance, people who supported the Veronica Mars Movie Project for $30 received a digital version of the film, a t-shirt and a pdf-file of the script. Pre-sales are also a perfect way to entice people into spending a little more money: LithiumCard’s near irresistible offer to buy 3 chargers for $150 and get 1 free was taken up by more than 400 people.
Sometimes, rewards need to be kept within a tight budget. A great idea then is to reward backers with special privileges that entitle them to pitch ideas for the project. For instance by naming a character in a book or deciding on a colour for the final product. Another idea is to personally update backers on the development of the project with small tokens of attention. As an example, the project behind the Aquafarm self-cleaning fish tank provided behind the scenes updates for $1 pledges (as opposed to an educational seminar for $10.000). Alternatively, you can invite backers to the production floor, arrange a Skype-call with the project leaders, or simply send handwritten cards or polaroids.
As we know, the crowd is crucial to any successful crowdfunding campaign. Offering enticing perks and rewards and sharing the project’s story from a personal angle makes backers feel special and part of the bigger scheme. Carefully crafted and creative rewards, big or small, are therefore a great asset for entrepreneurs to grow a solid community of emotionally engaged backers.
