The Hidden Gold in Crowdfunding

What are the advantages of Crowdunding a Product or Service Concept?

When crowdfunding is discussed, there are normally two aspects that are covered in the majority of
the conversation that surround the benefits of running crowdfunding campaign.

The first, no surprise, is the ability to raise money for a product or service often
before it has been produced. This is the case with both High and Low Tech crowdfunding projects commonly
found on Kickstarter and Indiegogo. It’s an incredible benefit and no doubt revolutionary to the way innovation
is funded.

The second, often spoken to from the “insider” or seasoned crowdfunding professional are the marketing benefits that
go along with running a successful (or controversial) crowdfunding campaign. As we have all seen, aside from the crowdfunding
industry websites, press that covers Tech and more recently Main Stream publications are hungry for new stories to cover
about crowdfunding projects. It seems regardless of the news outlet, you would be hard-pressed to find one that has not covered
a crowdfunding campaign. These stories run from human interest campaigns (NBC Philidelphia, Help Steven Walk Again), hot new tech products (GadgetReview.com, thingCharger) and of course controversial campaigns (Huffington Post, “Anti-Rape Underwear).
In each case tens of thousands of dollars worth of publicity and ultimately campaign support came from articles like these. Huge
marketing wins for all the parties above and gotten for pennies on the dollar.

You knew that, I figured you did. So where is the hidden gold?

The hidden gold of crowdfunding is in the rarely spoken about area of Market Research. Have you ever looked
in to running a focus group to determine the viability of a new product or service offering. If you have, you quickly
learned that this is a very expensive way to determine how people will feel about your new offering. Although used
by almost every Fortune 500 company as their only means of testing a new concept, there is now a much less expensive,
more accurate way of judging viability.
Focus groups normally consist of 15-20 “random” people (are they random? they has time to participate in a study for pay),
who are asked to test a product or watch a film and give an opinion. The problem we have is they are giving an opinion that
doesn’t cost them anything. They are normally paid to be there and although they are paid whether they like the item (concept, product, service, etc.) or not, they still receive there compensation and this likely sways opinions.
This will blow you away (unless you run a Fortune 500 company with very deep pockets), the average cost for a focus group
study is approximately $6,000 – $8,000 per session with a recommended minimum of 2 sessions to get “accurate” data. At bare minimum you are looking at $16,000 to get some feedback on your new widget.

Crowdfunding is a very viable and much more accurate picture of how an item will do in the real world. Why? Because it occurs in the real world. Feedback is based on action or inaction taken by participants and the group of participants are unlimited.
What if rather than paying $16,000 plus to hold a focus group (actually 2) in one city, you spent $5,000 putting together an over the top campaign and another $5,000 promoting and advertising the campaign (Both numbers well above average). Most crowdfunding campaigns that have the needed effort put in are closer to the $5,000 range for a very effective campaign. With most “personal” crowdfunding events costing under $500 excluding platform charges but putting in the energy and resources needed to greatly improve chances of successfully hitting goal.
Rather then hiring a research firm, you would save a minimum of $6,000 and have the opportunity to SELL widgets, garner press for your company and receive real-world data. This is why we are now seeing more Fortune 500 players entering the crowdfunding space, a trend that will continue to gain momentum in the coming years.
Market Research is the Hidden Gold in Crowdfunding

Howard Orloff
Founder
Crowdfunding-Website-Reviews.com
Crowdfund911.com – Crowdfunding Promotions



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