Crowdfunding is a fun space to be. You get to work with founders who go out there with their innovative ideas to improve the way we do things, be it cooking, filming, camping, etc. My experience lies in consumer electronics space, smart kitchen appliances, to be precise, as today the crowdfunding space is heavily occupied by the game market, and im no expert there.
If you never had experience launching a product through crowdfunding, it may feel overwhelming deciding where to begin, and get the most success out of it. At the end of the day, its the product you’be been working on for the past X number of years, so you obviously want it to be successful and you want as many people as possible to experience your innovation.
Today there are quite a few crowdfunding agencies out there for you to choose from. There is Jellop, Backercamp, Rainfactory, Funded.Today and so many more. You can often find the name of the agency responsible for the campaign at the end of the campaign listing page, which may be useful if you see the product launched in the same space or industry as your own product.
I launched 4 crowdfunding campaigns working with 2 different agencies and collected tons of feedback from other founders working with other agencies than myself.
Regardless which agency you choose to work with, there is one common pain point across the board – all these crowdfunding agencies need to be well managed by your internal team.
1. Cookiecutter or a standard template
Chances are you selected the agency you want to work with because you liked their successful track record and it gives you reassurance that your campaign will be as successful or even more so. Whereas there are definitely advantages to that, you still need to closely monitor, guide and look for ways to improve the performance based on your own goals and objectives you want to achieve.
2. Success metrics benchmarks
There are THREE main steps to the crowdfunding campaign and you will see your agency pushing to maximize the performance at each given step. What do you want to watch out for?
Step 1: Lead generation
This is the most important stage in your crowdfunding journey.
You want to start collecting leads as soon as possible. Don’t be afraid to put up a lead generation page even if you are not yet ready to drive paid traffic to it. It would still serve its purpose throughout social media channel, and other communities you would want to engage in to learn about your target customers and discreetly promote your upcoming product.
The real game begins once you start with the paid campaigns, as you would want to maximize your ROAS.
From my experience most of the leads will be coming from Meta Ads, Facebook and Instagram, not so much YouTube. Bottom funnel leads would be further targeted with the Google ads. Your Google ads will be showing higher conversion and lower Cost per Acquisition, but remember that they are bottom funnel leads, meaning they’ve seen your Meta ads, been to your website and probably even subscribed with your Lead Magnet.
So you would want to keep a mix of advertising channels and test them all out.
Keep in mind below benchmarks for your ad metrics. Note these are highly dependent on the product category and the market. Below benchmarks are for the US market in the consumer electronics space:
CTR – between 2-4% is ok, everything above 4% is good, the higher the better
CPC – target to get below $1 USD, the lower the better
CPL – between $2 and $5 USD, the lower the better
CPD – below deposit value, to ensure positive MER
Step 2: Preorders campaign launch day
Remember one thing, most of your conversions are going to come on Day 1.
So you would want to make some projections based on the conversion metrics for your leads. Reach out if you want me to share my lead gen guesstimator.
What should be your conversion benchmarks?
Depending on the structure of your crowdfunding campaign, you can expect the following numbers:
- Lead to Deposit conversion: 5-10%
- Deposit to Preorder conversion: 5 – 20%
- Lead to Preorder conversion: 0.01% – 2%
Benchmark numbers would also heavily depend on the product category, as well as the product price point. Rule of thumb here is the lower the price the higher the conversion.
Knowing this you want to think what is the best way to optimize your Meta Ads for? Would it be campaigns optimized for Traffic and Engagement or Conversion would be a better option? The answer is not that simple.
Typically Traffic and Engagement campaigns come at a lower cost and allow you to generate higher website traffic and a higher number of leads. The question is whether those leads are qualified and will convert into the preorders. The higher the product price the lower your conversion rate, hence you gotta be mindful making these decisions.
That’s one reason why I like this middle step of asking for a deposit, even as low as 5 dollars. The fact that your prospect took out a credit card and secured a spot, gives you an insight that you have a qualified traffic. The deposit amount needs to be determined by the price of your product.
However, if you barely get any lead to deposit conversion, you may revisit your ads strategy and optimize your ads for conversion, as low lead to deposit conversion rate is a red flag for a low quality of traffic and leads you are generating. In other words, Facebook oprimizes your ads for the wrong audience and hence you need to act.
Hope this was helpful. In my next post I will focus more on the ongoing campaign management and post campaign management.
Are you planning a crowdfunding campaign? Reach out for my first-hand feedback and support.