Developing a Campaign that Raises Funds on WO Funding Part 2
Offering Rewards (Perks)
Crowdfunding’s perks are what attract people to give money to projects that are posted. This is what separates crowdfunding from other more traditional types of fund raising. In offering perks you are providing a “tangible benefit” to a person. This is important because it means that the person cannot get a tax deduction for providing funds for your project. So they want to receive a tangible benefit (perk) that is worthwhile. This is true of any contribution upwards of $2, but you may also want to provide perks for those offering $1 so that they do not feel slighted. There are two types of contributors to crowdfunding projects:
Type 1 – people that want to support your project and don’t care whether they get anything back for doing so. There are a lot of this type of supporter for crowdfunding projects. It is possible to establish this fact since a large number of contributors never go on to claim the perks that they were offered for their contribution.
Type 2 – people that want to support your project but want something for doing so. This has been found to be a large motivator for people in this group. Perks for this group are even better when they are considered to be exclusive, i.e. something that most other, or no other people will have, or something that others won’t have in advance of a launch date. This might include one-off opportunities and once in a life time events. To achieve everything that you might hope to from crowdfunding you need to consider both types of people when preparing your project campaign and the types of perks that people will receive for contributing. Perks can really be a major factor in swinging some people towards contributing, or encouraging them to contribute more than they might otherwise have done.
In coming up with ideas for suitable perks, you might review why contributors are likely to have an interest in your project in the first place. Copying the perk system of another project is not going to be effective, because your project and campaign are unique. This means that your perk structure needs to be also. The perk system is what builds a bond between you and your contributors, so always keep this in mind when coming up with suitable perks.
For example, let’s assume that a chef wants to raise funds to open a new restaurant. He could offer people who contribute $500, a personal or small group cooking class. He would have to consider when developing this perk whether it would be possible to deliver this particular experience to all of those that would contribute $500. This means figuring out how many people would be likely to contribute $500. Being realistic about the ability to deliver perks and the cost of doing so is essential in getting this right.
In example, if the chef decided to offer a class to everyone that contributed just $50, the perk might be so appealing, and so very easy to reach financially that far more people would contribute $50 than he could ever have imagined, just getting the cookery class in a small group. This would mean that the chef would spend more time giving cookery classes than actually working on his new restaurant project, which would be a mistake and would defeat the object of crowdfunding. By offering this perk for a $500 or a $1,000 contribution even, the chef makes it harder to achieve and more exclusive too, making it very appealing for contributors that can achieve this level of contribution, and ensuring that the chef doesn’t spend months giving small group cookery classes.
Be imaginative with your perks. Creative, well thought out perks will be attractive and appealing and will light up the mind of the prospective contributor. They will also develop a bond between you and your supporters.
Example One: Joe Greenblum
Joe hoped to raise $50,000 for the project he was working on. Because it was quite a large sum, Joe decided to allow a longer timeframe for the project. He settled on a 60 day time frame. During that time period, 18,771 contributed to his campaign and he raised $90,832.
Joe had a considerable target and so needed to have rewards that would be attractive and appealing to different types of people. This started from a signed autograph for a small donation of $1, to a copy of a print for a larger donation such as $10. For those that gave higher donations, rewards became “rarer”. In this case, the rewards were more exclusive and deserved due to the higher contribution to the project. For example, Joe offered a personal caricature for those that donated $100 to $300. For donations between $500 to $1,000, contributors could get a book of art. Personal interviews with Joe himself (“Coffee with Joe”) were also possible for considerable contributions such as $5,000 or above.
Example Two: Daring Dates
Daring Dates wanted to raise $5,000 to develop a robust website. Without raising the funds it would not be possible to develop the website as other methods of raising cash had been exhausted. The money was needed quickly to develop the idea before anyone else decided to do it. The timeframe was accordingly set for 15 days. Over that period, the $5,000 required was raised from 117 people.
Daring Dates only had a small target and did not have much to give away. Those that donated $1 would get a thank you message from the company founders. Those that contributed $10 or above could have a free month’s membership when the website was developed. Those that offered more than $500 however, could win their own Daring Date with one of the founders of the website. Once again, the higher rewards were much more personalized in nature.
If figured out carefully, perks can drive people to contribute more than they might originally have thought they were going to. However, don’t make the number of options for perks so complicated that it takes a team of people to deal with perk administration after the campaign. Keep it easy for contributors and yourself by keeping the number of available options small. This makes it less complicated for them, and they’ll be more likely to contribute in that case. You can bear in mind the findings of recent research which show that if campaigns have a perk worth $25 they will raise more. Also, perks set at around $100 tend to bring in the most funds. Finally, perks worth $700 to $900 are the most common in attracting larger contributions.