3 best practices for planning your crowdfunding rewards

3 best practices for planning your crowdfunding rewards

This is part 2 of a 4 part series on rewards for crowdfunding campaigns: crowdfunding rewards

3 Rewards Best Practices

  1. Tangible rewards > Intangible Rewards
    Tangible rewards triumph intangible rewards, anytime.Let’s say you are creating the next big social networking site. It’s the next Facebook for pet owners, and you’re crowdfunding it. And I told you that if you backed my project for €20, I would give you beta access to the site once its launched. Would that be a convincing reward to part with your money?Now let’s take the same scenario, and instead I told you that if you backed my project for €20, I will give you an early bird T-Shirt with our logo, and your name imprinted on it. Now, doesn’t that sounds like a more convincing reward?Why were you more convinced with the T-Shirt reward? The difference was that with the T-Shirt, you had something physical to touch, while with the beta access, you cannot touch it.

    And that is why hardware and art craft crowdfunding projects have traditionally tended to succeed better than software, or publishing projects. Not all crowdfunding projects were created equal, and certain projects such as software ones tend to be more on the intangible side.

    That said, there are many creative ways to make intangible rewards appear more ‘tangible’. Film and video crowdfunding projects are a good example of intangible projects that have done surprisingly well. A common perk tactic that is used for film projects, is to get backers to participate directly in the film itself.

    Now, how awesome would it be to tell your friends to watch that scene in the movie, and tell them that you narrated that waiter’s voice?

  2. The €1 Donation Perk
    This is a perk that is often overlooked. Do not underestimate the power of the €1 donation perk!The greatest advice I ever heard about setting perks, is that you’ll have to give people a way to easily share your campaign. That’s because the majority of visitors to your site might not necessarily back your flagship rewards, like a €150 smartwatch. But the good news is that they are still interested in your crowdfunding project, and are willing to show their support. It’s just that they have a much lower risk appetite, or are financially strapped at the moment.The €1 perk is very low-risk way for these group of people who by the way, happen to be the silent majority. And the patterns largely the same; whether you’re a backer who has a higher risk tolerance, or a low-risk one, the likelihood is that you’ll tend to share the campaign with your networks after you’ve backed it.
  3. The early bird perk
    The early bird perk is a set of reward tiers that is rolled out at the beginning of your campaign, with the price of your product increasing over time. They usually start at a discounted price, and with a limited quantity. For example, offer 10 limited units of an item at €19, and then when they sell out, offer the next set of perks at €29 for the same item. Take note that for early bird perks to work their magic, the discount has to be significant enough. A good discount percentage would be at least 20% of the shelf price.We’ve found that early bird perks worked very well to quickly drive initial adoption, and brought three benefits for previous crowdfunding campaigns.It attracts and makes early adopters feel special. Your first backers are likely to be early adopters. These are people who like to be at the cutting edge of things, and they love to have the latest stuff: the latest wearable tech, the latest indie movie film etc. And it gives them even more bragging rights to their networks, when they were able to get these limited quantity perks at a discounted price.

    It’s a great way to validate pricing early on. From the response of the early bird perks, you will be able to roughly tell if people perceive your product as being priced too low, too high or just about right. With this knowledge, you can then quickly make price changes in your subsequent perks.

    *Note: FundedByMe will not allow you to adjust your perks as long as somebody has already claimed it. You’ll have to create a new perk if you wish to adjust the price.It’s a great way to forecast what perks work/don’t work. You might discover that people might generally favour a certain perk, while other perks do not work as well. You can then adjust the type of perks in subsequent perks.