December 27, 2012
Crowdfunding, essentially asking people to make donations to help you start, build, or grow your business, seems to be all anyone’s talking about these days. With success stories of entrepreneurs hitting gold on crowd funding sites like Kickstarter and Indiegogo among others, it’s tempting to think that all you have to do it throw together a video and wait for the cash to start rolling in. Turns out, it’s not quite so simple and only about 40% of food-related Kickstarter businesses ever actually hit their goal. So why do some businesses knock it out of the ballpark and others not even making it off the starting line? We talked to Aaron Barthel and Karl Mueller of Intrigue Chocolates to find out the secret behind their Kickstarter success.
The Back Story
Intrigue Chocolates had recently undergone a massive build-out of their own commercial kitchen space. After having worked in a shared kitchen incubator for the first several years while the business was getting up and running, the time had come to get their own workspace, showroom, and retail store. As the build out was being completed, Aaron and Karl decided that they also wanted to redesign the business’ brand to be more inline with the vision of the company as they now saw it. They hired a design firm who produced stunning work that was right on target with what Karl and Aaron had been hoping for. But now, with the build out and design costs eating a hole in their pocket (and their credit cards!) there was no money left over to get the new packaging designed.
“We figured if we could raise $10,000 from Kickstarter,” Karl told me one cold, rainy December afternoon in the Intrigue Chocolates workspace, “and with the help of our credit cards, we could finance the new packaging.”
With $10,000 as the goal, Karl literally worked night and day for one week straight to get their Kickstarter project launched. Despite the short time frame to get everything completed, by the time it was all said and done, their Kickstarter project raised nearly $20,000 – almost doubling the initial goal they’d set out for themselves. How’d they do it? Karl, who’s background and expertise is in internet marketing, shared these tips for kickstarter success:
1. Your Rewards
The rewards have to be clever – If they read nothing else, people will definitely read the rewards on your project so the rewards have to be compelling and written in a voice and tone that fits with your brand image.
Before you get too excited about those rewards be sure to calculate the cost associated with the rewards. Remember that for each reward you offer you’re most likely going to be giving the donor something back in return. Calculate out how much your rewards will cost you in actual dollars so that you can determine whether or not you’re actually making any money to put towards the project. For Aaron and Karl, they estimated that they would roughly net about $.50 for ever $1 pledged after Kickstarter and Amazon took their cut (as of right now, that’s 5% to Kickstarter and another 3.5% to Amazon who processes the credit card transactions) and they subtracted out their cost of goods sold for each reward.
Make that $25 pledge level enticing. In Intrigue Chocolates’ case approximately 80% of the pledges from people who didn’t personally know Aaron or Karl were in the $25 amount. Karl believes you need to put together a very generous offer (that won’t break the bank) for this level and don’t muddy the waters with too many other lower-priced pledge levels to confuse people. Make it easy and enticing for them to make a pledge.
Don’t forget the high rollers. While the $25 level might be the most popular choice, Karl said that their average pledge amount was higher because there are people who make larger pledge amounts. You want to make sure you have rewards in place for someone who wants to be, in Karl’s words, ‘abundantly generous.’
2. The Process & Presentation
Video sells the whole project. You have about 90 seconds to make your case in the video portion of the Kickstarter project. You don’t necessarily need a professional production company to shoot and edit a good video (Karl and Aaron shot their video using an iPhone 4s phone and edited it using Camtasia) but if you can afford to hire one it may be worth your while. Karl says that if he had to do it over again he would have used a local production company to film their video as it not only took a tremendous amount of time to film and edit, but that getting the sound and lighting right is critical to the appearance of the video.
Build Awareness – To be successful on Kickstarter your project needs to be seen by a lot of eyeballs because part of how you stay on the front pages of Kickstarter or become a staff pick is by how many page views – not necessarily actual dollar donations – your project gets. This means that you have to be more strategic than simply sending out a note to all your friends and posting something about your Kickstarter project on your Facebook page. Karl and Aaron attended a chocolate festival during the time their Kickstarter was running and they told everyone they could about their Kickstarter project. Their focus was less on getting someone to donate (though certainly great if they did) and more to simply get a lot of page views to their project so that their project would continually rank high in the Kickstarter algorithms.
PR/Marketing strategy – One way to build awareness is by having a PR and Marketing strategy in place before your campaign goes live. Know who you’re going to reach out to when and how. Doing things like networking with other Kickstarter campaign owners to try and cross-promote may be a viable way to build traffic to your page.
Timing is key – Karl’s recommendation is to start your Kickstarter on a Monday and end it on a Friday because that’s when Kickstarter is most active. Ideally, shooting for a campaign that’s about 28 – 33 days in length will help provide some of the urgency that encourages people to pledge.
Goal amount is key too – Notice that the majority of food-based projects that were successfully funded were looking for amounts less than $10,000. You want to show people that you’re serious and that the money is going towards a necessary project, but by pricing the goal amount too high you might discourage people who simply are looking to ‘shop’ your project because if you don’t meet your goal amount they won’t get their rewards. “Go with exactly what you need to get your project complete and then call it a day,” is Karl’s advice. “You want to go as low as possible but still be realistic.”
Know the trends and projections for projects like yours. Kicktraq, as the name suggests, has tracked over 25,000 Kickstarter projects. This is a great place to view data points from similar food-related Kickstarter campaigns. Look at those that are excelling and try to emulate their strong points in your project.
Proofread, proofread, proofread. After you have everything loaded into your project page you will be given a dummy link that you can send out to friends and family. Ask them to carefully proofread the entire page and get back to you with feedback. Mistakes, typos, and errors will make you look less reliable and will reflect back on your brand and your company. Remember, once your page is live you cannot change it so you need to catch those mistakes before your project is up for the world to see.
3. While Your Campaign Is Live
Post update on your Kickstarter Project page. This alerts current donors that there is something ‘new’ on the page and encourages them to come back and check out your project again. That, in turn, increases your page views which increases your page ranking.
Put that Marketing/PR plan into action!
Keep a close eye on your project and try to get some sleep! If all goes well you’re going to be very very busy!
“Kickstarter makes it technologically easy to put a project online but people shouldn’t underestimate the emotional ramifications involved with this process,” Karl says. Getting a project funded is a huge validation but by the same token, it can be emotionally draining to see your project flop. Not to mention that for established businesses having a Kickstarter fail may reflect poorly on the brand or may cause the entrepreneur to question the strength of the brand. Unfortunately, the best Kickstarter projects are those that showcase the real people and the real passion behind the project or business so you have to be willing to put your heart and soul online for everyone to see.
Even though Karl and Aaron pulled off a Kickstarter success story with only a week or two of preparation, Karl’s recommendation is that entrepreneurs plan at least 4 months in advance to get all the pieces of the Kickstarter like the marketing and PR plan, video, rewards lined up, etc.
*It should also be noted that Intrigue Chocolates really are some of the most unique chocolates I’ve personally ever tasted. I realize that the holidays just ended but Valentine’s Day will be here before you know it and I highly recommend you get your order into Intrigue Chocolates ASAP.