Things to consider before launching a new crowdfunding product.
After 350+ campaigns and raising $75M+, here’s my Kickstarter launch checklist.
I spent 4 years as President of a crowdfunding marketing agency helping hundreds of clients launch new hardware products via Kickstarter and Indiegogo. I oversaw all the new product leads that came in to Salesforce each day, many that nobody had ever seen before and the time was very exciting. It reminded me of the days when my Dad brought home the new catalog from The Sharper Image. For those born after 1990, The Sharper Image was the original Touch of Modern but found at the local shopping mall. It was full of curated guy gadgets that you couldn’t find at Sears, Radio Shack, Target, or the Macy’s electronics section. Brookstone is the closest match but doesn’t quite have the same flair that The Sharper Image once had.
In just over 4 years, we helped crowdfunding clients raise over $75,000,000 in pre-orders for products that had yet to be produced. We were the ‘Kings of Crowdfunding’ and everyone wanted our team to manage and launch their Kickstarter campaign. I felt I had a pretty good grasp at picking the winners, but in all fairness, I had the pick of the litter.
These are the common denominators I used to evaluate products we selected:
- What does the product do successfully? Some people in the startup world now phrase this as “what problem are you solving?” which I find condescending and dumb.
- How much does it cost? “My new headphones are $199!”. Great, so are Bose, Sony, and Beats that do same thing and available on Amazon (delivered to your doorstep tomorrow) at a few less dollars. Falling into a price war with established brands can be fatal unless you offer a unique spin or feature on the product. Many clients used a 4x multiple to come up with their MSRP. For simple math, if your product costs $25 to make, you would look at retail price of $100. With crowdfunding, we’d recommend a minimum discount of 30% and as high as 50% in some cases including free shipping. (Always build in free US shipping to your Kickstarter price!) What happens with most clients, even the successful ones that make $1m is they don’t really know their manufacturing costs, BOM, or even shipping costs to certain territories that have value added tax. Check out the company Easyship if you can. So start counting marketing, expenses, shipping, discounts and returns. These add up quickly and why it’s obvious to have nice margins in your product. Sweet spot on average Kickstarter contributions was in the range of $99 to $129 USD.
- Are there any current competitors and how do they compare via #1 and #2? Even if you don’t think you have a close competitor, you do. Or, alternatively, there is a product acting as the current solution people are using. Value proposition is key here. I saw many cool kitchen gadgets do very well by putting a unique touch on everyday devices that have not been updated for decades. No crazy tech, just creative design, or re-design, and function.
- Do you have a working prototype? This indicates to me how far along the process you have come or how far away you may be from launching. Having a polished prototype is key to selling the idea is close to production. There will certainly be updates and upgrades to your prototype as you move to a full production unit. Most press and media publications will not cover your product unless you have a working prototype. There’s too many products and they’ve also been burned from campaigns that failed to deliver. Future posts on this to come…
Everyone has an idea or what is commonly referred to as an “a-ha” moment. When I explained my “crowdfunding” profession to family and friends, there was always an uncle, cousin, or friend of a friend that had a product idea and couldn’t wait to ask me about how to launch it. My dad had dozens of them growing up, but sadly, never pursued or knew how to pursue making them.
But telling me about a product idea is usually where the idea stops and goes no further. Not necessarily with me, I love ideas and consulting on new products, but where the creator doesn’t know what to do next. What I mean by the idea stops is when someone speaks to me about a product idea they have, and that’s as far as they’ve taken it. Nobody makes it on Shark Tank with just an idea, you’re not ready for an investment. In my years running campaigns, I had 4 clients that made it on Shark Tank with one closing a large deal with Lori and Mark (Fizzics). To brag further, one of the executive producers of Shark Tank contacted me to see who else I had in our client pipeline to feed them for next season. Unfortunately, a majority of our clients were based in China and could not qualify for the TV show.
A simple checklist of things to consider before launching a Kickstarter campaign:
- Market Research — Is there a market for this product and who is it for? Who are your competitors? The more honest you are with this the better. Saying your design is superior may be true, but it is subjective. Customers you don’t have yet, may not agree or perhaps, they do agree with you but not at the price point your offering. Do your homework to save on pain (some) later.
- Prototype — these can get expensive especially when dealing with hardware products like e-bikes, chargers, or plastic goods. Molds, tooling, and other manufacturing costs for hardware products are really expensive. I’ve yet to see an acceptable 3D printed prototype for use, at least from the consumer space models. Softline products like backpacks, wallets, or bags are more affordable especially if you can source materials from overseas vendors. Creating a one-off for any new product is costly. However, you’ll need a prototype to photograph and get marketing materials ready for investors or a Kickstarter crowdfunding campaign.
- Market Validation — so, will anyone buy this? Kickstarter and Indiegogo have become the largest platforms for crowdfunding because they have tons of traffic from early adopter techies. IMO, they are still the best platforms to launch a new product, and build fast traction with customers. I used to call these customers on Kickstarter the “Apple guys” or Males in their 30s that have discretionary income, like to buy gadgets they don’t need but want, and can wait 6 months to a year before getting it just to be the first one! Males represent overwhelming majority of Kickstarter backers. Consider this when thinking about your product launch on Kickstarter and its potential customer base.
- Launching a Pre-Order Campaign — Before launching any campaign, I would run a pre-launch digital marketing campaign. This entails a budget of about $5k to $10k for running targeted ads to “Apple Guys” and other potential customers via Facebook and Instagram. First objective is to obtain email signups for your product launch. Why? So you can have thousands of people lining up at your door on day 1. It should be no surprise to anyone these days when you see Kickstarter campaigns say “Funded in 1 hour”. They should say “Funded in 1 hour…after spending $10k in ads, for 4–6 weeks, with a marketing team skilled in optimizing Facebook ads and using data obtained from other Kickstarter campaigns to target you.” In previous campaigns, approximately 70% of our Kickstarter backers were repeat backers. If you are unable to gather 3,000 “quality” emails of these specific demos for your pre-launch campaign, I would highly recommend postponing your launch. It may be your marketing assets, it may be your marketing team, or in fact, it may be your product not resonating with Kickstarter audiences. You’ll need to figure that out with your team.
This is a small, short-handed grocery list for launching a crowdfunding campaign, other topics I did not cover were PR ($5k-$15k/mo.), Marketing Services ($5k-$10k fees + ad spend), and Financing a Crowdfunding Campaign which could easily hit $100k+ or 10% for campaigns seeking to hit the 7-figure mark. In my four years in crowdfunding, we had 18 campaigns cross the $1M mark and this was average marketing spend by clients for products priced as low as $45 to as high as $1k+.