Crowdfunding as a marketing tool
A variety of marketing options for innovative projects
Whether for opening up a hip coffee shop, launching the latest trendy drink or creating a hot new fashion line – over the past few years, crowdfunding has become established as a popular form of project financing, including for businesses. As the 2021 Crowdfunding Monitor of the Lucerne University of Applied Sciences and Arts shows, more than 600 million Swiss francs a year move through Swiss crowdfunding platforms, of which there are almost 30, every year. In particular, there has been a sharp increase – due most recently to the COVID-19 pandemic – in rewards-based crowdfunding, i.e. crowdfunding campaigns that offer something in return. Crowdfunding is much more than “just” funding for a specific project.
Crowdfunding as a community tool
Crowdfunding is all about the target group. It’s important to win this “crowd” over for a project and to get them enthusiastic about it. Where it gets interesting is when, beyond me as the initiator managing to convince my target group to participate financially, they also share the project with their friends and on social media. This gives the project exciting momentum of its own, and, through their active participation, supporters become an important part of the project. Resourceful project initiators manage to maintain this enthusiasm for and commitment to the project and keep it going beyond the campaign, while building up a loyal clientele and group of followers.
Crowdfunding for market launch
If an unknown brand launches a new product on the market, they often find that there’s simply no one waiting for them, and selling to end customers without name recognition can be quite difficult. The initiators behind a Swiss beverage start-up Rebels 0.0 were well aware of this problem. Therefore, for the market launch of their alcohol-free aperitif alternative, they deliberately chose crowdfunding to allow them to reach a large audience right from the start. They succeeded in raising the target amount of 20,000 Swiss francs within 11 hours, and this success led in turn to press coverage, which brought additional attention to the emerging brand.
Crowdfunding as a distribution channel
The sustainable outdoor label ROTAUF from Chur has used crowdfunding several times already. Last year, their Systemwechsel.Jetzt! project broke all records – and did so in the middle of the first wave of the COVID pandemic. The campaign was used to sell as many products as possible, which were subsequently produced by various suppliers, exclusively from Switzerland. The kicker was that, thanks to the pre-orders during the campaign, they knew exactly how much of each individual product was needed. This approach makes it possible to avoid overproduction and full warehouses from the start, which fits perfectly with ROTAUF’s philosophy of sustainability and, of course, is also good for the budget. Furthermore, the products are only available for purchase in the company’s own shop and during the campaign on Crowdify. This allows the company to bypass specialist retailers, improving their own margins. It also puts time pressure on consumers during the campaign.
Crowdfunding for market research
Crowdfunding is also a very interesting option for quickly learning more about the target group of a planned product. The innovation team at Ricola is currently taking this approach to investigate whether they should launch a new beverage. Instead of months of secret market research, they prefer to rely on the most honest feedback available: their customers’ wallets. In the current crowdfunding campaign, they offer different variants of the product and let consumers buy the version that most appeals to them. This is a very effective way to test the market and learn a lot about the (potential) target group.
Conclusion
Money is not always the main focus of crowdfunding. Often the goal is also to make a product known to a wider audience, reposition a brand or just find out what the market even wants in the first place. Communication is key.