The rise of Kickstarter, Indiegogo, and dozens of other crowdfunding platforms over the last decade has created new pathways to fund, develop, and market innovative products and services. With crowdfunding set to surpass venture capital in 2016 in terms of dollars raised, and nearly doubling in size every year, mid-sized and larger manufacturers can no longer afford to ignore it. But businesses don’t have to fear these feisty startups; instead, they should look closely at the innovations coming out of the crowdfunding phenomenon, parsing the gems from the junk, to see a glimpse of the future of product innovation.
At BOLTGROUP we’ve launched our own successful crowdfunded campaign, as well as assisted clients with theirs. And we’ve learned a few things along the way. Here are three lessons of particular interest to mid-sized manufacturers.
1. Build a community—a relationship with your customers and fans
On crowdfunding platforms like Kickstarter, campaigns are funded by “backers”—people willing to commit money to a project, months or even years before product launch. That means backers must believe in the idea and trust the campaign to deliver. Successful crowdfunded campaigns engage in a dialogue with these very early adopters from the beginning of the project, sharing updates and insights into the development process, and building a relationship and a community along the way.
The hugely successful Pebble E-Paper Watch campaign, which raised $10,266,845 in 2012, did a remarkable job of engaging in dialogue with their growing backer network from prototype to manufacture to delivery. They shared 54 detailed project updates and responded to thousands of questions, even incorporating suggestions from backers into the software design. They eventually accrued more than 98,000 Twitter followers and 474,000 Facebook fans, a loyal and vocal group of supporters whose authentic voice has helped Pebble grow into a leader in the smartwatch market.
A detailed dialogue with your end users during the product development process makes a lot of sense: after all, you are building it for them. And that relationship can pay dividends in brand loyalty and word-of-mouth recommendations for your products down the road.
2. Bring the public into your development process to gain insights and feedback
Many manufacturers instinctively guard their R&D, but the crowdfunding model throws secrecy out the window. By letting the public in on the development process, creators gain valuable insights and can optimize features and styling before final manufacture.
Already larger brands are starting to test this model. Sony recently launched FutureLab to incubate some of their more innovative and specialized gadgets, allowing fans to weigh in on concepts in development. Here’s the concept in an article about FutureLab in Fast Company:
“The idea is to allow groups of engineers and product designers within these organizations to avoid the typically drawn-out, rigid, and challenging internal processes for bringing products to market. Instead, companies can bring to market new product concepts that might not pass through traditional product development methods, and have a real chance at market success, if on a smaller scale.”
“The designers will get direct, real-time feedback from potential customers on product concept. ‘The program will share concept prototypes with users while still at the development stage, and look to them for inspiration, leveraging their feedback to refine and evolve its projects,’ said Sony.”
3. Crowdfunding campaigns are raising the bar on social and environmental responsibility for businesses
The new generation of businesses cropping up out of crowdfunding aren’t just paying lip service to social and environmental responsibility. They’re making it part of the DNA of their business and their products. This unique focus is helping them build more meaningful relationships with customers and employees. Here are some examples of crowdfunded start-ups positioning their products for the greater good:
- For every bottle of Treeson Water sold, Treeson plants a tree to restore rainforests in their home of Costa Rica, where most of the water is sourced. They also provide a shipping label to return the bottle to Treeson, where the bottles are converted into energy for the next bottle.
- Here at BOLTGROUP we developed Gigs2Go as a sustainable way to share large files quickly. The 4-packs of tear-off USB drives are enclosed in 100% post-consumer recycled paper pulp. The unique design elevates a low-cost, renewable packaging material into a sophisticated electronics product.
Even Kickstarter is getting in on the social and environmental game. Last year, they announced they would reincorporate as a Public Benefit Corporation. Yancey Strickler and Perry Chen, co-founders and majority shareholders, want to prevent the influence of money from corrupting their mission to enable creative projects to be funded. By adopting this new legal designation, they are holding themselves to a higher standard of transparency.
Crowdfunding brings together a unique coalition of creative makers and enthusiastic early adopters, fostering an industry full of experimentation and innovation. Product innovators of all types should pay attention. They may wake up one day and find the entire innovation model has been turned upside down.