How to Use Crowdfunding to Prove Your Market
It’s true that the aim of crowdfunding is to connect great ideas with cash, but there are many other hidden benefits. One of the most important benefits for any project, but businesses in particular, is that crowdfunding is a simple way to prove your market exists. After all, you’re showing your idea to the world and asking people to back it, which will give you an invaluable source of feedback and interaction with your idea.
As any entrepreneur will tell you, start-ups are risky and it’s crucial for you to test your market because the truth is, you probably don’t know as much about your potential customers as you think you do! If you run a crowdfunding campaign, you can test the waters and find out what people do and don’t like. We’ve highlighted some of the ways in which crowdfunding can help you prove your market.
This is a psychological concept which basically means that if you see lots of people that are interested in something, you think that you should be interested too. With regards to crowdfunding, backers become drawn to your project if they see lots of activity on social media, or hear lots of people (backers, family, friends, even strangers) talking about your idea and sharing your project regularly. Getting this social proof means it will be easier to attract more backers or customers as the word spreads.
That’s right, because Bloom is a rewards-based crowdfunding model, you can offer your product or service as a reward! This means you can start filling in your order book, gaining customers and selling your product before you’ve even started making it. That’s a powerful tool which gives you the money upfront to start your business or project.
For a Bloom campaign you should offer at least 5-7 rewards, each with a corresponding value. This allows you to test the prices of your products, as you can track how many backers bought a particular reward. It’s a great way of confirming whether the price is too high, too low or just right. You can also ask your backers and community outright why they did or didn’t select a particular reward.
At the end of your crowdfunding campaign you will have tangible results that will hopefully include the funding you need, but could also be in the form of a business partner, feedback from potential customers, or in-kind support. Then, if you are looking to get a bank loan or investment, you can use these results to prove that people are interested in your idea. If you are successful, you can even tell the bank or investor that people liked your idea so much that they were willing to pay you to start-up! Pretty powerful stuff.
Well that’s a quick overview of just some of the benefits that crowdfunding can deliver, in terms of proving your market. The beauty of it is, you can still reap most of these benefits regardless of the outcome of your project! So, why not give crowdfunding a go and start a project today?
Author: Cara Pleym
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