Posted November 2023
2 min read
Have a great idea for a new product, but short on the cash to make it happen? Crowdfunding lets you leverage the power of your fan base to raise funds for your next big thing. While it’s no surprise that this capital raising strategy has been gaining popularity among ecommerce brands for its ability to raise funds, it’s also gaining traction for its capacity to build hype, drive demand and grow your customer base.
What is crowdfunding?
To put it simply, crowdfunding helps ecommerce brands raise funds through small financial contributions from a large number of people. Instead of relying on a few major investors for significant cash, crowdfunding harnesses the collective power of many who believe in your product's success. These smaller investors, or ‘backers’, show their support by making contributions and in return, receive rewards such as early access, discounts, merch or other incentives depending on the size of their donation. Crowdfunding campaigns typically run for a few weeks or months and have a goal of raising a certain dollar amount within that time frame.
The value of crowdfunding
Outside of the obvious benefits of using a crowdfunding strategy - to raise funds, it can be a valuable strategy for building hype and social sharing, driving demand and exclusivity and growing your customer base.
1. Build hype
Why not leverage your upcoming crowdfunding campaign to build hype about your product? A well-executed pre-campaign marketing effort can be key to creating the kind of hype that translates into actual sales when your product officially launches. So have some fun with it! Teasers, sneak peaks and exclusive behind-the-scenes content act as the initial sparks that ignite interest and conversation and counting down the days until your crowdfunding campaign goes will add to the buzz.
But it doesn’t stop there, another easy way to use your crowdfunding campaign to build excitement is by rewarding backers with incredible incentives. As enthusiasm for your new product grows, you’ll see an increase in social sharing, effectively transforming your backers into brand ambassadors.
2. Drive demand
In a crowdfunding campaign, pre-selling your product or offering discounts to early backers taps into the excitement of not wanting to miss out. This creates a sense of scarcity and exclusivity that really drives revenue. These exclusive rewards will motivate potential customers to support your project and turn that initial interest into real, concrete demand. Plus the ‘limited-time’ nature of crowdfunding campaigns creates a sense of urgency, doubling down on exclusivity and driving customers' desire to get involved early.
Additionally, a successful crowdfunding campaign can also act as powerful validation for your idea. When a substantial number of backers show interest in your project, it proves that there is a genuine market demand. This stamp of approval can catch the eye of investors, retailers, and distributors who see the potential, further boosting demand for it in the long run.
3. Build your audience
A well-executed crowdfunding campaign can be a powerful tool for building a long-term audience for your business. It's not just about getting the cash you need; it's also a fantastic way to build a long-term customer base and validate your ideas with the support of the crowd.
When you dive into crowdfunding, you can leverage your existing customer base and make a big splash in the market, attracting new customers who resonate with your products. Backers who invest in your crowdfunding campaign aren’t just bystanders; they are more likely to become super engaged customers who genuinely want your product idea to become a reality. Submarine allows ecommerce brands to tell the whole product's story. From a detailed product description to sharing photos and videos of how things are made, increasing your backers long-term investment in your product and business.
Crowdfunding isn't just about raising funds—it's a strategic tool to build hype, drive demand, and expand your customer base.
Brands around the world are using Submarine to raise money from their most dedicated customers all while retaining control of the end-to-end customer experience.
Want to learn more? Connect with our team to dive deeper with Submarine.