Crowdfunding campaigns are not just like an advertising campaign, except for the cost side, it also deals with a new product value proposition, cash inflow forecast, and accountability. Regarding these two platforms, each has its positives and negatives. And depending on the kind of product you’re planning on launching, you may opt for one or the other.
So in this article, I will walk you through these two platforms, and give you some tips to formulate the strategy and plan the execution approaches. By the end of this piece, you can learn how to leverage crowdfunding to raise the fund for your new product launch.
- Introduction on Kickstarter and Indiegogo
- Difference Between Kickstarter and Indiegogo
- Secrets to Succeed from a Business Strategy Perspective
- GTM Product Marketing Approaches
Introduction on Kickstarter and Indiegogo
Kickstarter is an NYC-based company that has helped inventors, entrepreneurs, musicians, publishers, and much more product and creative types raise the fundings online. The value proposition is that if you would like to obtain financial support for an idea or product prototype, you can create a project on the Kickstarter website with a specific fundraising goal. A project proposal typically includes a video, links to the product, and a description that includes the risks and challenges that the project creator may face when using the funds raised to create the product.
Today Kickstarter has hosted over 180,000 successful projects and has a total of nearly 18 million backers, of whom one-third support multiple campaigns. However, registering a project on Kickstarter needs to comply with the rules, below are the requirements:
First thing first, you need to stick to four rules: No personal projects, no charity, must be a tangible product (At least prototype), funds can’t be exchanged for equity.
Meanwhile, you must be eligible: 1) You’re 18 or older; 2) you’re creating a project in your own name or on behalf of a registered legal entity you’re a part of; 3) you have an address, bank account, and government-issued ID based in the country you’re creating in; 4) you have a credit or debit card; 5) you are also eligible to use their payment processor, Stripe.
Similar to Kickstarter, Indiegogo is an American crowdfunding website founded in 2008 Its headquarters are in San Francisco, California. The site is one of the first sites to offer to crowdfund, and it allows people to raise funds for an idea, charity, or start-up business. The site runs on a rewards-based system, meaning donors, investors, or customers who are willing to help to fund a project or product can donate and receive a gift. Following changes in Security and Exchange Commission rules earlier in 2016, Indiegogo has partnered with MicroVentures to offer equity-based campaigns beginning in November 2016, allowing unaccredited investors to participate with equity stakes.
Indiegogo is usually perceived as a less strict and more flexible platform, and today it has successfully launched over 800,000 ideas with its 9-million-strong community. At any given point it has around 1,200 live campaigns and 1,800 InDemand campaigns (Kickstarter has 3,000+).
Similar to Kickstarter, Indiegogo has its own requirements: 1) You are 18 years of age or older; 2) you are a legal resident or have a business entity registered in one of the above listed eligible countries; 3) you are creating a campaign in your own name, or on behalf of a registered legal entity with which you are affiliated. 4) you have an address and bank account from the country in which you are creating a campaign. 5) If running your campaign as an individual, the linked bank account must belong to the person who verified their identity for your campaign.
Difference Between Kickstarter and Indiegogo
Although both platforms’ value proposition and background are very similar, they have lots of differences that can affect your decision to choose one to start. Basically, there are 5 things that are different.
1. Product Category
Kickstarter is famous for table gaming, interior, wearables, travel, photography, and consumable electronics. On the other hand, Indiegogo is more suitable for SSDs, smart homes, laptops, and digital gadget sellers and companies.
(Well-known Indiegogo crowdfunding product – Lumen Metabolism)
In a way, it’s quite difficult to instantly reject a platform due to existing product category insight, or say which product SKU should belong to which category. But just in terms of monthly unique visits, Kickstarter obviously has a much bigger volume, such as 25 million around than Indiegogo’s monthly traffic 13 million around. So if your product is priced at a similar position to those same category products’ one on both platforms, I would recommend you to start with Kickstarter first as at least it has more organic traffic and data supporting your campaign to succeed.
2. Fund Scheme
I think the biggest difference between the two platforms is the approach to monetize and when you get the fund.
For any crowdfunding campaign, we need to set a funding goal before the campaign is set up and launched. Kickstarter releases funds only after the campaign reaches the goal. On the other hand, Indiegogo allows you to choose between receiving funding whenever coming in or waiting to see if you hit your target. However, Indiegogo, as well as PayPal, has a certain percentage of funds reserved, in case there are some refunds coming after. And basically, it’s around 5 – 10%. Although getting funds immediately seems to have less risk, please remember you might have additional operation work, such as refunds, etc.
3. Perks & Fees
Perks in crowdfunding campaigns mean different offers, such as early bird, super early bird, etc. First of all, Kickstarter doesn’t allow creators to hide any old perks that launched before on the page. So the potential backers can check the previous offers and compare the current ones. However, Kickstarter provides the count-down perk. When creating a perk, you can select the start and end dates, and it will automatically lock when it’s crossed. This is perfect for creating super early bird deals that are only live for the initial 24 hours.
On the other hand, Indiegogo provides the Secret Perk. With these, you can create tailored perks sent to influencers, or via your direct sales channels. This works great if you want to incentivize your subscribers and provide them with additional limited benefits.
Last but not least, both platforms charge 5% fees out of the total funding amount, and it also comes with additional payment process fees. In payment section, Kickstarter charges 3%*per transaction + 0.2 cent, then Indiegogo charges 3%*per transaction + 0.3 cents.
4. Campaign Days
Both platforms allow you to run campaigns between 1 and 60 days long. Like saying you can launch a campaign that states to last 30 days, and check the performance on the 29th day, and determine if extending additional 30 days or not.
But Indiegogo offers the possibility of going for the InDemand option and lets you not promise to run the campaign on the platform exclusively. The in-Demand option allows campaigns to continue collecting funding after your campaign ends, I presume that you’ve achieved your goal. The in-demand option platform fees would be increased to 8%, although this works for campaigns that you start on both Indiegogo and Kickstarter. In a way, you need to accurately calculate the P&L.
5. Marketing Value
The Kickstarter platform doesn’t allow any digital ads tracking pixel installed on the campaign page, which means you can’t trace the visitors and retarget them later on in other digital ads channels. On the other hand, Indiegogo allows campaigners to insert the pixel code and create a remarketing audience.
Indiegogo provides contact information from backers when the backers pay for the product. However, Kickstarter has to wait until the end of the goal, then you can only conduct a survey and ask your backers to provide you with their contact information if you want any feedback before the campaign closes. So in terms of customer database, Indiegogo provides more value to sellers.
Last but not least, Kickstarter uses its own video hosting service, but Indiegogo uses YouTube and Vimeo. In a way, Youtube hosting would be better if your business has a Youtube channel because that’s two birds with one stone since more views from crowdfunding campaigns on your YouTube videos, can help increase higher rankings on YouTube. Then more shares, comments, and likes, etc interaction on the video would be much better to show your brand recall and business reputation.
Secrets to Succeed from Business Strategy Perspective
Similar to growth marketing, the platform itself is important, but we need a business strategy to achieve a goal that makes sense and makes value to your business. Basically in a crowdfunding campaign, there are four considerations to formulate a strategy
1. Cost and MSRP (US$)
Take the US market, for example, basically, we need a pipeline of costs that includes product unit cost, shipping cost (from supplier to the US), fulfillment costs. Simply we can say this is the landed cost + fulfillment cost. Then, it’s the crowdfunding platform fees and the payment process fees, which is a flat rate from the platform you choose to run the campaign.
In a crowdfunding campaign, basically, it would have an exclusive discount compared with the MSRP (US$) that might be priced when the product’s real model is done and ready to release. So pricing a reasonable MSRP is critical for any sellers to show attractive discounts in the campaign. For more details regarding eCommerce variable cost, please check out this article
2. Funding Goal & Cash Inflow
The funding goal is pretty important because it is directly related to the MOQ and profit. Generally, sellers start with flat cost and variable cost in a campaign. The variable cost can be marketing materials, PR, partner serving fees, etc. Basically, if you aim to monetize the investment in the early stage of product prototype and sourcing, there must be a minimum funding goal to achieve, otherwise, you would lose money. So setting a goal makes sense based on the platform insight and in-house cost calculation.
Even if you don’t aim to earn profit from selling products, at least it makes sense to ensure funding goals can cover the marketing investment dollars, and cash inflow can reflect which funding goal can earn back the investment. Then just kindly remind me that KickStart doesn’t provide customer data directly for you to convert repurchases in the future.
3. Perk Portfolios
As mentioned above, Perk means the offer in the campaign. The creators can provide multi offers based on different business purposes. Generally, there are two elements you should take into consideration if you want to create an attractive combination of perks. First thing first, the discounted pricing and product selling strategy should vary from different perks. Secondly, perk flighting is critical to ensure it can engage with the potential backers at the right moment with the right pricing.
Kickstarter doesn’t issue refunds, as transactions are between backers and the creator. And Indiegogo might refund based on actual cases. I am not saying after getting funds, you don’t need to deliver the products. But in a way, crowdfunding doesn’t legally represent a purchase or checkout. Instead, it’s a sort of donation or supporting a concept and making it happen together. Finally, the backers can enjoy the result in the earliest stage.
So when selecting a crowdfunding platform, you might want to double-check if the platform features can fit your business purpose, either purely raise the funds to test if a product can work out or not, or you leverage a crowdfunding platform to monetize the cost in the early stage. It’s good for you to select a right platform
GTM Product Marketing Approaches
Now the campaign page on the crowdfunding platform is ready, it’s time to build campaign awareness and drive the traffic and backers. Basically, there are four key components, which are pre-launch press outreach and PR activities, lead generation from social and search channels, email campaigns, and community management. I’m not going to deep dive into details, please check out the other articles FYI.
As you can see from above, many features and functionality elements are quite similar to each other from both devices, but in terms of lifestyle design, the Fitbit Luxe must be the winner, but it’s obviously for the lady’s option instead of for the man. I believe men would select Mi Band 6, thanks to its long battery life and also the better value for money at the same time.
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