How to measure the success of a crowdfunding campaign

A crowdfunding campaign is an operation aimed at raising capital, but this is actually only the tip of the crowdfunding iceberg. Underneath, there is a massive marketing operation that has the goal of attracting investors, but at the same time allows you to gain new customers, professional contacts, followers, visibility, and bring new or deeper professional skills in terms of marketing and sales processes into the company.

A successful crowdfunding campaign is about more than just raising money: to take full advantage of the opportunity it represents, one must be aware of its scope. Knowing how to measure the success of a crowdfunding campaign is necessary in order to know what elements to pay attention to during its preparation and execution and what to evaluate after its conclusion. To take stock, but also to learn something for the next campaign!

In this article we outline the KPIs (Key Performance Indicators) to be monitored and evaluated to measure the success of a crowdfunding campaign and find out how they can be useful in maximizing the potential of each project.

The essential KPIs for measuring the success of a crowdfunding campaign

At the end of a crowdfunding campaign, the most obvious indicator of success is the number that appears on the campaign page next to the €/$ symbol. As is obvious, the capital raised is the most relevant figure because it decrees the success or failure of the operation. In the case of the all or nothing model - by far prevalent in equity and lending crowdfunding, less so in reward crowdfunding -, in fact, if the minimum goal is not met the company does not get a single euro of the capital raised, which goes back to the investors.

The first KPI, then, is the capital raised. But by itself it doesn't say much. Here are the other KPIs to consider:

• Number of supporters
• Number of customers among supporters
• Involvement of supporters
• Campaign duration and abandonment rate
• Value of the average investment
• Traffic and Conversion Rate
• Cost per Conversion.

The capital raised

Measuring the success of a campaign by considering how much capital has been raised is not just about whether the unbreakable threshold has been exceeded or not.

Specifically, it is necessary to evaluate:

• If the stated minimum goal has been met
• Whether and how much was exceeded or by how much was missed
• Whether and how well the result reflects the company's expectations
• The ratio of capital raised to total campaign expenditure.

From these measurements, a number of useful considerations can be made: if the minimum goal has been exceeded by a large margin, there may be untapped potential to be tapped with further activities; if it has been missed by a large margin, there may have been errors of judgment to be identified by retracing all the way back, etc.

The valuation of the capital raised, as is evident, cannot do without cross-checking with other variables among those listed in the previous paragraph to understand the real value of the figure before us.

Analysis of supporters

One of the added values of a successful crowdfunding campaign is the ability to create and consolidate a community around the project. Audience engagement and retention not only influence the outcome of the current campaign, but are an asset for the company's future initiatives.

The main potential investors in a crowdfunding campaign, in fact, are the customers or potential customers of the company itself, that is, those who have an interest in the product or service it offers. A crowdfunding campaign, consequently, is also a way to create a closer relationship with its customers, get to know its target audience better, and ideally turn customers into investors and potential customers into customers AND investors. Then turning all these people into a solid community that follows the company's activities with constancy and interest. The added value will thus be maximum.

How to tell if the operation is successful? By measuring the following KPIs.

• The number of supporters: if they are too few, however loyal, they have little driving force and generate little resonance. We are talking about "crowd," so there must be a real crowd, obviously to be measured by the parameters that size and type of company allow.
• The number of customers among supporters: how many investors were already customers of the company? How many became investors and new customers at the same time? Maximum success is achieved if both of these numbers are high, but if even one of them is, one can be satisfied and increase the efforts of one's communication activities toward the other segment. Other options are not very plausible or desirable: you are unlikely to successfully conclude a crowdfunding campaign thanks to strangers, professional investors, or friends and family. If it happens, the effectiveness of the campaign is lower, because you get the capital but do not build a community or increase sales.
• Involvement of supporters: a successful crowdfunding campaign stimulates active participation, which is manifested through comments and feedback on social media and any dedicated groups. Qualitative and quantitative analysis of comments helps to understand whether the project met the needs of the audience and generated tangible emotion or interest. It is also very important to assess how many people have booked calls with the team to see if they have been able to establish a direct relationship with supporters.
• Rate of return of supporters: if the company has carried out crowdfunding campaigns before, a good indicator of loyalty is the rate of return of supporters. This metric shows how many previous supporters have decided to contribute again, revealing the level of trust and affinity created with the brand.
• Average value of investment: if it is low, supporters may have a poor perception of the company's positioning and its product/service, or perceive the rewards offered as being of low value or unattractive, or even belonging to a target audience with low spending propensity. This data helps to segment supporters more precisely, build a preferred relationship with higher-spending individuals, assess the attractiveness and perceived value of the rewards offered, and convey a more effective message about the value proposition of the company.

The indicators described reflect the success of the campaign beyond fundraising and show the potential to establish a lasting relationship with supporters: the real work of retention begins after the campaign, and we need to continue to measure supporter engagement in subsequent activities.

In addition to this, there is also a more subtle KPI that is summarized as investment behavior and answers the following questions:

• When did most people make the investment? At the beginning, middle, end of the campaign? After particular events?
• When was the inevitable phase of declining interest in the campaign?
• What is the dropout rate? That is, how many people showed interest but then did not finalize the investment? 

The answers may offer insights to better organize the roadmap of a crowdfunding campaign, simplify the investment process, etc.

Cost analysis

A crowdfunding campaign can have significant costs, between promotion, software, content and project management. It is therefore critical to monitor cost-effectiveness and return on investment (ROI) so as to optimize spending, maximize results, and objectively assess the value of the capital raised.

Here are useful KPIs for cost analysis.

• Cost per Acquisition/Conversion: how much was spent to acquire each individual supporter? The lower the cost per acquisition, the more effective the campaign will be in reaching the target audience with minimal use of resources.
• Traffic and Conversion Rate: analyzing traffic to the company's landing page and campaign page is essential for understanding the range of the audience reached and assessing the effectiveness of marketing and promotion activities. The conversion rate indicates the percentage of visitors who actually contribute to the campaign, providing insight into how effective the message is and how it is perceived by the audience.
• Return on Ad Spend (ROAS): ROAS represents the economic return on each euro spent on advertising. It is calculated by dividing the revenue generated through advertising campaigns by the total amount spent on promotion. This parameter is crucial for understanding the effectiveness of individual paid advertising strategies and for identifying the most profitable campaigns. A high ROAS indicates good cost optimization and a strong ability to generate funds through promotion.
• Efficiency of individual expenditures: monitoring total campaign spending and costs per action allows you to identify areas that offer a better return on investment. This assessment allows you to eliminate the least effective expenditures and focus on the activities that offer the best results.

All these parameters are interrelated and need to be closely monitored during the campaign, even before they are evaluated at the end of the campaign to make improvements to the strategy later. For example, detecting a high acquisition cost allows for identifying the most cost-effective channels for advertising and optimizing budget distribution or improving ad quality and targeting accuracy.

The success of a crowdfunding campaign starts with precrowd

To measure the success of a crowdfunding campaign, it is necessary to evaluate in results also in relation to the work done during the precrowd, which is a key preparation and testing phase. In general, if the KPIs analyzed so far give positive feedback, it is usually thanks to a precrowd done well: all critical issues were observed and resolved or put under analysis even before the campaign was launched, which then benefited from the shot corrections and experience gained.

Not only that, a precrowd done well is one in which you manage to gather all the necessary expressions of interest and do it in an engaging and persuasive way. How to measure it? This is a trivial KPI: just check how many of the people who had expressed interest in investing during the precrowd then actually invested and whether the amount invested matched the amount originally stated or deviated from it.

If the churn rate among those who expressed interest before the campaign was launched is high, something went wrong and marketing strategies and the relationship with potential investors need to be reviewed. Even if the campaign was still successful: it means that extra efforts-and therefore extra costs-were required during the campaign due to weak preparation.

What to learn from measuring the success of a crowdfunding campaign

Measuring the success of a crowdfunding campaign first and foremost allows you to understand the depth of value added by this alternative finance tool. But it also offers a huge opportunity to gather valuable data and lessons learned that can make a difference for subsequent projects. 

Here's how, in brief:

• Analyze what worked and what did not,
• Identify strengths in communication and targeting, to understand which messages, images and call-to-actions got the best responses and to define a communication strategy that is increasingly closer to the expectations and desires of the audience.
• Use data to refine message and engagement. Once you have identified the audience segments that have responded positively, you can further customize the communication, adapting the tone and style to make it even more impactful. Based on loyalty data, you can also improve community management by offering follow-up content, exclusive updates, and incentives to keep participation high.
• Create a roadmap for continuous optimization and establish an iterative process. The data collected should be documented and archived in order to create an optimization roadmap for subsequent campaigns. This progressive approach makes it possible to improve the performance of each campaign, progressively reducing costs and increasing the return on investment.

In this way crowdfunding can really become an asset valuable to the company and move from a simple fundraising solution to a tool for continued growth and brand consolidation.