There are many strategies for bringing a crowdfunding campaign to success, but one is more important than the others: we are talking about precrowd. It is a concept that is not in the vocabulary (not yet!), but it should be at the forefront of any entrepreneur's personal guide to raising crowdfunding capital.
As we have already suggested in several articles, the real game of a crowdfunding campaign is played before the whistle blows on the campaign itself. The precrowd is the hard training before the decisive game: without it, one cannot hope for victory.
Most failed crowdfunding campaigns go wrong because the company did not precrowd, or did not precrowd properly. In this article we will understand why this is so important.
Why a precrowd phase is needed
Precrowd is a key stage for two closely related reasons.
- First of all, a crowdfunding campaign is not something you put together overnight. A mistake that often leads to failure is to consider it a side business, to be done in the spare time, fitting it into normal, everyday business processes.
A crowdfunding campaign should be considered as a line of business in its own right, requiring dedicated time and people, implementation of specific processes, a defined budget, preparation of materials, often the acquisition of new skills and the use of new tools. It cannot be improvised.
The precrowd phase allows you to calmly set up the operational structure that will support the campaign: the team, training, tools, budget, marketing and sales strategy, processes, materials, and useful contacts. It takes time to identify all the necessary elements and to test them: without the dress rehearsal, if something turns out to be inadequate on the eve of the campaign or when the campaign has already started, the risk of disaster is high.
- Second, a crowdfunding campaign is successful when it can convince a number of people to invest in a company or project. An investment is a major action that requires a long and thoughtful decision-making process. This is especially true of crowdfunding investment: it is a relatively new, unfamiliar field, devoid of intermediaries and advisors, and often focused on young, unknown, high-risk companies.
Potential investors need to be identified, informed, involved, even pampered, so that they can be led by the hand to the investment. Doing precrowd means taking potential investors through all the early stages of this decision-making process before the campaign has even begun, so that at launch they are ready to invest. Campaign time should be used only to stimulate people to get on the last step-it would not be enough for everything else.
What's more, try to imagine the scenario of a crowdfunding campaign launched out of the blue, without a proper precrowd phase: out of nowhere, the dedicated page appears online, with a counter icily stuck on zero. Who would dare to be the first to invest? Only those who already had a thorough knowledge of the project and the company. In the absence of prepared investors, the counter remains at zero, and the more days it spends at zero, the less likely it is to go up: without a "pull," a "social proof," someone or something to convince everyone else, no one will come forward. This is the herd effect: a social mechanism typical of human beings and difficult to circumvent.
Crowdfunding campaign preparation: the operational tools
The toolbox for a crowdfunding campaign includes content to fuel communication on the one hand, and software and media to be used on the other.
In the precrowd phase, it is necessary to do the selection and run-in of the marketing and communication tools to be leveraged for the campaign: not only social media, but also data analysis tools for internal use and CRM software to categorize users based on the interactions you establish with them and their reactions, so that you can focus on those most interested and create customized paths for each category.
Having the contacts of potential investors may be of no use if you do not have the tools to distinguish them from disinterested users and properly nurture them to lead them to your destination. An ideal path must be built in advance, as automated and smooth as possible. The precrowd is the perfect time to test it, because there is not yet the rush of the campaign and adjustments can be made.
Interactions are based on content, and even that needs to be prepared in advance: choose the key information to be conveyed, through social posts, newsletters, landing pages, press releases, and prepare the relevant texts, to be used in both precrowd and campaign,.
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Preparing crowdfunding campaign: collecting expressions of interest
The work described in the previous paragraph is used to field all campaign operations before the campaign begins, to begin to make contact with potential investors and "warm them up" so that you have a base of interested and involved contacts ready to invest when the campaign opens.
"Testing" the path built to accompany users to investment means putting it into practice in all its parts, except for the last step, that of the economic transaction: in lieu of this, an "expression of interest", a kind of declaration of intent in view of the campaign, is sought from potential investors.
The ideal goal is to reach virtually 90 percent of the campaign's minimum collection threshold during the precrowd phase. At that point, one can open the campaign and go out and pick up all those who have expressed interest to lead them to the last step, with enough confidence to see the counter go up immediately and to be able to leverage the herd effect to attract new investors even among those who were not reached in the precrowd.
The trump card: the reward
The marketing strategies for making a collection of expressions of interest that is effective enough to later translate into investment are many and customizable, but there is one that is more strategic than others.
To arouse people's interest and be sure to keep them interested until they invest, you have to offer something very stimulating in return. That is why it is essential to apply the reward mechanism, which we know from reward crowdfunding, to all crowdfunding campaigns.
Designing a reward mechanism that provides investors, especially those who invest early in the campaign, with an exclusive and limited 'reward' is the trump card to ensure that expressions of interest turn into actual investments.
How long precrowd lasts
This will be a very short paragraph: it depends. The basic rule is not to rush: the precrowd should last as long as it needs to. While the duration of a campaign usually ranges from 30 to 90 days, for the precrowd there are no limits and it is right not to pose them. Of course, without falling into a cycle of endless procrastination dictated by performance anxiety.
For companies with an already structured team, extensive expertise, well-rounded marketing processes, perhaps already crowdfunding experience behind them, and time to devote, the precrowd will likely take less time than will be required for young companies with a small team, little time, and little experience.
Certainly getting support from consultants and crowdfunding professionals can speed up the time and increase the effectiveness of precrowd.
Turbo Crowd is the first crowdfunding marketing agency in Italy and has made precrowd its flagship. To find out what we mean in practice by "expressions of interest," "reward," and "data analysis," read the first Italian book on crowdfunding which combines novel and manual to follow the step-by-step preparation of an equity crowdfunding campaign.
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