Crowdfunding as Alternative Marketing

Crowdfunding(Alley Watch, 2013)

Think about it. You run a startup that specializes in software applications for more efficient restaurant and hospitality management. Not only are you seeking funding to get your product and business off the ground, you are attempting to prove your worth in the marketplace. What you have, someone wants. And more importantly, you believe (through significant data collection, hopefully) that person is willing to pay for it.

But how do you connect with those customers? Chances are, cash is tight and a lavish media buy is not in the cards. And one thing is certain – while the number of channels available to connect customer and business has never been more plentiful, neither has there ever been the sheer volume of content and competition. How do you get “the signal through the noise?” (tip of the cap to Nate Silver)

Enter crowdfunding. For many startups, this may already be in the works, simply to raise capital to fund development efforts, carry on operations – in essence, keep the lights on till the whole thing takes off and makes millionaires out of all the founders (if only, right?) Now,however, many companies are realizing a serious and exciting alternative benefit to utilizing this service. Go back to the initial example. Suppose you create a campaign on Kickstarter to raise funds for continued software development and marketing efforts. One of your “offerings” to crowdfunders is the ability to get the first downloadable versions of the product, as well as technical support to assist in troubleshooting and making it better. Chances are, some of your initial investors are going to be restaurant and hospitality professionals, looking to gain competitive advantage by adopting new technology. And what better place to potentially get in on the ground floor than a site like Kickstarter?

In marketing, we call these folks “early adopters.”

In the greater business world, these are your first customers.

If all this sounds like a stretch, we need only turn to current events and several recent stories in the Washington Post and on NPR’s Marketplace. Companies are funding growth efforts through these types of campaigns, whether they have physical product to offer (Occulus Rift, anyone?) or it is still in pieces on the shop floor!

And the money is pouring in.

What does this do to traditional marketing efforts? Does it change the marketing conversation as a company grows, given this type of starting point? Marketers are always talking about how important it is to create true brand ambassadors out of customers. But there is a danger here, too – when a customer becomes so loyal, so dedicated to a particular product (I want what I want, how I want, when I want!) that they become resistant to any change. With this new marketing/funding model, the first customers have taken a true stake in the company. Does this get a bit dicey when the company begins to take off?

Just some thoughts for you as the week gets going. We’d love to hear your comments!