Crowdfunding, the latest Eldorado
for established brands
by Céline Degreef, Founder & CEO of MyCrowdCompany
Read the Tribune of Céline Degreef on Frenchweb website (in French)
Crowdfunding is undoubtedly a booming market, as shows its exceptional growth: over 296 million euros in 2015, representing a 95% increase on 2014 in France alone (1). It is now considered an essential tool for start-ups wishing to raise money to launch new activities or products. However, more than just a financing tool, crowdfunding is becoming a renowned means of communication and an exclusive way to create special relationships between a company and its backers. According to the AdoctA study, in France 74% of backers say they would be willing to “heavily promote” their company if it were to invest; Only 3% of those people say they do not want to take on an active role in this investment; 32% are more than ready to take part. Therefore, it is not so much the purchase in itself that matters to backers, but the becoming a part of a project they have decided to support. What if crowdfunding was no longer just for start-ups, but also used white label assets to become a means of engagement for established brands wishing to launch new products?
The power of the crowd in action
Crowdmarketing, crowdsourcing, crowdfunding, crowd-culture… It’s all about the crowd. This shows an unprecedented change where the customer is now at the heart of every decision. Today’s customer is agile, connected and demanding, trusts the community more than advertising. This is what brands must respond to. In the age of conversation and digital, anyone can use the power of the crowd to deeply change the way customers buy and interact with brands.
It is this newly held power which means communities now engage directly with brands. This new paradigm of conversation turns marketing towards new issues, at the heart of which lies engagement.
By capitalising on collaborative levers, brands can turn their customers into allies and use this new relationship as a true source of value. If they know how, brands can include their communities in product creation from day one (crowdsourcing), let them decide whether or not they wish for a product to be manufactured by inviting them to finance it (crowdfunding) and empower them to become ambassadors (crowdmarketing). Based on this full-scale market test, products are approved, given the green light and even promoted by a community of customers, before manufacturing has even begun.
Experience is the new marketing
Because of this shift towards conversation, we notice a tendency for customers to be over-demanded by brands. To stand out, engagement marketing is key and must deliver a unique experience to customers. Indeed, leading customer experience brands have a 16% advantage on competitors regarding purchase probability, reluctance to change brands and the likelihood of referrals from customers (2).
In this sense, gamification, meaning game mechanisms applied to other areas, is a tool of choice. Gartner expects gamified services to soon be as popular as Facebook or Youtube and gamification has been recognised by The New York Times as one of the most revolutionary ideas of recent years. As part of an engagement strategy, it serves the idea of customer experience. Why? Because player profiles highlighted by consulting firm Bartle reveal that points, levels, badges, rankings that mark each of the players actions are associated with particular dynamics such as gratification, status, self-realisation, creativity, competition, socialisation… Each individual can take pleasure in living their very own experience depending on their personal profile. By becoming a driver of experience, gamification creates a community of people who enjoy being challenged, giving a significant social dimension to any project. This unique concept reinforces the relationship between a brand and its customers, making it more engaging thanks to the exceptional experience it offers.
Why is white label crowdfunding such an Eldorado for established brands launching new products?
Because it is a wonderful opportunity to make product launches go viral, value and reward customers, build special relationships with them and to make communications assets engaging and differentiating, serving a brand overall. By using a crowd-culture approach, brands have a considerable advantage when it comes to reinventing product launches whilst making customer engagement the cornerstone of their innovation strategy.
Why does this work so well? Because brands already have all the tools they need to make their own crowdfunding platform a success!
Key 1 : An existing community
The success of a crowdfunding campaign is primarily based on a company’s ability to activate its 1st circle, which will in turn virally engage both its 2nd and 3rd circles, ensuring a campaign’s success. Therefore, established brands already have what is considered to be the most precious asset on public and participatory platforms: their large community of customers! And we’re talking about a qualified community, rather than the very large yet unqualified communities crowdfunding platforms currently rely on. Taking these customers away from a company’s site and directing them to a whole new platform would be counter-productive: brand visibility would be diluted by other projects sharing the same platform, therefore reducing associated benefits such as traffic increase and cross-selling…
Key 2 : Brand image
By using a white label platform, personalised and branded to suit brand guidelines, companies can turn their crowdfunding platform into a true communications tool. Pre-ordering becomes more than just a financing programme, it’s the opportunity to introduce an exclusive product to your fans. Many other opportunities can also be explored: limited editions, capsule collections, products co-created by customers themselves and the development of a diversification strategy are just a few of these. Crowdfunding is the chance to generate brand content and transform waiting into interaction.
Key 3 : A relationship with their customers
Crowdfunding is becoming the new way to talk directly to customers and make them into brand ambassadors. There are many examples including Lego’s success story “Lego Ideas” which offered customers the chance to create their own models, some of which were then manufactured. Co-creation such as this enables a brand to invite customers to take part in their innovation process: more than market research, the brand directly consults its customers, collects “smart data” and rewards their involvement by enabling them to co-create a product.
A crowdfunding campaign can also be the opportunity to increase brand loyalty. By capturing users directly from the company’s website, rewards can then be used to offer special loyalty programmes, for example. In this sense, gamification is the ideal engaging experience for users. The idea? When used in tandem with a crowdfunding campaign, gamification enables brands to reward their communities each time they take part (shares, referrals, comments..) by offering special rewards (goodies, promo codes…). A great way to create excitement around your brand whilst benefiting from viral content and creating a special, long-lasting relationship with your community.
In conclusion, crowdfunding – like all aspects of crowd-culture such as crowdsourcing and crowdmarketing – has a promising future. More than just a funding tool, it is the marker of a changing era and the disappearing of boundaries between brands and their customers. At a time when communication has become conversation, crowdfunding could well revolutionise the way established brands work, should they take the opportunity to reinvent their product launches by engaging their customers. Beyond increased visibility, this is the opportunity for brands to put their customers at the heart of their innovation strategy, to value their fans’ love, to reinforce their loyalty using a rewards system and to create special relationships with their community. The association of crowdfunding and gamification offers a unique experience, turning customers into brand ambassadors. Because they are excited by a project they feel strongly about, customers will be proud to belong to a community, which they believe in, where they share values and desire, and are treated as more than just buyers. In 2017, more than ever, brands will use this new strategy to transform their relationship with their community and turn it into an endless source of wealth.