Crowdfunding is the Highest Form of Loyalty: Shared Destiny

10 Reasons Why FriendFeed is a Better Place to Browse Flickr Photos Than Flickr ItselfHarvest a thousand ideas. Above photo from popular photographer, and my friend, Thomas Hawk.

Crowdfunding is the highest form of loyalty, but only a few big companies have deployed this crowd strategy.

Big companies can learn from Indiegogo, and Kickstarter.
You’ve heard of Indiegogo, Kickstarter, and other crowdfunding platforms for the tech savvy, but what does it mean to corporate product development and marketing strategy? Today’s crowdfunding projects include a panoply of products that never make it to the shelves. I jokingly refer to this as “this decade’s home shopping network,” due to the proliferation of oddball products you didn’t realize you needed. These “long tail” products, are examples of grassroots market innovation offering an opportunity for entrepreneurs to get pre-orders, pre-funding, and free marketing to support future business.

U-Haul Investors Club spurs crowdfunding strategy.
For years, marketers have told themselves that repeat sales are the highest form of loyalty, but I’d like propose that we’re now seeing a greater form of loyalty in crowdfunding. Yet, it remains largely an untapped opportunity for large companies to recognize and develop. Take U-Haul Investors Club for example, where the crowd can finance and own parts of the loading equipment, often at better rates than traditional banks. In return, they receive periodic revenue from the performance of these vehicles. It’s safe to assume, that when it’s time for folks to move, U-Haul Investors will use U-Haul’s services, as well as advocate U-Haul to their friends.

GE taps crowd innovation from Quirky.
With that said, this is just the first phase of the crowdfunding movement. Expect more refined versions to appear, akin to GE’s Quirky program, where the crowd submits ideas, a smaller team selects the best, then GE’s massive production and supply chain creates and distribute at scale. The inventors who submit ideas benefit from their name being on the box, shared revenues, and a chance to see their brainchild on store shelves – without even going to a fabrication plant.


What are the benefits of Corporate Crowdfunding?

  1. A nearly limitless supply of fresh innovation and ideas. Struggling to get fresh ideas to market? Is your company mandate to foster outside-in innovation? Tap into crowdfunding sources to start your journey for crowd innovation.
  2. Backers pre-pledge to go on the journey with you. These backers are telling entrepreneurs, and even large corporations, that they’re committed for a long period of development in exchange for early access and other perks or financial benefits.
  3. They’re engaged with product development. This engaged community can be counted on for active feedback, although they may likely be representative of a passionate contingent, not necessarily a mainstream audience.
  4. A built-in set of early adopters. In both Kickstarter and Indiegogo, most benefits include perks, which include special services, recognition, or gifts. Some provide early access and a period of exclusivity for the product being funded. Tap these early adopters for feedback and word of mouth.
  5. They’ll naturally advocate the product. Being engaged means to commit fully. These crowd-based backers are invested in your future product with time, money, and even reputation. Assume they’ll advocate your products to their network and beyond.

Opportunities for corporate product strategy.
Using the same consumer-type strategies as Kickstarter and Indiegogo, allow the crowd to suggest products, then fund them for potential development, akin to GE’s successful Quirky program, which has now extended beyond consumer electronics to appliances. Allow the crowd to drive the initial discussions and ideation. Allow a system for IP protection, rights and rewards to be shared between independent inventors and your company.

Below Graphic: Crowdfunding behavior set to double
Result of 90,000 respondents from my recent research with Vision Critical show that Crowdfunding will double in adoption by the U.S., UK, and Canadian general population.

03_Forecast
Corporate crowdfunding is newly charted territory.
What’s the one major downside of Crowdfunding programs? Many project don’t see the light of day and, if they do, they may not become a global success. Additionally, some companies are afflicted with the “if it’s not invented here” syndrome, which limits innovation to only engineers and scientists. Here’s where established brands can help make the right choices, apply the right resources and help both crowds and companies win. Corporations can adopt this new strategy to create a shared destiny with the crowd, fostering a higher form of loyalty through crowdfunding.

Crowdfunding is the highest form of loyalty: shared destiny

(Disclosure: GE is a founding member of my company, Crowd Companies, an association for business leaders at large companies.) 

  • http://www.tradestreaming.com Tradestreaming

    interesting post, Jeremiah. I think it must be hard for large organizations to tune in to the vibe happening at a micro-community level.

    It’s also interesting to see GE (who seems to “get it) participating in crowdfunding. Beyond Quirky, GE’s also signed an agreement with my firm, OurCrowd, to use our platform for identifying early stage startup investment opportunities.

    What do you think makes GE a standout Fortune 10 when it comes to innovation/crowdfunding?

  • José

    Need to raise funds for establishing a liquid fertilizer manufacturing plant. Any ideas? Thanks….fundgold2020@gmail.com

  • http://pear-a-digms.com/ Kristine Santos

    I hadn’t heard of the GE Quirky program, so thanks for sharing. It’s interesting to see how brands are becoming more community oriented. I tend to focus more on startups and you see this all the time because startups have to involve their community (advocates, customers, etc) if they want to thrive.

    You’re seeing more and more corporations doing the same thing. I’m in Atlanta and I see Coke, Home Depot and Google constantly involved with the entrepreneurial community to keep an eye on the latest innovations and what’s happening in the community.

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  • http://web-strategist.com/blog Jeremiah Owyang

    That’s fantastic insights Kristine, thank you. I’m keeping a longer list of companies being more community minded, here:

    http://www.web-strategist.com/blog/2014/04/04/graphic-a-timeline-of-corporations-in-the-collaborative-economy/

  • http://web-strategist.com/blog Jeremiah Owyang

    Trade. Yes, Frequency wise, and in depth of products developed with the crowd, GE is a category leader.

    As mentioned in the post, they’re a paying member of my company.

  • http://pear-a-digms.com/ Kristine Santos

    Great list! I didn’t know about most of those, so thanks for the list and the time you took creating it!

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  • http://web-strategist.com/blog Jeremiah Owyang

    My pleasure!

  • http://web-strategist.com/blog Jeremiah Owyang

    James it was very interesting to spend 2 hours with you yesterday to learn about your vision, tour the office, and hear about this growing space. It’s interesting to see how we’ve similar ideology on “Shared fate” via crowd funding.

    Beyond blogging, another comparison was the rise of MySpace and Friendster (perhaps akin to consumer-only destinations of crowd funding platforms today like Kickstarter) forced brands to roll their own version. we saw in 2006 a whole industry birthed that now has yielded “Community Platforms” where brands have built their own online communities on their corporate websites with Jive, Lithium, Telligent, Salesforce, and beyond.

  • http://web-strategist.com/blog Jeremiah Owyang

    Thanks Philip. Yes, i’ve outlined the threats and drawbacks too, have you read my post on the “Darksides”?

    http://www.web-strategist.com/blog/2013/06/18/the-dark-side-to-the-collaborative-economy/