Harvest 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?
- 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.
- 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.
- 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.
- 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.
- 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.
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.)