James Leonard Deamer

@jamesleonarddeamer

KickStarter: How to Successfully Raise & Refund.

A how-to of running and refunding our KickStarter campaign — GardenSpace.

Our product, GardenSpace

KickStarter is great for many projects, our hardware startup GardenSpace was not one of these. GardenSpace raised & refunded $34,069 USD. This post is a recount and how-to of our campaign (pre, during, post) and why we refunded the money. If you are considering running a campaign, or simply have an interest in how a KickStarter campaign works, read on.

To compress the information and make this useful I will follow this format:

  1. Platforms: Information on the platforms, details to consider
  2. Pre campaign: What you should do & be seeing, advertising & PR
  3. Third parties: You’ll discover thousands of these and need a few
  4. During campaign: What to do
  5. Post campaign: How to proceed & options
  6. The review: The rest of the story (part 2)

Enjoy!

1) Platforms

The first, and most important, consideration when planning a crowdfunding campaign is the platform you choose to run your campaign on. Apart from fees, the most important difference between platforms is the audience.

The audience is the demographic of people already backing campaigns on the given platform. Why is important to consider ? Well, on average ~70% of all backing comes from existing backers already on the platform.

Whilst audiences and campaigns change over time, 70% is still such a significant number that it must be part of your initial considerations.

A great way to choose which platform is right for you is easy, just ask!

Email your prospective platforms and request backer demographics. KickStarter’s audience has traditionally been very tech- and male-orientated, whilst Indiegogo has traditionally been more craft- and tech-based, with a greater diversity of age and gender demographics. You can also search for projects in a similar category or functionality to estimate how your product might be responded to on that platform, past performance is a big indicator on KickStarter.

For our product we chose KickStarter.

KickStarter, for those whose minds and credit card’s are blissfully unaware, is a crowdfunding platform in which creators (sellers) campaign products that backers (customers) pledge money to (buy).

The product being backed is usually a late prototype or design for manufacture v1. The creators campaign to their audience that, if they back their project, they will deliver the finished, kick ass version at a future date, typically 12 months.

The project creators set a campaign goal (monetary amount). If this goal is reached, the creators can then accept the money (pledges) from their backers and at a future date, deliver the final product. Conversely, if a project goal is not reached, all money is automatically refunded to backers, no fees taken.

As a platform, KickStarter works perfectly. There are many products (always lots of watches) that backers can pledge money for and to their credit KickStarter, are continually refining the backing process so that creators don’t just raise a bunch of cash and crash out overnight. This has unfortunately happened and probably will continue to happen.

So as a creator, what do you need to know?

First things first, KickStarter is a business. They provide a service to make money! Obvious as this might seem, I have talked to numerous people that are halfway through a campaign (or planning one) who fail to consider that KickStarter will take a cut of the funds they raise.

How much will Kickstarter take as a fee ?

This is all public information, so no secrets here; Kickstarter will take 5% of the amount raised.

This is just the beginning. Credit card processing (Stripe) will then take another 3–5% of each pledge. These fees are guaranteed. On top of this, you can typically give away another 10–20% as payment for services.

Yes, 10–20%. You read that correctly

As you can see, only a portion of the ‘total amount raised’ is actually devoted to manufacturing and delivering the product.

It is not uncommon for campaigns to give away over 25% of total funds raised, before creators can even start to manufacture and deliver the product!

Fees & Audience are the main considerations when deciding on a platform. There are however additional ‘hurdles’ we came across that are also good to know about KickStarter as a platform.

  • Not every country has KickStarter, which limits your reach
  • Less than 2% of Kickstarter campaigns raise more than $100k USD (you will most likely not be an exception)
  • You will need a bank account, formal documents and business registration to run a campaign on behalf of a company, otherwise it will be run as an individual who is liable for the delivery of the product
  • 70% of funds raised on KickStarter are from REPEAT backers
  • Europe is a pain-in-the-ass to ship and sell to from outside Europe (think VAT and costly shipping)
  • You might need to pay tax
  • The majority of Kickstarters backer audience is in North America and therefore like USD campaigns
  • Less than 2% of Kickstarter campaigns raise more than $100k USD (you will most likely not be an exception)
  • You should run your campaign in your own currency and country. The default is you are forced to run it in the currency of your business registration you use during sign up, there are workarounds to this, though difficult
  • Less than 2% of Kickstarter campaigns raise more than $100k USD (you will most likely not be an exception)
  • You will need to show a ‘working’ prototype when making a claim on KickStarter before your campaign goes live
  • You can alter everything BUT the campaign goal amount, linked bank account and a backed reward once the campaign is live. Title, video, digital assets, categories etc can all be altered during
  • Advertising dollars in = backers out
  • Less than 2% of Kickstarter campaigns raise more than $100k USD (you will most likely not be an exception, has it sunk it yet?); &
  • KickStarter staff run and control KickStarter the machine, make friends =] !

2) Pre Campaign

Like painting, KickStarter is 90% preparation 10% execution.

Pre-campaign is all about building a momentum machine; getting leads, digital asset creation, building PR, advertising and preparing your audience to buy your product the moment it launches. Below is what you’ll need to prepare pre-campign.

2.1 Get KickStarted
2.2 Finding Your First Backers
2.3 Advertising
2.4 Messaging
2.5 Video
2.6 PR & Getting Help
2.7 Campaign Page
2.8 Rewards & Shipping

2.1) Getting KickStarted

The first, and most important, thing you can do before launching a campaign is actually very simple- tell KickStarter.

KickStarter staff are an amazing resource that can provide you with feedback and direction on your pre-campaign material, but more importantly they can boost how you rank in their search algorithms. This is either by way of a ‘Project We Love’ badge, feature on the home page’ or a ‘feature in the KickStarter newsletter’.

Any of these will boost visibility, increase your rank in the search algorithm and make a big difference to your project! We saw an 135% increase in daily pledges the day we received a ‘Project We Love’- it matters!

Get on the phone, email Kickstarter staff, message their people on LinkedIn and introduce yourself. Jump up and down; tell them who you are, why your project is amazing and why they should care. You are their lead generation and they are there to help!

2.2) Find Your First Backers

Building an audience that will back your product the moment it goes live on KickStarter is how you will start your momentum machine. This audience can be made up of anyone and managed in lots of different ways, we used traditional newsletter lists, Facebook/ Instagram and Twitter followers and personal networks. Our experience was that newsletter list are by far the most effective.

For a reference point, our audience prior to launch was just over 4,700 email leads with roughly 500 ‘power’ leads (people we had spoken to via phone, Skype or emailed directly), ~1000 Facebook fans with a reach of 100k plus and local news PR.

A well maintained newsletter list is your most valuable asset to your campaign. The average conversion of email leads to paying customers is 1–3% during campaign, over a 30–45 day period. Our conversion was slightly less at 0.88%.

The amount of leads you generate is up to you, but 10,000+ emails should be a minimum goal for any news campaign wanting to raise more than $100,000. Using a tool such a MailChimp will make collecting and managing your leads easy. Leads are generated either organically, usually via your website, or paid, via advertisement. On average, the majority (>70%) are through paid advertisement or paid PR.

Organic

The majority of leads you generate will come through paid advertisement, but there are still channels in which you can generate organic leads. Here are some ways we generated leads that cost nothing but time:

You have to start somewhere.
  • Post on relevant forums & Facebook groups, offer these people incentives to join your newsletter and get feedback from them
  • Answer & ask questions on sites like Quora
  • Get Reddit famous
  • Leverage local newspaper and publication PR. Be careful here; while PR can help kick start your lead generation, is it an ace, you can only play it once. Aim for local non-national outlets that can write a small piece about a local product for lead gen purpose prior to launch
  • SEO hacks. Buying a website, publishing content and having it refer to your site can be a great way to generate leads for potential customers searching your product pain solver. I bought whatswrongwithmyvegetables.com intending on writing content on growing vegetables at home and having it refer to the GardenSpace website
  • Publish quality content on your own website; &
  • Contact domain celebrities or bloggers; offer them early access to review or see your product in exchange for an article and link backs!

Whilst organic leads are great, they aren’t often repeatable or scalable; something you will need during your campaign. Paid leads via advertising can solve this problem.

2.3) Advertising

Advertising can seem like a dark art at times, but prior to launching, your goals and metrics are simple; acquire leads, test your messaging, test your assets. Find what works & repeat.

When advertising for a new product Facebook is usually the better platform. It’s discovery aspect is better than Google, as at this point because no one is searching for your product, you are introducing something new to potential customers.

Focus on finding your audience on Facebook and generating newsletter sign ups. There are some Google’s advertising tools you should still use, retargeting is a great way to build familiarity with leads that click through and view your website.

Facebook has a number of great tools for advertising. These tools are being constantly updated, restricting or increasing ease of lead generation. Throughout our campaign, our best lead campaigns were not outright lead generation ads, but paid posts of prototype footage shot on phone cameras. The ‘organic’ feel worked well in the newsfeed and many of our videos had 300k plus views. We would pay between $100–$300 for boosting the post and share it into a number of large member groups related to our product.

2600000 million views (11 months after our campaign had ended, ouch)

Experiment with the different ad types & format and find what works for your product. If you are using Facebook, the more leads you have the easier they will be to replicate as an audience. With 1000+ emails you can accurately recreate those people as an audience plus a percentage to target look-a-like audiences.

Spending money on acquiring leads might seem expensive at the time, but keep in mind the campaign. Yes, you will waste some money, but if you track & test it will be to better your ads in future. Remember, our 0.88% newsletter conversion netted nearly $6,000 in pledges and we spent close to $2000 capturing and managing that list.

As previously stated, you are spending money, so it is important to maintain clear goals, assumptions and tests with your advertising. Start out by just taking a guess and estimate, gather data and use it to learn. Write out assumptions of the audience, why you think it is relevant ? Specifics of what you will be testing with the advertisement, e.g. if a particular age group is better than another ? And what the goal of the ad is, this could be: achieve CPL of less than $1.50.

To track your ads the most valuable metrics to pay attention to are:

CPL: Cost Per Lead, or the amount of money you pay in advertising to acquire that lead e.g. email address and name. This could be through a lead generation ad, a boosted post or payment to influences.

CPC: Cost Per Click, or the amount of money you pay in advertising to acquire an engagement click e.g. someone clicking on or interacting with your advertisement.

Once you have your advertising and lead generation machine up and running, start talking with your audience. Ensure your audience understands what KickStarter is; how to purchase goods on KickStarter and specifically why they should purchase your good on KickStarter (most likely the financial discount offered).

There are advertising agencies that will run KickStarter ad campaigns for you in the lead up to, and during your campaign. These agencies usually charge $5,000 up front to essentially do the same testing described above and than take 15–20% cut of pledges that they generate whilst spending $30-$50 dollars per conversion. If you can demonstrate a good CPA (cost per acquisition) most agencies will actually front the money for the ad spend themselves, and why wouldn’t they if they can generate $60 from a $30 ad spend on a $300 product.

2.4) Messaging

Running effective ads and maintaining a good newsletter list will require you to have a good website and great messaging. Great messaging is the most underrated aspect of advertising and campaigns. Messaging, for those new to advertising, are the words, phrases and descriptions you use to communicate and SELL your product and value.

Messaging is forever evolving so listen to feedback and find what works, it should be simple and flow like a conversation. Messaging on your website should be a conversation between the page and the potential customer.

To test your websites messaging, you can use the BBQ Test. To perform, pretend you are at a BBQ describing your product to someone you have just met for the first time using the same words and progression of your website. Does it make sense and logical progression as a conversation would? Does it read as how a natural discussion would unravel? If not, time to simplify and re-do!

How you talk to your audience is up to you, but it should be in language that mirrors your product i.e. don’t have a high-cost, luxury product and use juvenile messaging and humorous digital assets. Any outreach you make should be conducive to the product’s target audience and main message, with the aim of building momentum, leading towards the launch of the campaign, regardless of being 1, 2 or 3 months out.

2.5) Video

Your video is an extremely important digital asset. This will be the first thing people see, interact with and respond to on your campaign page. The video can be anything from amatuer filming to $10,000 plus professional productions. For reference we spent just over $3,000 on our video, a lot of which was for professional filming & editing (Mude filmed & edited our video, these guys are awesome!).

Oh yes, we had fun with our video.

You can also hire people to write video scripts for you, but the best way is to tell the story yourself. Backers like connecting with creators, so have a go yourself. If you don’t have great camera gear, hire some. Your video is your biggest asset, so invest in it.

There is no ‘correct’ method for creating a video but here are some general guidelines that will keep you out of trouble:

  • Communicate or demonstrate what your product is and what the value/problem it solves is in the first 15 seconds (messaging, again important)
  • Choose one style, either be a design film with amazing asset shots, or funny with punchlines. It is really hard to blend both styles and you’ll end up wasting time
  • For inspiration on how to script a great video just watch those of successful campaigns and replicate what you can
  • Show your product off and show people using it; &
  • Talk value, you want the next thing the person watching your video to do is back your campaign.

Tip: You will need to submit your video with your draft campaign page to KickStarter prior to your campaign going live. If you make outrageous claims about technology, like a fridge that will double as an oven simultaneously whilst running on solar, you’ll need to demonstrate some kind of proof. This does not need to be your final cut and at any point (once approved) you can update your video (even when the campaign is live).

Digital Assets

Your digital assets: product photos, videos, logos, fonts, GIFs, prototype photos, team photos, are what your campaign page, advertisements and newsletters will be built on, so get these done professionally and done right. The impact good digital asset can make is huge and they can be reused for a long time so don’t be afraid to invest! If you’re good with your planning you can collect a bunch of these as you film your video.

You’ll need a number of product and team shots that include:

  • Product only shots, white background, all angles
  • Target audience interacting with product, try and recreate a natural environment in which it is used, overly fake is easily spotted
  • If your product does something cool looking (moves etc) get lots of GIFs & videos of this, self shot can work wonders here
  • Customer reactions, these are priceless!
  • More product shots, be creative, be daring =]
  • Team shots, building, testing and creating the product; &
  • Prototype footage, versions and development.
Product shot, in target setting.

2.6) PR & Getting Help

Running a successful and top 2% ( >$100k USD) campaign is a lot of work, and there are a number of partners you can contract for help.

Campaign managers

Talking to KickStarter strategists be like….

Campaign managers are usually the help that is needed. The general pitch from a campaign manager will be that they have the expertise and team to do most of the prep work described above and make sure you have a successful campaign. My experience with Campaign Managers is mixed.

The commercials usually look like a base fee any where form $5000–$10000 and a commission ~10% on any backing you receive that is not brought in by pre-approved referral links (PR, friends/family etc). Campaign managers can assist with everything from generating leads (be careful here, they can rack up big ad spend in a short amount of time with no results), to creating the digital assets for the campaign page and designing drip email marketing.

If you are short on time and resources a campaign manager can be amazing. However, don’t underestimate the importance of scrutinising who you bring onboard to help. Treat it like a hire; ask to speak with the creators of campaigns they have run previously and get real reviews. Ask for stats, their average CPL in your category and a timeline plan, get as much information as you can before making a decision.

Some campaign managers will pitch to you that they have running a campaign down to a science; they do not, otherwise every campaign would raise the exact same amount, which they do not (science is repeatable).

Finally, negotiate! All you can, and hard on the commercials. Push as hard as you can for a entirely commission based or pay per performance contract. Avoid upfront and remember you are the customer, so shop around and negotiate!

Freelancers

If you don’t have the resources or don’t want to hire a campaign manager, but could still use some help, hiring a freelancer is a great alternative.

You can usually hire a good designer for a few thousand a month and get a whole months work from them, far cheaper than a campaign manager. Freelancers are also good for film and email marketing content. Highly recommended!

PR Agency

PR can make or break a campaign, but it is never guaranteed to do either. In my opinion it is worth every dollar when done right. I strongly suggest putting in the time and effort to find an agency you can work well with. Treat it similar to hiring a campaign manager, do your homework, ask hard questions, talk to past clients and journalists and get their reviews and negotiate pay-per-result.

You’ll spend anywhere from $5,000 USD plus here so make it count!

PR is your ultimate traffic driver. Even a bad review can often yield good click through results and conversion, as readers will want to make up their own mind, often readers will click through, make their way through a nice campaign page and decided they’ll back you (I had this happen, 8 backers)!

Good reviews are great and I have seen articles bring in upwards of several hundred backers from a single write up, never ever underestimate the power of good PR.

If you are looking for a good agency, my recommendation is Proper Propaganda. The team is amazing, they do outstanding work and with an introduction like No matter what happens, you’ll hate your PR agency. The good news? You’ll hate us less you can’t go wrong.

Yes, you might get in TechCrunch.

Plan your launch

Regardless of hiring help or using internal resources, with so much to do, planning is a must. Use your own favourite tool here. I used Trello for my own personal planning.

2.7 Campaign Page

Your campaign page is another area in which you tell your story and capture a backers attention. I would recommend keeping it simple and similar to your video script. If you’re stuck for design inspiration check out some of the top trending and backed projects. Here is ours.

2.8 Rewards & Shipping

Prior to launch you’ll need to have a set commercial model of rewards and shipping rates. Rewards and shipping can be updated when live, but a backed reward can NOT be altered in anyway.

It is important to understand your profit margins on rewards and associated shipping costs to where your primary audiences is located. This Google sheet is a useful calculator that helps demonstrate the split of the pie.

Shipping can be complicated so engage early with shipping and logistic companies to understand base costs.

3) Third Parties

I touched on this with campaign managers and PR teams above, those are the main third parties you will need prior to launch, the remainder can be engaged during or after launch.

The second you launch a campaign you will be bombarded with emails, LinkedIn messages and messages through your KickStarter page by third parties singing “we will help make you successful”. 99% of these companies are all the same, PR, advertisers, PR & advertisers, email newsletters, backer groups, backer forums. Most aren’t helpful though these are some I think you will find helpful.

Email Newsletters

You will receive in excess of 16,478 messages and emails from companies that run KickStarter forums and campaign newsletters that all have the same pitch “we will feature you in our newsletter campaign which goes out to over (inset big number here) verified repeat backers”. Backerland is one of these companies that we did use.

Backerland

Backerland is a newsletter community of kickstarter backers, they send an email blast out every couple of days with ‘hot’ new campaigns. This is a pay to play service and will cost anywhere from $200-$400 dollars USD. These are really hard to judge and most of the newsletter offers are a hit and miss, we did use the Backerland newsletter and got 4 purchases from it so the activity broke even, though the click through rate was disappointing.

If you are considering using a newsletter service ask for their last 5 campaigns as examples and screenshots of the open, click through and conversion rates. They will attempt to dodge this like nothing else but just ask a few times and be persistent.

KickBoost

KickBoost is a referral reward platform in which you can generate a specific URL and for every purchase that comes through that URL the register will receive a percentage of the sale (usually between 5–10%). This can be useful in 2 scenarios.

Firstly, it is a great incentive to get online publishers and bloggers to write about your campaign, as if the article gets traffic and their readers buy, they will make money. KickBoost usually reach out to you during a campaign but it would be worthwhile getting to know them beforehand as they know some journalists.

Secondly, it is a great way of encouraging people to post, tell their friends and share your campaign, as they can also make money by doing so.

4) During Campaign

The goal!

If you have done your prep work right than running your campaign will be another month of hard (but fun) work. Everything you do for the next 30–45 days in about getting backers.

There is no one right way to run your campaign and the reality is that it could be tanking and you will be scrambling to try and understand how to fix it. I can’t offer much advice apart from that momentum is key, drive everything you have towards momentum and backers.

If you do find yourself with a slow — medium start, turn everything into a milestone and a PR story. PR is big bang for buck as far as inputs and reach, so tell a good story. Below are some examples of how to turn around a slow start.

  • We just crushed our goal in 24 hours!” If you hit your funding goal quickly
  • Forbes and TechCrunch loved this and so will you” if you get a review or article from newspapers and blogs,etc; &
  • Saturate local news cycles, no one will love you as much as your hometown

Updates

You are able to post updates during your campaign. Updates are a double edge sword, only share good progressive news and don’t post often (once a week at most). Updates get posted to every backer in an email, this will encourage some and remind others that they backed your campaign and they might use that reminder to revisit the page and second guess their backing, sometimes cancelling.

What to do when backers cancel pledges

Yes, this is possible and happens quite a lot. According to insights from a KickStarter advertising agency the ‘industry’ average for cancelled pledges is around 1 in 3, three steps forward, one step back.

Backing a project on KickStarter is more of a future agreement to an IOU than an actual sale. Backers aren’t charged at the time of a pledge and a pledge can cancel at any point. Cancelling a pledge is made very easy and obvious for backers (I feel this is for the better, protecting the consumer).

You can message backers directly at any point after they have backed you but this will be through the KickStarter platform, you will not obtain their email until after the campaign.

Not everyone checks these messages so getting a response as to why people have cancelled is hard. That said you should always try to reach out and ask why they cancelled, offer a friendly extension for them to come back or provide feedback.

You should also consider this when posting updates as the cancel pledge button is very close by when they open and read the update, if they don’t see something they like they’ll be gone. We saw the majority of cancelled pledges during the last 6 hours of the campaign and after each update, even though they were good news updates.

FAQ’s

KickStarter offer a FAQ section where you can address questions that will come your way. When creating your own FAQ’s less is more, your product is simple and you want it to appear that way, having a 40 point FAQ breaks this imagine and your product can seem complicated. So address critical and key buying questions. Warranty ? Availability ? Technology paragraph 101 ? Compatibility ? Anything else is something a backer can engage you in and ask.

Comments & questions

Anyone is able to ask you a question or comment on your campaign page. Most postings are constructive questions that you can easily address. Some might be slightly more disruptive, deal with them quickly and in an absolute manner.

Campaign Page Ideas, Link FB messenger

A good engagement technique is to create a banner image that is linked to your company facebook messenger, use the image to encourage people to ask questions and get in touch privately.

Redirect websites

Redirect all URL’s you have to the campaign page, note that if you are using pay per result contracts make sure you have a tracking URL so you can disqualify any purchases you bring in yourself.

Write medium articles

If you blog, write about your launch!

Write LinkedIn articles

I have found LinkedIn articles to be great for engagement and purchases so if you use LinkedIn give it a go!

Track your progress

Clictraq is a useful tool for tracking and projecting your campaign. ClicTraq shows a projection of your campaign and an insight into how backers on KickStarter are responding. This is a free website and should be taken with a grain of salt but still useful.

5) Post Campaign

The fun doesn’t stop here, KickStarter is but one platform that you can crowdfund on and if you are an early stage company without an ecommerce store, marketing & advertising machines then they are a great alternative to building infrastructure you don’t have.

Indiegogo, KickStarters biggest competitor offer a great program in which you can take all funds raised on KickStarter and apply it to a Indiegogo campaign allowing you to carry forward the social value of the amount of the money you raised. They don’t physically require the money, it is more a ‘for show’ arrangement.

Indiegogo charge 10% of any purchase through their website. But again, if you don’t have a good ecommerce machine set up this is a good alternative as the Indiegogo website has a lot of traffic and a new audience of backers.

And Finally: Deliver or Refund!

Deliver. Don’t betray the trust backers have put into you or your product. If you find yourself in a situation where you can’t make the math work to deliver the product, refund.

You have a 14 day grace period in which you can refund backers 100% of their money without Stripe or KickStarter taking a cut.

Final note

After a hell campaign we chose the refund option, we returned 100% of the funds to our backers and accepted a moral failure.

Where did we go wrong ? Many places. Could we have done better ? Perhaps. It is my hope that by reading this future creators will have a better chance at success.

I’d like to thank every single person who backed our campaign, it meant the world.

I’d also like to thank my partner for her support during the campaign and time spent reading & editing this post.

Often I find this type of post is now actually content marketing and there is a hook at the bottom promoting a service or new business venture, well sorry to say I’m not selling KickStarter advisory services — I know, shocker =]

But if you’d like to suggest edits or additions to this post you can email me: jld(at)jamesdeamer.com

Part 2, the review — coming soon.

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