Validating your business is the next step after identifying a brilliant idea. The biggest problem for entrepreneurs, especially if they are launching their business for the first time, is to make sure there is an actual customer who wants to pay for your product.
Testing Market Demand
The concept of "testing market demand" is somewhat alien to student entrepreneurs across Southeast Asia. The current norm is to just talk to the potential markets, identifying their issues and the relevancy of the proposed solution. The majority of the Institute of Higher Learning will encourage their students to send in questionnaires or idea feedback forms. Unless there's a button for respondents to put some money in as a show of support, I doubt that the data collection can yield any meaningful results.
How To Test Market Demand?
Testing market demand is not rocket science; the idea is if you can convince people to pay for your solution before you develop it (pre-sell), it means that you or your idea might have business merit. The only reason why someone would put any money to back you up is if the idea is too good (great solution) or the people who are running the idea are trustworthy (great founder).
Crafting Great Rewards for Potential Backers!
One of the ways to test market demand is via reward crowdfunding. It enables the founder to sell the idea early before they even start building the solution. The biggest blunder for a reward crowdfunding campaign is not crafting great rewards for backers. People will only pay when they see the value, and if they are paying for something in the future, the value needs to be greater than what they fork out.
Who are Your Backers?
Crowdfunding is a great way for you to talk to potential customers early, get their feedback, and for them to BUY your solution before you launch your idea. Giving a chance for potential customers to support your idea is a good way to steal customers from your existing competitors. That is why giving out a "Thank You" cards or just labeling them as a "Superstar" supporter is not good enough!
Examples of a Bad Reward
Basically anything in the realms of a "Thank You" card, note, email or even phone call. Another good example of a bad reward is giving labels without getting anything tangible to high-value backers. For example, if someone commits more than RM500 to your campaign, and you just call them a "Superstar" without getting anything else. Rule of thumb, crowdfunding is pre-selling. So SELL YOUR PRODUCTS OR SERVICES TO GET SUPPORT!
Examples of Good Reward
1) Pre Release of Products or Services: You are currently crowdfunding to validate your business idea. Give backers an option to get the products or services early than launch. This is a terrific strategy to test the pricing model that you will implement in the later stage of your development.
2) Free Access or Discounts to Other Features: Giving backers a free upgrade might be an interesting approach as you can test out other features that are in your pipeline. Alternatively, you can give discounts or vouchers for backers to get the features, products, or services at a cheaper price.
3) Merchandise and Freebies: One of the biggest responsibility of a reward crowdfunding campaign manager is to make sure your brand gain awareness. Getting cool merchandise or freebies is a great way to put a smile on your backer's faces and get them to recommend you to others. Indirectly, you will get them to love your brand and your mission.
4) Personalised Messages: As stated above, a normal "Thank You" card is a big no-no for crowdfunding. At the very least, send out a customized video messages that clearly say the backer's name or a handwritten note to show how much you appreciate their help.
5) Join Community: Some backers support you because they have the same issue or they share the same sentiment as you. Giving them a chance to mingle with people who face the same issue or joining a community that can make them be heard will encourage them to give you more. You can even promise exclusive deals to be promoted in the community.
6) Digital Gifts: Templates, digital stickers, digital vouchers, nft's, and many more. The best way to put a smile on a backer's face is to give them digital gifts where that won't be as expensive as physical gifts and have fewer logistical issues.
Why Craft Good Rewards for Backers?
Put yourself in the backer's shoes. Your potential customer would surely support you if you can promise them that they will get to use your solution when you launch. With great rewards, you can turn an RM10 backer into a RM150 potential customer.