how to launch your crowdfunded product to market

Copyright 2014, San Diego Public Relations Group http://www.sandiegoprgroup.com

You have been successfully crowdfunded! Now what?

Written by John Miewald, Edited by Julian Rogers

How to launch your crowdfund product to market

Things just got serious. You have successfully

crowdfunded your product. Congratulations! But now

what? All you need to do now is simply build the thing …

right? Not so fast. Building, funding — these are only

part of your success story. Don’t waste your great

product launch … and your new investors’ funds.

You need to do this the right way.

Here’s how: This e-book is a short overview that will guide you through the

steps to successfully take your crowdfunded product to market.

Can you avoid risk?

In many workplaces, you will hear a resentful rumble regarding how the leaders of the company

make all of the money while those lower on the totem pole do all the work. “It’s not fair!” you will

hear them mutter behind the boss’ back. However, most of the time, it is fair. The boss makes

more money because he has taken on the risk. He put up his money to start this venture with no

guarantee of success.

Employees joined the team when the boss knew he had money to hire employees. The

employee is guaranteed his paycheck as long as he is employed. That is the arrangement.

However, when a project is crowdfunded, the boss may, in fact, not have put up his own money.

He may not be taking the biggest risk. Crowdfunding, for many entrepreneurs, is a way of

avoiding risk. You use other people’s money to sponsor a business venture that may succeed or

fail. You invest your time, of course — a valuable commodity — but for you, financial risk is

limited or removed entirely.

So I ask you: should the boss get the lion’s share of crowdfunded enterprise’s profits? Perhaps

not.

In fact, in some crowdfund projects, the idea is to raise capital to hire other people to build the


product or service that you intend to offer. You will likely use some of the money raised to hire

salespeople to sell the product for you.

This may seem like a brilliant plan but it will only work up to a point. Savvy business people can

recognize if you are a non-essential element in the equation. The manufacturer and salesforce

are key to the success of the venture but you…? Who needs you?

Always know and be able to explain what your salable qualities are. Know what you bring to the

table.

Where is your next paycheck coming from?

After a crowdfund campaign, it can seem like you have a lot of money. You may feel that you

have more money than you could possibly need. Do not be fooled by this illusion. You need to

plan to make your next paycheck. This is the start — it may be the start of a whole new career

for you. That is exciting. But, again, the launch of your crowdfunded project is only the beginning

of hopefully a growing, successful business.

You may think that all you need to do is finish making your product and then the money will

come. Research and development, design, and manufacturing gets your product made.

However, after the product is made, you also need to sell it. Setting up a channel for sales can

take months, or more, depending on your sales cycle. Do you have enough funds to cover the

gap before you land your first sale? How many sales will you need to support yourself or a staff?

For some people, this means that they cannot quit their day job yet. If this sounds like you, keep

your day job until you know with certainty where your next paycheck is coming from or you have

enough personal funds to keep you afloat for 12 months or more. Dedicate your product’s

crowdfunded money to the processes we will discuss below. You may not like your day job but

these processes will be your escape plan.

“We will make the product until the money runs out!”

This is a typical strategy after being crowdfunded. In truth, it’s not much of a strategy at all.

Many entrepreneurs are creative, yet they have little idea how to create a lasting, viable

business. But they do know how to make a great product and they can convince investors to

participate. So, they take their $10,000 and write as many pages of the great American novel as

they can before the money runs out.

Here’s the secret: the money always runs out.

Look at it this way: What you have earned from your crowdfund effort is a little cushion of time to

come up with your next way of validating your product’s market viability. You must reward your


investors. Sure, you want to go to market with your hot product. But without a selling strategy

that product is still not done.

Your selling strategy

If you have been successfully crowdfunded, it does not mean that you have a product that will

be a success in the real world. Many crowdfunded products never make it to market. Accept this

fact and prepare your launch so you are not one of the product failures that litter the road on the

way to the marketplace. Many inventors and creative people found success on KickStarter or

Indiegogo … only to fail right afterwards. Why? Their selling strategy was insufficient.

Let’s get real. What do you have so far?

1. You have some idea about the messaging to use for your product. You were at least

able to compile some message that made backers gives you money. That is a start.

Ideally, you have a carefully crafted, honed communications plan that includes all

aspects of your marketing and business communication needs.

2. You can make the claim on your marketing materials that you have been “successfully

crowdfunded.”

3. And that’s it.

You may think that the money you raised is an advantage. Maybe. With crowdfunded

enterprises, money is both a blessing and a responsibility — an obligation to others. Money is a

tool. Like a hammer or fire, it can be used to build or destroy.

What worked vs. what will work

Flexibility

An interesting downfall of many crowdfunded projects is that companies get fixated on what

worked during the crowdfund campaign. The danger here is you may cut off new ideas and

approaches. Please consider that what worked in the crowdfund campaign may not work

beyond the crowdfund campaign. All businesses, even those not crowdfunded, have to be

flexible and adapt to changing circumstances. You have to be open to the possibility of

changing tactics, based on market shifts, new learnings along the way and more.

Your team

Examine and evaluate the people on your team. During a crowdfund campaign, you may have

had friends and family volunteering their time to help make it a success. Does this mean you

now owe them a job? If you make your brother or best friend the VP of your company because

he helped you send the rewards for your backers, does your company stand a chance of being

a multi-million dollar venture? What qualifications does he have? You need people who are

going to bring you to the next level. How will that happen?


This is true for all companies. Changing market realities require thriving companies to be flexible

with regard to tactics, strategy and personnel. Your goal is to get to the next level. It does not

matter if you are making $100 per month or a $100 million

dollars per month. Your idea needs to grow in order to make a

profit for you and your investors.

There are many ways of selling a product in today’s

marketplace. It’s tempting to think, “Let’s do them all!” It is

what I call the “spaghetti on the wall” approach. When cooking

spaghetti, you know when the spaghetti is done if it sticks to

the wall. Many companies view their various marketing and

sales efforts as different strands of spaghetti. Rather than

individually test one strand, they take the entire boiling pot and

throw the whole thing at the wall. The strands stuck on the wall are “done.”

Many selling strategies are incompatible. For instance, it is a point of contention for

manufacturers to sell direct and compete with their resellers or distributors. Similarly, if you have

several small specialty resellers, it could stir up dissent if you sign a deal with a large distributor

who could out-sell and out-market them. Many manufacturers are enticed by short-term gains

only to encounter long-term obstacles.

Be clear about what your agreements are with any members of your marketing and selling

teams: sales operatives, resellers, distributors and other agents. Be sure you can offer a clear

opportunity for each that will not cause conflict with the others.

Strategic alignment

You cannot rely solely upon your vision and values when establishing a strategy. One of the

most abused — and potentially dangerous — quotes from the late Steve Jobs is, "people don't

know what they want until you show it to them." Few people can successfully run a business

without listening to their customers. On the other extreme are businesses that try to

accommodate every customer whim to the point they compromise their identity. These are both

extreme examples, but neither works in isolation. A sustainable business can only be realized

through the pursuit of alignment.

In the early stages of your business ask yourself these questions:

• What will your customers buy?

• What are you producing?

When these two factors are aligned, strategy communication and implementation will have a

stable foundation. Many strategy teams fail to answer these fundamental questions, and thus

end up misaligned. If misalignments are apparent, you would be negligent in moving forward


without making adjustments. Remain true to your vision, while at the same time attempt to

satisfy the demands of your customers. You may need to experiment to find the alignment that

translates into more paying customers.

E-commerce

E-commerce is anything from selling on your website to listing your product on eBay, Amazon or

other online e-tailers and distribution networks.

At the time of the writing of this e-book, selling a product on a privately held website was tough.

Most successful online sellers move their products on reputable shopping portals, like Amazon.

The big online sales sites offer access to ready-made markets. They may be right for your

product. You can test market your product through e-commerce and then decide if it is the

direction you want to go.

Internal sales

You could build an internal sales force that reaches out on your behalf. What I mean by "internal

sales" is that your company's products are sold directly by its employees to the consumer. Your

company shoulders all of the costs but also gives up little margin.

Resellers

In order to motivate resellers, you need to offer them a compelling profit margin. A short sales

cycle will have great appeal to some. Others are willing to put in the time and effort on a product

with a long sales cycle if the value and profits are there. Think about what would motivate you to

sell another person’s product.

If your product is an easy sell, requires little explanation and has clear value, a reseller may

throw in your product with the rest of their offerings in order to pick up a few extra bucks.

However, if your product is truly innovative and new, it could present a problem for resellers who

now must tackle the burden of explaining the new product.

Resellers make money by closing sales. They want to make as many sales as quickly as

possible. If you want the best resellers moving your product, you need to make it easy for them.

Your value proposition must be clear and convincing. Even if your product is better than any

other out there, if it slows the sales process for the reseller, you may find them demotivated to

promote your product. Create strong marketing materials that clearly define your product’s value

to the customer.

When is it best to use resellers?

If you want to reach a specialized industry, a network of resellers may be the way to go. Some

examples might be when selling to the education or medical industry. Both of these require


knowledgeable specialists, with industry contacts, credibility and broad market reach to navigate

sales to completion. It is unlikely that a K-12 school will stock all of its classroom with an item

purchased off of eBay. You won’t be selling medical equipment to a hospital if they do not know

you already.

Distribution — not so fast

If your product is aimed at mass audiences, the dream for many startups is to have your product

on the shelves at major retail stores. If it is your dream and you want to achieve that despite

profits, go for it. Who am I to stand in the way of your dream? However, if you want to make the

most money possible, I suggest you consider the other approaches first.

Beware: Landing a product on the shelves of a big-box retailer is hard-earned. It’s tough territory

to get into. It is easier to make a product available through one or more online resellers

(including your own website) and considerably more complicated and expensive to get a

product placed on the real-world shelves of a brick & mortar store chain.

Similar to resellers, distributors take some margin. Individual retail outlets also take some

margin. Just like resellers, the more innovative the product, the harder it is going to be to sell for

the distributor. Again, they will need clear marketing materials to help them make the sale.

“Can I sell on Amazon and have resellers/distributors?”

I am just going to say “no.” Technically, yes, you can, but it is difficult. The problem is that you

are competing with your reseller/distributors when you also sell direct to your customers. It is

possible to set prices higher for yourself and lower for resellers but sooner or later a customer a

reseller was cultivating will decide instead to buy direct from you. Feelings get hurt and mutually

beneficial business relationships crumble. It is a complicated situation that is not worth getting

into unless you are a very skilled and savvy business person.

Your target customer

Who should buy your product? If you answer, “everybody!” you are in trouble. That is the worst

place to be. “Everybody” is the same as “nobody” except that the person who answers “nobody”

is honest with himself.

Remember, if you are funded through a crowdfund campaign, you probably have a product that

is a little unusual. Even if it were exactly like something that already exists, most people would

avoid it because it is unfamiliar. Put yourself in the shoes of the average consumer. Are they

going to buy Crest Toothpaste or Bill’s Super Toothcleaner? Bill’s Super Toothcleaner may be a

superior product for less, but it takes a special person to open his wallet and take a chance on

it.


You need to find early adopters; the people who are willing to take a chance on new products

like yours. This is not the average person. Maybe the average person would love your product

but he or she is probably not going to risk it. Who is willing to risk it? Target these people. Find

them in forums related to your product or industry. Incentivize them to try your product and get

them to deliver feedback — feedback you can use to learn and to market with.

In the question of where and how you will sell, the answer lies in who you will sell to. If you want

to sell to busy, tech-savvy people, online sales make sense. If you want to sell to people who

need to see or experience the product in person to truly appreciate it, then selling in stores

makes sense. The internet has changed how we shop in many ways but people still buy cars

from dealers in person more than they buy them off of Amazon or eBay.

When to start marketing

Your best marketing is going to be the product itself. However, a great product is only the start

of good marketing. Spend as much time and money as you need on product development.

Before you get close to launch date, start a marketing / PR campaign about a month before the

product is released. Aim for creating a noticeable buzz before the product is available for

purchase. You want excitement on launch day. If you make a big announcement that XYZ

product is now available and no one cares, it is going to be much harder for the next step:

winning over your early adopters.

What is it?

You need documentation that explains your product before launch. Aim for simplicity and

brevity. If you cannot explain your product in just a couple plain-spoken sentences, you risk

losing a great percentage of your target audience. This is vital not only for customers but for

resellers and distributors, also. Include your positioning in this documentation and make it

available online. You may have some of the documentation written as a result of your crowdfund

campaign but know this: No one is going to buy what they don’t understand.

Early adopter buzz campaign

The buzz may start on social media and, if you are lucky, it will. Hopefully, people still remember

how excited they were back when you first announced your idea on KickStarter or whatever

platform you used. Often, however, the honeymoon is over and the fresh new idea is now old

news.

Don’t expect new buyers and new leads. Earn them. Focus on closing the people who are

already excited about your product. You likely will not have tons of leads right out of the gate but

you may have a core group of early adopters. Your fan-base can expand over time. No one is

suddenly a hit with everyone. You need to start somewhere and grow. Leverage your early


adopters, take special care of their needs, solicit their feedback and amplify their positive

experiences and goodwill toward your product.

Many times this initial outreach to early adopters requires a PR effort. This is when you need to

find some journalists and bloggers who will try things on behalf of the rest of the world and post

their opinions. This is how you begin to build buzz with the mainstream.

Pricing

There are many variations of pricing strategies. Ensure that your costs are covered and that you

are making some kind of profit. If your profit margins are narrow, you will need to sell more of

your product to make a profit. If your profit margins are high, you may come across as

“expensive” but you will not need to sell as many. Decide which trade-off is best for your product

and for your brand. Execute accordingly.

Compare your product against similar products in your category. Many times, I have heard the

comment “there is nothing like my product on the market.” This has almost never been true

since the first wheel was invented. Consumers will have a knee-jerk reaction to your product

and classify it in about a second. You may have created a hat with a built in stereo, fan, cup

holder and snorkel but the average consumer will look at it and simply call it a “hat.” If your hat

costs ten times what every other hat costs, you will need to justify that price. It is not impossible

to do but understand that is the situation you are in.

Your pricing will be heavily influenced by your selling strategy. For example, if you are using

resellers or distributors, you need to factor in their margins in addition to your own. The

tendency among manufacturers is to assume that buyers always seek the lowest price. A more

accurate statement is that buyers seeks the lowest price for the best product. Customers are

motivated by value. Price is only a part of that equation. Your value proposition must be clear

and it can include a higher cost if it is justified by higher value, such as cost savings over time,

durability, top-line components/materials, etc. A clearly better product can be priced high for the

category.

Technical support

If you are offering software, consumer electronics, games, or anything similar, you will need to

help your customers get — and remain — comfortable with your technology. You need a

winning technical support plan. Some crowdfund campaigns are one-man / one-woman

operations. You may believe that you will be able to (or have to) do the technical support

yourself. This is almost certainly an unreasonable assumption. There are many more business

considerations that you will need to focus on. Don’t be that guy/gal that blows it by dropping the

technical support component of your product’s lifecycle. Have a tech support plan in place and

delegate.


Shipping and logistics

Shipping and logistics are a reality of going to market. They can eat your

profits. Not only do you need an attractive package for the shelf but you

also need a package for shipping the product, or bundles of products. If

you plan to ship to resellers or retailers, you probably want boxes that can

hold large orders of multiple units so that everything is not shipped one at

a time.

There are packaging manufacturers that will build custom boxes for you

but you are going to get the best prices by buying packaging pre-

configured, in bulk. Figure out the size and dimensions of one of your

products. Then do the math for fitting several units in one box. You may,

for example, have a 10- or 20-unit box for your product to more easily

ship to a retailer.

Building trust

Trust is everything in business. The most successful businesses are highly trusted by their

customers. Your customers must trust you through every step of the marketing, buying and

service experience. Drop the ball at any step in your customer’s experience and you’ve likely

lost that customer. Do it regularly and your entire business is at risk. Similarly, you must be able

to trust everyone you depend upon to get your product to market.

Trust is highly subjective. Online businesses are often more suspect to new customers and

prospects than brick-and-mortar businesses. You can earn trust by diligently obtaining all the

certifications, awards and testimonials that you can. Be sure to offer feedback opportunities for

your customers that are visible to readers of your site. Studies show that online purchasers trust

reviews from other customers more than product recommendations. Don’t miss out on this top

way to influence new purchasers and prospects.

Be sure to respond publicly to comments about your products/services. Even — and especially

— to negative comments. You may or may not be able to win over a negative commenter (likely

not) but your response, if crafted properly, can positively influence other customers or potential

customers. Your brand is on the line with every purchase and every customer interaction.

Earning trust is not easy and is not a one-time activity. Losing trust is both easy to do and can

happen with just one negative interaction. Tread carefully.

Packaging

If your product is going to be on a shelf, it needs packaging that sells the contents. Remember,

you have no say in how the box will be stacked on the shelf. Maybe it will be standing on end or


on its side. Maybe it will be on the top shelf or the middle shelf. Your packaging must sell the

product no matter what side faces the customer.

Do your homework. Go to a store that you would like for your product to appear and the aisle

that you expect it to appear. What does the aisle look like? What color are the boxes? How

large are the shelves? Do most appear in boxes or blister packs? How can your product

packaging stand out in that environment?

The color of your packaging can either make you blend in or stand out. You may think that you

want to stand out and much of the time — you are right — but there is something to be said for

blending in when you have a product that is radically different. If you have a creation that is

entirely unlike anything currently on the market, you may want to have packaging that conveys

familiarity.

To be clear, the packaging that appears on the shelf should not be the same packaging that the

product is shipped in. Even if it is a very pretty box to begin with, it will likely have all kinds of

dents and stickers on it by the time it arrives at the store. This means you are going to need two

different kinds of boxes.

UPC

Large retail chains will demand that you have a valid universal product code (UPC). I want to

take a moment here to emphasize the word “valid.” In some markets, you can get away with

launching your products with any 11-digit number. Many online portals are this way. They just

need 11 digits that are not being used by anything else and you are good to go. However, if you

want your products to appear on the shelves of Target, Walmart or Sam’s Club, you need a

unique 11-digit UPC that is registered to your company in one of the universal databases.

Patents

If you really have a great, unique idea it is just a matter of time before someone rips you off.

Consider also getting copyrights of any unique images that you use, including logo, product

images, etc. Copyrights, unlike patents, are international and could be the deciding factor in

preventing some overseas company from creating a rip-off product.

Spend time on the United States Patent and Trademark Office (USPTO) website to identify and

read any patents similar to your concept.

Timing your product launch

Some advisers will tell you that “timing is everything.” This may have been true years ago but

today a prolonged strategy is more valuable than timing an announcement with some event or


trade show. (The exceptions to this, of course, are seasonal products.) It is best to launch the

product when it is ready.

Exposure for your product does not need to come from an announcement at an event. You have

more options for marketing, advertising and PR than ever before. There is no need to rush. The

risk is rarely worth the reward. Putting out a poor product will result in early adopters posting

negative reviews that you will have trouble recovering from. (See the Trust section above.)

The one bit of timing that you need to worry about is if you have made promises to resellers,

distributors or customers. Unfortunately but honestly, the least important of these three are your

customers. Enthusiastic early buyers of a product that has not yet been released will wait a little

while until you are ready.

Your distributors and resellers may not be so patient. If you cost your resellers or distributors

sales before your product even comes to market, you may damage lucrative business

relationships. As a rule of thumb, always under-promise and over-deliver. If you think your

product will be ready in May, tell them June. Better that they are pleasantly surprised than

disappointed.

Mass production

You do not want to start mass producing until you know if you have a final product. Take the

time to create a prototype and beta test. Then test some more.

If you want to make a living off of selling your creation, you are going to need many of them.

Assuming you are making a tangible product, you will need a way of making many of them. This

means working with a factory.

Many inventors turn to China for mass production. Keep in mind that the factory will need

detailed plans on what they are building. This can leave the door open for unscrupulous factory

owners taking a version of your idea and producing an overseas counterfeit version. Be sure

you have all patents and copyrights in place for any region your product may appear — either in

pre-production, production or final form.

Venture capital

You could take your success from crowdfunding and parlay that

into raising more funds from venture capital. If you need more

funds, the time to go to venture capitalists is right after a

successful crowdfund campaign, when excitement is high. If you

end up waiting a bit, you may want to do a PR campaign to

generate excitement and remind people of the product that you

are offering when you go to venture capitalists.


This e-book is very short but the points brought up here are the kinds of things that venture

capitalists will ask about. Be sure you can survive your meeting with a venture capitalist. They’re

not known for suffering fools or the unprepared. You should be able to speak with authority on

any of the points brought up here with a venture capitalist.

What’s next?

This short e-book gave you an idea of the things you need to consider after your crowdfund

campaign but I want to give you just one more thing to consider: What’s next? Even before you

complete this project, you need to have the next one lined up. This is how a business is built.

There is no time to wait for everything to be settled before beginning on the next project. In fact,

knowing what you plan to do next could affect how you execute certain actions now. This e-

book is not intended to cover this broad topic.

If you have questions or comments, I would love to hear from you. Send me an email at

[email protected] or visit the San Diego Public Relations Group website at

www.sandiegoprgroup.com.

how to launch your crowdfunded product to market

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