While the crowdfunding industry grows, the competition does too. If you’re running your campaign on Kickstarter or Indiegogo, why should people pledge for you and not the hundreds of other projects in the same niche?
That’s where crowdfunding rewards come in. Your campaign may have a lot in common with another project, but if your rewards are backer-centric, you’ll get better results. Why is that?
Let’s shine some light on the psychology behind crowdfunding rewards and why low stocks urge people to act faster.
Why Do Crowdfunding Stock Levels Work?
We all like to be rewarded because it’s part of who we are as humans. When we get a reward, our brain releases ‘happy hormones that encourage us to do more of what got us the reward in the first place.
Suppose you want to buy a shirt that costs $30. You spotted it in the shop window, and now you’re home contemplating if you want to buy it or not. Buying the shirt will definitely bring you joy.
However, the next day, the shop announces a 50% sale. Now, you’re getting the shirt the same shirt for $15. While the price is halved, your joy is doubled. In business terms, this strategy is called incentive marketing, and it’s also used in crowdfunding.
What is Incentive Marketing?
Incentive marketing uses motivational devices, such as contests, discount coupons, vouchers, free delivery, and reduced prices to increase sales.
Let’s apply this to crowdfunding now. For instance, you’re running a campaign to raise money for your short film. Sure enough, people will pledge if they like the storyline and your campaign video.
However, if you throw in a reward, they’re more likely to pledge. Say, there’s a celebrity working on your film. You can give signed keychains as rewards to your backers. Now, you’re giving people an incentive to pledge for your movie.
Previously, they were giving you $20 because they liked your idea. Now, they’ll give $40 because they want a keychain signed by Robert Downey Jr.
While an entire team handles incentive marketing at a large company, you must do everything manually when running a crowdfunding campaign. As the campaign grows, this could become a bit of a hassle.
Worry not, though. JustEarlyBird is a reliable reward automation tool that increases your sales by managing rewards and creating urgency. The tool shows limited stock values, urging people to pledge faster. Does that work? Absolutely.
Why Does Creating Urgency by Showing Low Stock Levels Work?
Businesses tend to keep customers’ psychology into consideration when devising marketing strategies. To sell your product, you must know what the customer wants and how they react to different marketing tactics. The same goes for crowdfunding.
If you show an ample level of crowdfunding rewards, most people will likely take their time to pledge. However, if you show low crowdfunding stock levels on your campaign page, people will act faster.
In psychology, it’s termed the ‘Mere Urgency Effect,’ while in crowdfunding, it’s called ‘reaching your target before 60 days’. Here’s the thing, you can use the urgency effect to prompt people into doing unimportant tasks before the important ones.
According to a 2018 study, when people are told that a certain task is urgent, they’re highly likely to perform it even if it’s unimportant.
One of the best ways to use this effect is by setting deadlines. Most businesses do this regularly. They set deadlines for discounts, promotions, and free delivery, making people act fast.
You can incorporate this into your campaign by showing low crowdfunding stock levels. When people see that the crowdfunding rewards are running out, they’re less likely to think before pledging and more likely to act on impulse.
According to a 2016 study, when something is scarce, shoppers buy it urgently. Online businesses use this principle by showing you how many items are left in stock. When a customer sees that only three items are left, they tend to place an order quickly.
JustEarlyBird helps you apply the same tactic to crowdfunding. It shows low stocks to visitors, letting them know that they have to act fast to get the crowdfunding rewards you’re offering.
Is Incentive Marketing Important?
Yes, it absolutely is, especially in crowdfunding. You can estimate the importance of incentive marketing by knowing that 86% of the customers report being loyal to brands with rewards programs.
Some people think rewards always have to be money or a tangible item. Quite interestingly, crowdfunding rewards don’t always have to be monetary. Even in retail businesses, non-monetary rewards seem to be doing the trick.
That’s probably why US businesses spend around $16.1 billion on non-monetary customer incentives every year. If you don’t have a lot to spend on your crowdfunding campaign, you can be a bit creative with rewards. Let’s take a look at an example to see if it works.
Build the Barn at Poplar Wood Farm
With a target of $25,000, it took only 150 backers to bring this farm to life. You might be wondering, what were the rewards? For $150, backers could name a goat on the farm. Plus, they got two picture updates of the goat to see how their animal was doing.
Thus, this example shows that people merely need a reward, whether it’s financial or validatory. In any case, you have to make them feel that their contribution means something, and you’re ready to reward them in return.
Lastly, we’ll end by saying that you won’t be able to handle everything manually once the campaign starts growing. That’s when JustEarlyBird can take over some tasks – showing low stocks and automating rewards – to let you focus on other things that require more attention.
Crowdfunding rewards fall under the umbrella of incentive marketing, making people act promptly. Likewise, visitors are more likely to become backers when they see low crowdfunding stock levels. Use these psychological tactics in your next campaign to reach your target well before time.