Crowdfunding Public Relations That Builds Buzz Every Time.

Crowdfunding as Market Testing

What Campbell’s Soup Can Teach Us About Crowdsourcing for a New Product

Crowdsourcing for Tomato Soup

Crowdsourcing for Tomato Soup

Too often, we see crowdfunders that pin all of their hopes and dreams on a single crowdfunding campaign for their new idea. They’re convinced their product, service, film, album, etc. is brilliant and that everybody is going to want it. Dreams of yacht sailing, worldwide travel and shopping for mansions takeover; the crowdfunder is positive that legions of crowdfunding backers will throw fistfuls of dollars at their campaign and life will be perfect.

This line of thinking can get downright dangerous if Jane Doe or John Doe literally bet the ranch on their new idea by mortgaging their house to develop and build a prototype, rack up credit card debt on website design, Google Adwords, Facebook ads, and paying for crowdfunding public relations services such as ours. Every once in a while, Mr. or Ms. Doe have done the crowdfunding equivalent of putting their life savings on a random spot on the roulette wheel of crowdfunding and say a prayer as they spin….

… a win is life changing. The heart can start beating again as products can be built and shipped profitably. A loss, which is much more likely at the roulette wheel or on any crowdfunding platform.

That’s why crowdfunding promotion has to be treated like a market research tool to test new product ideas BEFORE any serious amount of money is spent. Launching a crowdfunding campaign with a “do or die” / “failure is not an option” position is a very, very risky proposition. Crowdfunding as market testing is concerned should be considered just as important as the money raised itself.

Campbell’s Soup knows all about this, as do most companies and informed entrepreneurs. Campbell’s has been churning out their tomato soup in those familiar red-and-white cans since 1902 and remains among the top three in sales among dozens of different flavors in their soup line.

When Campbell’s started to roll out two new packages for their tomato soup – one a single serve ‘grab and go’ microwaveable container and the other a similar two serving tub – they engaged in extensive market research before spending millions on new packaging and production facilities.

In other words, Campbell’s turned to crowdsourcing to poll the market and see if people wanted their Campbell’s tomato soup in anything other than a tin can.

Taking their boldness one step further, Campbell’s rolled out a whole new tomato soup; tomato and sweet basil bisque. And as you might expect, it’s delicious!

You can be sure that a few thousand people tasted their bisque in focus groups, market research studies, etc. before they fired up that new production line.

Turns out, the market was very receptive. Campbell’s spent money on the new expansion of products only AFTER getting market validation from consumers.

Webvan, one of the most spectacular failures in the history of the business world, didn’t do market research. Everybody just figured that home delivery of groceries would be epic, leading the company to burn through over $1.2 billion in cash and shutting down in about two years. What happened? They built out warehousing, logistics, bought a fleet of trucks and just waited for the customer orders to roll in — not nearly enough did. Long story short; Webvan bet it all on what they FELT the public would do but never thought for one second that nobody would want to buy groceries the Webvan way.

This is the sad trap of the “build it and they will come” philosophy which, as you can see by now, is fatally flawed and leads to lots of disappointment and tons of wasted money.

Ergo, the tremendous value of market research. And crowdfunding as market testing goes is the next evolutionary step in manufacturing.

Tim Ferris, often quoted and referenced in this blog, constantly stresses the importance of doing market research to get product validation BEFORE sinking any serious amounts of money into any given idea. His blog article Hacking Kickstarter talks all about the importance of testing a product idea on the market before investing any serious amount of time, energy or money. Read the first four paragraphs of this article 10-12 times in a row to let this idea penetrate the skull…

How many times have you dreamt of launching a new product, only to let your dream fall to the wayside?

I don’t have the money to even get started! What if it fails?

In the past, these excuses held some weight, as bringing a new product to market could be incredibly expensive. Oftentimes, you had to prototype, build, and then hope the world wanted what you were selling. If not, you could end up with a warehouse full of debt: unsellable inventory.

Now, there are new options. Crowdfunding platforms like Kickstarter and IndieGogo allow you to introduce (test) a new product before you start manufacturing, removing a huge amount of risk. If people like what you’re proposing, you can pull in thousands or even millions of dollars to fund your dream. At the very worst, you were able to test your idea without investing much time or money.” – The Hacking Kickstarter article from the Tim Ferris website.

It should be coming clear that crowdfunding as market testing is a game-changer in the world of innovation and entrepreneurship.

To help deprogram you from the flawed thinking of adopting your idea and running with it no matter what, read Tim’s Four Hour Work Week book several times. It’s life changing all by itself. Then read chapters nine and ten over and over and over again to understand that testing a product idea on the market is a key factor in identifying a product or a service that you can make money selling. In other words — and sorry for being so repetitive — test the product idea before you go all-in on your idea. That’s all Tim talks about in chapters nine and ten; product testing, market validation and proof of concept with consumers BEFORE committing resources to the product or service in questions.

Crowdfunding for market testing purposes is ideal for that and it’s so important for any entrepreneur to get some sort of “proof of concept” that lets you know your idea is commercially viable.

If your crowdfunding campaign fails, your product idea doesn’t grab enough people to make it profitable. Crowdfunding campaigns need to be seen as a product research tools first and foremost. Therefore if your crowdfunding project doesn’t hit its goal, you’ll know it’s time to move on and test a different product or service idea. Rinse and repeat as often as necessary until you find that muse that will change your life and possibly even improve the world. We’ll be happy to help you every time and every step of the way in helping you use crowdfunding for market testing to insure you risk very little money with the potential of a huge reward.

Related articles:

Epic Crowdfunding PR is Not a Panacea

Crowdfunding Success and Failure & Reality

Crowdfunding and Market Research