Crowdfunding has become one of the best ways to bring ground-breaking product ideas to life.
But it is not easy to raise money on crowdfunding platforms such as Kickstarter and Indiegogo. 65% of all crowdfunding campaigns fail to reach their funding goals, and only 2-3% of crowdfunding campaigners raise above $100K, only 0.1% raise over $1M.
So if you have an innovative product idea and have decided that crowdfunding is the best way to bring it to life, you may need to consider hiring a crowdfunding consultant to help you achieve or surpass your funding goals.
In this article, we provide an overview of crowdfunding consultants, the benefits and drawbacks of hiring them, the cost of working with a crowdfunding agency, and the questions you should be asking to choose a genuine and experienced crowdfunding consultant.
What is a Crowdfunding Consultant?
A crowdfunding consultant is a person or an agency that offers advice on how to launch, manage, and promote your crowdfunding campaign for a fee.
There are three types of crowdfunding consultants based on their compensation fee structure.
1.Hourly rate or fixed cost consultants
These consultants may invoice a fixed amount for a project or charge an hourly rate for their services. They may also charge a consultation fee for the initial discussion or ask you to pay a certain amount upfront for a fixed project. The advantage of this method is knowing upfront costs, and gaining insights into the attention and time they are willing to dedicate to your campaign. Also, they will not cut into earnings if the campaign is a run-away success.
The disadvantage is that their fee is a flat rate, which means there is little incentive for the consultant to give their all to make your campaign successful. Whether you succeed or not, they have already had their pay. You may feel that you have not received the value for your money.
2. Commission based consultants
These consultants embrace commission-based compensation. They receive a certain percentage of funds raised after spearheading your campaign successfully. These consultants appreciate the challenges and uncertainties of raising money on crowdfunding platforms like Kickstarter and Indiegogo and are rare to find.
The advantage of this model is avoiding upfront costs, and knowing the consultant has financial motivation for the project succeeding since their pay is based on it.
The disadvantage is that there is a free-rider effect: sometimes, the success of the campaign may not be directly linked to their action, but they will still get their share.
3. Hybrid consultants
These consultants charge partially hourly or fixed rate costs and a commission on the funds raised. Their fees are lower than what hourly or fixed rate consultants and commission-based compensation consultants charge.
The advantage of these consultants is that they receive an initial pay, which is good to focus their attention and time on your project, and a commission that acts as an incentive to work hard and make your project successful.
What About a Crowdfunding Agency?
Most crowdfunding consultants propose to offer advertising and PR or influencer marketing services. But others go beyond and have created their own crowdfunding agencies.
Here are the different services that crowdfunding agencies may offer.
- Market analysis
- Lead generation
- Facebook & Google Ads
- Landing page Design and Copywriting
- Crowdfunding Page Copywriting & Design
- RR Outreach
- Email Marketing
- Referral Campaigns
- Social Media Marketing
- Cross promotions
- Customer support
Depending on the crowdfunding agency, they may offer all or just some of these services. The extent to which they offer them depends on their expertise, knowledge, and experience, and varies greatly from one consultant to another.
Benefits and Drawbacks of Hiring a Consultant
There are several benefits and drawbacks of hiring a consultant rather than running the campaign alone. When done with a team, everyone learns from the unique strengths of each member, allowing the transfer of valuable knowledge and digital marketing which can help in other projects once the crowdfunding campaign is over. Costs are reduced because there are no additional payment to crowdfunding agencies.
The problem is the amount of time required to learn the skills and accumulating experience in copywriting, influencer marketing, social media marketing, and PR. These tasks can be executed by an expert, freeing valuable time to focus on parts of the campaign you have firmer grasp on.
So the first thing to do is assess the business needs and the goals of the campaign and outsource the relevant tasks to the consultants with the expertise to elevate the campaign.
Benefits of Hiring a Crowdfunding Consultant
Here are the advantages of working with a crowdfunding consultant.
- They have the knowledge and experience: they have built up the expertise to execute crowdfunding campaigns over the years, and you will get the help and advice of knowledgeable crowdfunding experts in their team.
- They have an extensive network: Crowdfunding agencies have a vast network of influencers and journalists and can help you land featured posts with affiliate commissions and garner visible coverage for lower rates.
- Crowdfunding consultants can help you achieve a higher funding goal: you can set a higher funding goal and expect to achieve it because they can guarantee the maximum possible ROI for your campaign.
- They help you build your brand: working with the best consultants helps you develop a strong portfolio of digital materials such as reliable marketing insights, marketing strategy, audiences' data, and pictures that can help you build a bigger brand and continue growing your business after the crowdfunding campaign.
Drawbacks of Hiring a Crowdfunding Consultant
As one would expect, everything that has benefits comes with some drawbacks too, and crowdfunding consultants are not an exception. There are some drawbacks to be aware of before taking the plunge.
- Added cost: hiring the best crowdfunding consultant who will bring value to your campaign is not cheap. You need to factor in their fees either as a commission of the raised funds, hourly rate, or a fixed cost.
- After the campaign, you are left all by yourself: after the campaign is over, your experienced consultant will leave everything to you and your team, and you will start handing all the activities by yourself.
How Much Do They Charge?
There is no one-size-fits-all price when it comes to the cost of hiring a crowdfunding consultant. This will vary among different experts and projects. They may charge an hourly rate or fixed cost for the whole project, or a percentage commission on the total funds raised.
It is upon you to negotiate favorable terms with the consultant to agree on a reasonable fee for both of you. But do not expect to pay someone $500 to run your campaign for 30 to 60 days or someone promising to bring you traffic of $1million for $50 and expect to get value for the money. They may not give it the time and the attention it deserves, and you will only end up losing your money.
Related article: The Marketing Costs You Need to Factor into Your Crowdfunding Budget
5 Questions to Ask a Potential Crowdfunding Consultant
The number of crowdfunding consultants is growing by the day; there are so many "experts" who propose to offer you their service when you begin a campaign. But you need to be careful because many of them are scams and will not bring you any results.
When the deal sounds too good to be true, you may not get value for your money.
Here some specific questions you should ask to weed out the bad guys from the real and valuable crowdfunding consultants.
1.Do you need a crowdfunding consultant?
This is the first, and the most important question because you may not need a crowdfunding consultant.
You can find great data and information on crowdfunding blogs or third-party blogs. If you have the time, educate yourself using these free resources, especially for personal-focused crowdfunding campaigns.
You can also decide to use this approach when your funding goal is somehow low, and you cannot afford a consultant. Let's say you want to raise $10,000.
To get a crowdfunding consultant who will give you high-quality consultancy services, you may have to part with $1,000 or $2,000. Beware that you get what you pay for, and if someone changes very low, they only end up repeating what you can learn for free reading crowdfunding articles on Easyship. So you need to weigh your options and see whether you need or can afford to hire a crowdfunding consultant.
2. Inquire about their team of marketers
You need to find a crowdfunding consultant who is good in public relations and understands the ins and outs of digital marketing, mainly social media marketing. In other words, your consultant should be well-connected to the media. Make sure that your crowdfunding agency has the following experts in their team.
- PR expert: this is the person who can handle public relations. He will be responsible for securing media coverage, writing and distributing press releases, and reaching out to journalists.
- A great copywriter: this is someone who will write compelling copy for your crowdfunding page, landing page, and emails.
- Facebook ads manager: this is the person who will ensure that your ads on Facebook generate leads and drive people to your crowdfunding page to achieve a high ROI.
- Social media enthusiast: depending on the number of social media channels your organic campaigns will run, such as Facebook, Twitter, and Instagram, you need someone to oversee these channels and ensure that your campaigns are successful.
A consultant doesn't have to have four different people for the roles above. A PR expert can also take care of all copywriting tasks, and a Facebook ads manager can take care of both paid and organic social campaigns. Just make sure that each of these digital marketing roles is covered. That way, they will be able to use the media to target the right donors and make your campaign successful.
3. Inquire about their experience
Anyone can claim to have crowdfunding expertise, take your money, and provide very little value to your crowdfunding campaign.
Ask your crowdfunding consultant to back their claims with references to the past campaigns they have worked on before and how much they raised in each campaign.
If they have run many campaigns, they have learned a lot in the process and can use their wealth of experience to make your project successful.
4. Ask about their rate of success
Also, pay close attention to their rate of success. Ensure that you seek to know the total number of campaigns they have spearheaded against the successful ones. If someone has run 50 campaigns and only ten were successful, you may need to think twice before hiring them. Make sure that they have success stories to justify their promises and fees.
5. Ask about their fees
You need to ask your crowdfunding consultant about their fee structure. Some charge a flat fee before the campaign starts. Others charge a percentage of the total funds raised. Others will ask for some down payment upfront, and a commission of the money raised later.
Whatever their fee structure is, you need to remember that you get what you pay for. If someone charges very enticing fees, then you need to doubt the quality of their services and the value they will bring to your campaign.
Don't expect the best consultants with a track record of success and who is willing to think beyond the normal marketing practices to make your campaign successful to be that cheap.
3 Tips for Avoiding Costly Search Mistakes
There are some costly mistakes that you should avoid when looking for a crowdfunding consultant. Here are the most common ones.
- Their successful campaigns: a consultant may try to impress you with the successful campaigns they have worked on. Don't get carried away by that! Make sure you dig deeper and get to know their actual success rate. It makes sense to ask about their failures as well.
- Don't just see this as a hiring process: paying a consultant a fee is an investment to help run a successful campaign. Make sure that the activities the consultant will handle will lead to a positive ROI.
- Don't rush into looking for a consultant: do the research and put work into the project before rushing to hire a consultant to do everything from scratch. It makes sense to bring in a consultant to critique and improve the campaign rather than outsource even the most basic aspects. This will provide a direct connection with your funders.
Knowing the questions to ask and the common mistakes to avoid when sourcing a consultant is the first step, but where can you find the high-quality pros?
There are several ways through which you can identify reputable consultants. They include:
- Experts directory: you can find Indiegogo-trusted crowdfunding agencies listed here. You can find Kickstarter campaign consultants listed.
- Campaign pages: consultants place their logo at the end of their partner's campaign pages. Look through the pages of successful campaigns and see whose logo is there.
- Get a reference from a campaigner: if you know some people who have run successful campaigns, you can ask about their experience with their consultant.
- Search online: searching crowdfunding-related questions on google and Quora is also another way to find consultants. Read through the comments and reviews on their pages, and you will probably land one of the best crowdfunding consultants there.
Is it Worth It?
When planning to start a crowdfunding campaign, expect to receive numerous offers from crowdfunding consultants pitching their services. While most of them are scams looking for a quick buck and bring no value to your project, there are knowledgeable, experienced, and genuine consultants who can offer valuable advice and help you surpass your funding goals.
Asking the right questions about the campaigns they’ve worked on, their success rate, and compensation fee structure is the best method for distinguishing the reputable from the scams.
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