While crowdfunding is skyrocketing in popularity, it comes down to more than just the money. Crowdfunding is changing how both entrepreneurs and established companies bring products to market. It has allowed thousands of innovations to raise funding all whilst still in the product development process.
Recently, even established companies are turning to crowdfunding as a way to improve innovation and research and development. A prime example of this is Morphy Richards who launched their Mico with Heatwave Technology in July 2017.
The new microwave cookware solution creates the perfect dish in a fraction of the time it would take in a regular oven, and reached 134% of its goal in just a month.
By using crowdfunding, the team gauged interest and gathered direct customer insight by having an open conversation with backers and providing regular updates.
For example, final designs of the cookware were non-stick and dishwasher-friendly based on what customers were asking for. Morphy Richards made an effort to consider consumer trends and then work towards solutions to meet consumer’s needs and improve the product.
While the professed goal of all crowdfunding efforts is ultimately to raise money, the benefits of crowdfunding are not strictly financial. Successful crowdfunding campaigns offer huge potential for raising the visibility of new products and providing a platform through which backers can provide valuable feedback on those products.
Duncan McCann, researcher at the New Economics Foundation, comments, “It is about understanding the market very quickly, which is a real benefit. It also brings a guarantee of a certain number of purchases and it generates loyalty.”
In general, crowdfunding a product early in its development process often allows entrepreneurs to tailor it to the people who will actually be buying it. This valuable information can’t be used if product development is nearly complete, so the focus is mostly on the financial outcomes of crowdfunding.
And the story doesn’t end there. Even councils in the UK are turning to crowdfunding as budgets are being squeezed by the UK Government. Whilst councils may not be working with chip boards or tinkering with coding, launching campaigns can be a litmus test for local interest.
If a campaign has direct relevance to local consumers, then the project will be funded, which is a win-win situation for both the council and consumer.
Crowdfunding is not just about the money, it’s an invaluable way for companies to essentially conduct market research and get more in-tune with what consumers want. When it comes to successful crowdfunding and accelerating innovation, it’s important that companies focus on what the ‘crowd’ can offer them, and not just the ‘funding’.