Customer Engagement ‘is’ Kickstarter

michaelaris    February 6, 2015

Customer Engagement ‘is’ Kickstarter

Organization Name: Kickstarter

Industry: Crowdfunding Services

Name of contact:

Perry Chen, Founder, Kickstarter
Yancey Strickler, Founder, Kickstarter
Charles Adler, Founder, Kickstarter

Web references:

Kickstarter
Formlabs

Company Overview:

 

kickstarter-logo

Born in the Greenpoint section of Brooklyn, New York – Kickstarter officially launched on April 28th, 2009 by founders Perry Chen, Yancey Strickler and Charles Adler with the artist world in mind. In 2002, Chen envisioned the possibility of holding a concert in his then current city, New Orleans. But with the eminent fear of potentially losing all his money on the illustrious idea, he lost his nerve. While his financial nerve was lost, it did birth a new idea – what if there was a means for other ‘creatives’ to raise money to fund their ideas? In 2005, Chen found himself in New York City in the company of Yancey Strickler, a friend and known pragmatist. Accompanied by his qualifications as an online music critic, Strickler was overwhelmed with the democracy factor in pursuing an avenue like this: what if it became a popularity contest where people utilized the site like a voting system? Chen confidently quenched all his fears, speaking on behalf of talented small town artists alike: give people the opportunity to appreciate their talents. An Internet based strategy like that, could be just the thing. Convinced by Chen’s unrelenting tenacity, they agreed upon a strategy and third founder, Charles Adler, was added to the mix. Equipped with the right contacts with the skill sets they needed, Kickerstarter took off.

What is Crowdfunding?

Crowdfunding is a practice in which a project or venture is funded by the monetary contributions most commonly deposited via the Internet. The crowdfunding model is broken down in three groups:

The Project Initiator: A person who proposes the idea, and/or project which is up to be funded.

The Backers: Individuals who not only support the idea, but are willing to donate towards the cause.

The Platform: The host in which marries both the project initiator and the backers together.

While Kickstarter is not the first of it’s kind, it is the first to attract some of the largest projects since it’s founding in 2009. But is crowdfunding a new concept? Believe it or not, it’s not. In 1783, Wolfgang Amadeus Mozart envisioned himself playing three recently composed concertos in a Viennese concerto hall. Without the funds himself, Mozart offered his backers the opportunity to not only hear the pieces, but have a physical copy of the sheet music given to them in conjunction with a notation of thanks in the concertos’ manuscript. While Mozart’s supporters were known as ‘subscribers’, the modern day term for people who support creative ventures such as his, are now known as ‘backers.’

Subscribers to Mozart’s Lenten concerts, 1784 – Cornell University Library

By 2013, the crowdfunding industry grew to be a whopping $5.1 billion dollar industry worldwide.

Stuff You Should Know: How Kickstarter Works (Podcast)


Customer Engagement

Kickstarter allows for customers to engage at the early conceptual product development and design stage. This gives consumers the opportunity to feel that they are apart of the big picture; apart of the driving force behind the company, not just on the receiving end. It nurtures the connection and value the customers have with the products. If that wasn’t enough, the reward system set in place by Kickstarter entices consumers with different tiers of personalized engagement, whether it’s a simple virtual high-five, or a personal meet-and-greet at a VIP Product Launch Event.

This deep connection is not a novelty that should be taken for granted. It has the power to either make or break a business. And, with the openness of the Internet, word spreads fast.  

The Good

It is not an unknown concept that since the birthing of the Internet, people worldwide have been connected in more ways than anyone could have ever fathomed and engagement as a whole is at an all time high. With a web tool like Kickstarter, the projects creators get to retain 100% of the rights and control to their projects with a success rate of 44% for fully funded projects. Launching a project for funding on Kickstarter is free, however, there is a 5% of aggregate fees collected, as well as 3-5% payment processing fee processed by Amazon; however, these fees only apply if ALL targeted funds are collected – if the goal is not met, the funds not only go back to the backers, the project creator does not incur any fees.

The Bad

“With great power comes great responsibility” – Uncle Ben (Spider-Man)

Since the Internet is an open forum, it is not a safe place for businesses to hide. The thought of putting an idea out onto Kickstarter for millions of potential customers’ to be exposed to sounds like a fast track to success. However, if your idea takes off and is successfully funded, then the pressure is on to deliver. Moreover, since Kickstarter is the marketplace in which businesses are launching their products or services, it is also the place for their customer communication. In 2012, an innovative personal 3D Printing start-up manufacturer met the bane of its 2,068 backers, when it’s pledged goal of $100,000 reached a total investment of $2.9 Million.

Formlabs: Case Study

Founded in September 2011 in the MIT Media Lab in Massachusetts – Formlabs was created by Maxim Lobovsky, David Carnor, and Natan Linder. As an engineer, designer, and marketer, their goal was to create a high quality, but affordable desktop stereo lithography 3D printer. After a year of prototyping, Formlabs found itself ready for production, but there was only one draw back: funding.

The team decided that it would take a crack at the increasingly popular online crowdsourcing platform, Kickstarter, to get their mission statement and technology out to the masses.


Within 2.5 hours, Formlabs broke their $100,000 target and within 2.5 days, they hit $1 million. Throughout the process, Formlabs was in constant communication with the backers, answering questions, showing off demos, and always offering their tokens of appreciation.

What they didn’t expect, was that they would raise almost $3 million, with most pledges going towards the reward of backers receiving their own fully functional FORM 1 Printer. With such a high demand, and no ready supply, the Formlabs team had their work cut out for them. Almost 9-months passed, and not a single printer had left their facility. There was an uproar from their backers all over the internet, on almost every social network. Formlabs was being chastised for not holding up their end of the bargain.

But, the company held their heads high, and always communicated to the customers that they were always their number 1 priority. They were transparent about all of the technical flaws and speed bumps they came across while mass-producing the product, and promised the backers they would ensure quality. Finally, in December of 2013, 1 year and 3 months after their Kickstarter campaign, Formlabs shipped the last of their inventory to their backers.  

Lessons Learned

While Kickstarter remains to be one of the most commonly used campaign platform for the creative world with a reputable track record for successful viral projects, it doesn’t change that the delivery of projects by its creators is important. Strategy is key with any successful project on Kickstarter; it’s not just about having a really great idea. A constant engagement with one’s customers and market is imperative for a successful campaign. Kickstarter can provide the tools; it goes back to the project leaders’ desire to see the project succeed by remaining engaged in the campaign.

Food For Thought:

Goodman, G.F. 2012. Engagement Marketing: How Small Business Wins in a Socially Connected World.

Crowdfunding As A Customer Engagement Channel (Valeriya Paykacheva, Kajaani University of Applied Sciences)

Submitted By: Amanda Pereira, Michael Racioppo

To contact the author of this entry please email at: michael@mediaclassified.ca, pereira.amanda18@gmail.com

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