Crowdfunding is a great way for entrepreneurs to raise money for their businesses. In this form of funding, you are soliciting the general public to invest in your company. Such investment can come in several forms. In some cases, you give funders equity in your company. In other cases, you give them rewards, such as the product or service you are developing with their funding. And still in other cases, Crowdfunding is simply used to gain donations for your worthy cause.
Regardless of the type of Crowdfunding you embark upon, to be successful, you must leverage social proof. Social proof is the psychological principle that people are much more prone to do something when they see others doing the same thing. The classic example of social proof is the bar with a long line out the door. People inherently want to go into this bar over the bar down the street that doesn’t have a line out the door.
So what does social proof have to do with Crowdfunding? Let me explain. When you set up a Crowdfunding raise, you will create a web page that explains your project. Typically you’ll have a video discussing what you’re doing and why you need funding. And you’ll have text below the video with additional information. In addition to this supplemental information, you’ll have a button for people to click in order to fund your project. Finally, by that button, you’ll have information on how many people have already funded your project and for what total amount.
It’s this last piece of information where social proof is so crucial. Let’s say you visit a Crowdfunding page that presents a great opportunity. Then you read the information and see that zero people have funded the project to date. Alternatively, let’s say the page shows 483 people have already funded the project for $53,280. In this latter case, because of this positive social proof, you and others will be much more prone to fund the project.
Now that you understand social proof, here’s how to use it to successfully raise Crowdfunding dollars. Before telling the masses about your Crowdfunding raise (perhaps by posting on Facebook, Twitter, etc.), start by telling only your closest friends. Get them to fund your project first, so when others (who don’t know you as well, or don’t know you at all), visit your Crowdfunding page, they see the social proof that others have already funded you.
Social proof is an important and proven marketing principle. We see it all the time in the form of product and service testimonials and endorsements. So, don’t forget to use this principle when raising Crowdfunding dollars to grow your business.