Crowdfunding, if you’re new to the concept, is a way to raise funding for a business, idea or project by letting your audience support you. It can be a great way to get the money you need, if you understand how it works. In this article we’ll get to the root of crowdfunding by explaining the psychology behind it, or as I like to think of it, crowdfunding with Cialdini.
Crowdfunding your project, venture or idea is a bountiful idea we can thank the “scale-free degree distribution” internet for. An obscure art project can find backers in exchange for a promise of something tangible (e.g. logo t-shirt) or intangible (e.g. name embedded in movie). It can be a long dirt road to raise funds using this method, but if done right it has tremendous benefits to you, your idea and your backers.
We have been on all sides of fundraising, and crowdfunding is the slowest and requires the largest amount of time (on average). You’ll need a great idea, a scalable network, a writer, a designer, a video and a high level of resilience.
Last, you’ll need knowledge in the psychology of persuasion. That’s where Professor Cialdini and his six principles of reciprocity, commitment and consistency, social proof, authority, liking and scarcity come in.
Reciprocity means giving something in exchange for the expectation of something coming back in your direction. Backing other crowdfunded ventures is the first place to start. Then, what else can you give to create the social gap people feel when they sense an obligation to “return the favour?”
Helping someone out in a tough spot, sending an unexpected gift or just a “shout out” in social media can create this social gap of reciprocity. The largest use of this will likely be pulling in all the favours from your past good deeds with others in your network. You can also include incentives or rewards to your crowdfunding page, as another aspect of reciprocity.
Commitment and Consistency
We tend to stick with an idea once we’ve set it in place, even if the incentive is gone. Start by asking for some social attention, then moving the individual along to eventually backing you. Last, ask them to socialize it to their friends. We have a built-in need to be consistent with our past behaviours, once you’ve broken the ice with a potential sponsor, continue to ask.
We tend to do things we see others do first. Stand on any busy sidewalk and start looking up at the sky with a curious look and count the number of people who do the same. This is as simple as showing the backers (built into the process) but is often augmented by all the social media channels, video views and other areas where we see proof of others’ interest. This is where the scale-free degree distribution environment meets social rocket fuel.
Obeying an authority figure is human tendency, but it depends on who your audiences see as authoritative. Having authority back your venture can come from having something published in a notable print or digital magazine. It can also include quotes from notables in your category, non-profits or other leaders who are relevant to your category. Any and all endorsements are good and help persuade other backers.
It is no coincidence that one of the fundamental elements of social networking is the “like.” We have a tendency to be persuaded by beauty (male and female). Being likeable along with reasonable amounts of Photoshop work will go a long way. Picking the “face” of your brand or venture also helps. Don’t be afraid to pick the most articulate and photogenic member of the team.
The most crude version of this is “limited time only.” An elegant version of this idea is how travel sites give you the limited number of rooms available and notify you when someone is looking at your room. Limiting the options in each of the categories and limited time to participate is required in more situations. Scarcity is one of the most powerful motivators, use it in subtle ways and see the results.
Study up on infomercials, see these methods deployed like a blunt butter knife. Filter ideas through a brand and business strategy then leverage them to unlock wallets.
Now that you understand the psychology behind successful crowdfunding, continue on to learn more about what you can do to make your campaign stand out from the rest.