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Tuesday, July 29, 2014

Crowd funding is the Highest Form of Loyalty: Shared Destiny 07-29

Crowd funding is the Highest Form of Loyalty: Shared Destiny 

10 Reasons Why FriendFeed is a Better Place to Browse Flickr Photos Than Flickr ItselfHarvest a thousand ideas. Above photo from popular photographer, and my friend, Thomas Hawk.
Crowdfunding is the highest form of loyalty, and only a few big companies have deployed this crowd strategy.
Big companies can learn from Indiegogo, and Kickstarter.
You’ve heard of Indiegogo, Kickstarter, and other crowdfunding platforms for the tech savvy, but what does it mean to corporate product strategy? Today’s crowdfunding projects often include a litanay of odd products that didn’t make the shelves, I jokingly refer to it as “this decades home shopping network” due to the odd ball products you didn’t realize you needed. These “long tail” products, are examples of grassroots market innovation offering an opportunity for entrepreneurs to get pre-orders, pre-funded, and free marketing to support a future business.
U-Haul Investors Club spurs crowdfunding strategy.For years, marketers have told themselves that repeat sales is the highest form of loyalty, but I’d like extend that we’re now seeing the greatest level of loyalty, crowdfunding, become an untapped opportunity for even large companies to develop. Let’s take U-Haul Investors Club for example, where the crowd can finance and own parts of the loading equipment often at better rates than traditional banks. In return, they receive periodic revenues from the performance of these vehicles. It’s safe to assume, that when it’s time for folks to move homes, these U-Haul Investors will use these services, as well as advocate to their friends.

GE taps crowd innovation from Quirky.

With that said, this is just the first phase of the crowdfunding movement, expect more refined versions to appear, akin to GE’s Quirky program, where the crowd submits ideas, a smaller team selects, and GEs massive production and supply chain is able to create –and distribute at scale. For the inventors who submit ideas, they benefit from their name being on the box, shared revenues, and a chance to see their brainchild hit shelves –without even going to a fabrication plant.

What are the benefits of Corporate Crowdfunding?
  1. A nearly limitless supply of fresh innovation and ideas. Struggling to get fresh ideas to market? Is your company mandate to foster outside-in innovation, tap crowdfunding principles to start your journey for crowd innovation.
  2. Backers pre-pledge to go the journey with you. These backers are telling entrepreneurs, and even large corporations that they’re committed for a long period of development in exchange for early access, perks, or even financial benefits.
  3. They’re engaged with product development. This engaged community can be counted on for active feedback, although they are likely representative of a passionista contingent, not a mainstream audience.
  4. A built-in set of early adopters. In both Kickstarter and Indiegogo, most benefits include perks, which include special services, recognition, or gifts, a few of them result in the early product being shipped. Tap these early adopters for feedback and word of mouth.
  5. They’ll naturally advocate the product. Being engaged means to commit fully, and these crowd-based backers are invested in your future product with time, money, and often reputation. Assume they’ll advocate your products to their network and beyond.

Opportunities for corporate product strategy.
Using the same consumer-type strategies as Kickstarter and Indiegogo, allow the crowd to suggest products, and then fund them, for potential development, akin to GE’s successful Quirky program, which has now extended beyond consumer electronics to appliances. Allow the crowd to drive the initial discussions, ideation. Allow a system for IP, rights, and rewards to be shared between inventors and your own company.
Below Graphic: Crowdfunding behavior set to double
Adoption numbers of 90,000 respondents from my recent research with Vision Critical shows that Crowdfunding will double in adoption by US, UK, and Canadian general population.
03_Forecast
Corporate crowdfunding is uncharted territory.
What’s the one major downside of Crowdfunding programs? Many a project doesn’t see the light of day, and if it does, it may not be a global success. Additioanlly, some companies are afflicted with the “if it’s not invented here” syndrome which limits innovation to only engineers and scientists. Here’s where established brands can help make the right choices, apply the right resources, and help both crowds –and companies –win. While relatively untapped, corporations can adapt this new strategy, to obtain the highest form of loyalty, crowdfunding, for shared destiny with the crowd.
Crowdfunding is the highest form of loyalty: shared destiny
(Disclosure: GE is a founding member of my company, Crowd Companies, an association for business leaders at large companies.)