Product development is potentially expensive and risky. You spend a significant amount of money to bring a product to market and only then find out if your customers want to buy it. Is there a way to reduce this risk?
Start-up manufacturers cannot afford this risk and Kickstarter evolved, to use crowd funding to help minimise this risk by getting customer buy-in, before committing to invest in the product. Since 2009 Kickstarter has raised nearly $900m in product funding. Kickstarter allows potential purchasers to evaluate new products and pre-commit to buy, before the product has gone into manufacturing. If there are not enough customers to cover the start-up costs the project doesn’t proceed and the customers get their money back. We are not suggesting that established brands launch their products on Kickstarter ! But there is a lot to be learnt from the process. If you have a significant base of past purchasers who have bought your existing products; why not increase their loyalty and make them feel special by inviting them to evaluate future products and inviting them to reserve products in advance at advantageous prices? For example, imagine that you’ve made a ladies’ leather bag in brown that has sold quite well and you are interested in bringing it out next season in a range of colours? By inviting past buyers to reserve bags in the new colours you learn which colours will succeed, detect the colours that are better dropped and secure upfront committed revenue to contribute to development costs. You could have invited customers to vote on new colours, but asking for a commitment ensures you get accurate reliable feedback, as well as pre-selling a product. After all, why make products that you know customers don’t want to buy? If you don’t already know how Kickstarter works take a look and think about how you could apply the principles to your products. You may also want to learn more about crowdsourcing, a topic Theresia has written a blog entry about. If you are interested in reducing the risk of product development by using these principles as part of your customer relationship marketing then why not contact us?