A Closer Look At Crowdsourcing

Whether you like it or not, you are either crowdsourcing or being sourced. The information we are generating in a big data world is starting to funnel into tightly curated areas of interest to companies and people. And it’s only going to get bigger!

Crowdsourcing can refer to a number of things, including gathering resources or opinions from large groups of people, and today, refers to a revolutionary type of fundraising. Recent successes in crowdsourcing ranges from the launch of new products, such as the Turtle Shell speaker, to the funding of new movies like Veronica Mars, both getting headlines for disrupting the traditional process for launching a new project. Whether you’re a small business owner, inventor, a writer, or anyone else, you may be able to use crowdsourcing for yourself. Who knows, you may cause a little disruption in the process! But before you head to the internet to try to raise money or get people involved in your cause, you probably need to get a better idea of the basics behind this versatile opportunity.

crowdsourcingHere is the what, who, when, how and why of crowdsourcing:

What: Basically, crowdsourcing is a new way to collect a community and financing that you can use to bring any project you could imagine to fruition. Whereas the old method of raising money and collecting data involved things like taking out loans or wooing random participants in paid focus groups, the internet has changed the landscape completely and makes it easier to access millions. Writers have raised money to write their novel. Video game companies have built buzz and sourced money to develop new games or consoles. Guy Kawasaki used crowdsourcing leveraging all his social channels to gather feedback for his first self-published book. But instead of building buzz the typical way, he involved everyone’s input directly back into the book. On the day of his release, he had thousands of book participants in his community who felt a piece of ownership.

Who: Of course, people aren’t just going to wire you money or give you their time and information because you have a cool idea. Instead, they expect something in return. Whereas traditional investing was always done with the understanding than those giving you money were going to get a financial return on their investment, the most popular crowdsourcing ventures work a bit differently. Instead of monetary returns, most of these efforts involve offering your investors ‘perks’. If you do it right, the perk is the product itself! Extreme perks have even included things like vacations or ‘meet and greet’ events or personally signed books. Whatever you decide, the more you personalize, the bigger your influence and community will grow!

When: For starters, be realistic when you set your goals. Don’t ask for so much that people will immediately scoff at the idea of helping you. Also be sure that you offer worthwhile perks. The perks someone gets for helping to crowd source your project will have a big impact on just how much rewards you get, so make them timely. Seasonal. Need help funding your next extreme bike? Promote it during the Xgames when people are excited. Launching a new traffic app? Include quotes from gridlockers or promote in cities with known traffic problems. When it comes to explaining yourself and what you want to achieve, be sure it emanates passion. People will always support the underdog.

How: You need to know just how crowdsourcing actually works. It starts with your overall goal and your audience. The story you build will make the biggest impact. I’d recommend you spend the most time crafting your authentic story, and how it clearly ties back to your project. How did your experience spark the idea? How did a tragic time in your life inspire the need to change it for others? People innately look to connect with others who share their personal values. Seth Godin took this approach last year, in getting his entire book crowdfunded. He built the entire storyline and made well over $200k to fund his book by doing something so radically different than going the traditional publishing route, his supporters wanted to be a part of this new way of publishing.

Why: The advantages to this are fairly obvious. For one, it gives better insight to a company or person about the overall level of interest in what they’re offering to their audience. It’s almost like market research that actually pays you in the end. The level of support you get for a project can be used to determine overall supply and demand, and help you figure out the best strategies to move forward. And of course, it also helps provide a simpler way to get the funding you need without involving third parties. Caution; prepare yourself for success so you can follow through. In the case of the Pebble Watch, they raised money faster than they ever anticipated and weren’t able to fulfill their orders on the backend because they hadn’t planned on it actually working so well. This destroyed the opportunity to turn millions of anticipating buyers into raving fans.

KEY TAKEAWAY: Building a community by crowdsourcing has massive value when your brand or product has an authentic value and story to tell. You’ll collect an insider audience of buyers eager to talk about it, share it and be a part of your brand for life. Just make sure you’re ready for success, and reap the rewards.