- Crowdfunding is an increasingly popular way to raise funds for both commercial ventures and charitable causes.
- Kickstarter, GoFundMe and Indiegogo are examples of crowdfunding facilitators.
- How you word the appeal can determine the success of the crowdfunding campaign.
It's not what you say, but how you say it that could determine how successful your crowdfunding campaign is, according to research.
A study from researchers at the University of Illinois at Chicago revealed that linguistic style, which is how one says things, is critical in crowdfunding campaigns, especially for social entrepreneurs.
The study's authors found that how a pitch is voiced and worded is much more important for social entrepreneurs than it is for their commercial counterparts.
"Here, we show that the persuasiveness of entrepreneurs' stylistic expressions is dependent on their category membership – that is, whether they are social or commercial entrepreneurs," said Annaleena Parhankangas, the study's lead author and an assistant professor at UIC, in a statement.
The study was co-authored by Maija Renko, a UIC associate professor of entrepreneurship. For the study, researchers analyzed 656 Kickstarter campaigns from 2013 to 2014. They discovered that linguistic styles that made the campaigns and their founders more understandable and relatable to potential funders boosted the exposure and success of social campaigns. However, linguistic style had little impact for commercial endeavors.
"Early-stage entrepreneurs are increasingly involved in the theatrical pitching of their projects to various audiences at forums, such as accelerator demo days, pitch mixers, competitions and online crowdfunding sites," Parhankangas said. "How they deliver the message matters – and, as a result, it is important to study how entrepreneurs' language use affects their chances of raising funding."
The researchers said style doesn't matter as much for commercial entrepreneurs. Instead, content is likely to be enough to persuade their audience to invest.
While what's being pitched is more important for commercial entrepreneurs, there are some phrases they can use in their pitches to increase their chances of success. A previous study from researchers at Georgia Tech looked at more than 45,000 Kickstarter campaigns and found that certain phrases used on the campaign's webpage could be used to predict whether it would fail or succeed.
Based on the 100 most popular phrases used in the project descriptions they studied, these are the top phrases in successful campaigns:
- "Also receive two"
- "Pledged will"
- "Good karma and"
- "Option is"
- "Given the chance"
- "Has pledged"
- "To build this"
- "Accessible to the"
- "We can afford"
- "Project will be"
- "Mention your"
- "Your continued"
The researchers noted that successful projects, which made up slightly more than 50% of the campaigns they analyzed, used the above phrases to express concepts such as reciprocity, scarcity, social proof and identity (belonging to a community), and authority.
On the flip side, these are five phrases that the Georgia Tech researchers said indicated crowdfunding failure:
- "Not been able"
- "Even a dollar"
- "Later I"
- "A blank"
- "Hope to get"
"Our research revealed that the phrases used in successful Kickstarter campaigns exhibited general persuasion principles," said Eric Gilbert, the study's author, who runs Georgia Tech's Comp.social Lab. "Campaigns that follow the concept of reciprocity – that is, offer a gift in return for a pledge – and the perceptions of social participation and authority generated the greatest amount of funding, [but] the language used to express the reward made the difference."
Additional tips for a successful crowdfunding campaign
- Be prepared. Yes, you can use the crowdfunding feedback to refine your ideas, but know where you are going. People don't want to invest in something that doesn't seem well thought out.
- Be strategic on social media, and customize your approach. You shouldn't use the same strategy for each platform.
- Facebook is not a substitute for a media page; be helpful to the media so they can help you.
- Tell your story before you ask for money. Show people why they should want to give money (whether to invest or to help) before you ask.
- Keep up the communication; let your supporters know what's going on. They may want to provide additional support.
- Get personal – tell them who you are and who is on your team.
Crowdfunding experts agree that the most critical element of a campaign is the hook, a unique quality that communicates clearly and concisely why the cause is worth someone's attention. Expert Josh Kraus points out that the hook includes both the USP (unique selling point) of the proposition being funded and how the USP is framed. This could include the utility of the item (for a commercial product) or the ethical considerations (for a philanthropic venture). The most successful hooks turn the selling points into a story that makes people pull out their wallets.
According to TechSoup, it is also critical to choose the right crowdfunding vendor. This has evolved into a very competitive industry over the last decade, with notable differences between the players, and more to consider than the standard Indiegogo, Kickstarter and GoFundMe offerings. Newcomers to the space include Classy and Mightycause, so do your homework before deciding on a platform.