Traveling the country and meeting with business owners (and those who advise them), I ask a simple question. What does a business investor expect that is different than what a customer expects? I almost always get the same answer: discounts. Most people think that owners are expecting to get lower prices on the products they buy. That’s actually not very important to investors at all.
Owners primarily expect two things when they participate in crowdfunding campaigns. The first thing that they expect is access. That means that they’re able to talk to the manager, and business leaders, and give their feedback. They like to be included. Now obviously, that doesn’t mean that each time you want to hire or fire someone, you’re going to be contacting your crowdfunding investors. But it doesn’t hurt to let them know that their opinion matters. Surveys and other feedback loops help reinforce that the investor has access. Having owner loyalty cards is important, just like having actual physical stock certificates. People want to be recognized as owners. That is true when they walk into the business. And it is also true that that people want their ownership status displayed on their social media page and on their physical wall in their home or office.
This leads to the second thing that owners really want. Investors want to be part of something bigger. They want to be involved with their community. Just like people are interested to see themselves on the roll of people were involved in a particular nonprofit charitable fundraising campaign, these investors also want to be recognized and included in the community of people who added to a local business. This creates a huge advantage to the crowdfunded company. Not only do you have a lot of investors who are going to talk about your business, the investors are also letting you speak directly to their followers about how grateful you are to have them as part of your team. It is a double-win. The business brand gets the benefit of a larger network, and the investor’s personal brand is enhanced because of their connection to a local business in the community.
Remember the crowdfunding isn’t just about discounts. It is about access and community. Companies that embrace crowdfunding will be far ahead of their competitors, saving hundreds of thousands on old economy marketing strategies that are less and less effective – strategies like providing coupons and discounts to entice people through the doors.
Jonathan Frutkin is an attorney at The Frutkin Law Firm, PLC in Phoenix, AZ. He’s written a new book called “Equity Crowdfunding: Transforming Customers into Loyal Owners” which was published in May, 2013.