BINGHAMTON, N. Y. — Looking to launch a crowdfunding campaign for your next big idea? If so, emphasizing your previous track record over your technical know-how will make potential investors more likely to open their wallets for your project, a new study finds.
Researchers at Binghamton University recently recruited 300 volunteers to evaluate a handful of mock Kickstarter campaigns, hoping to see what features could turn a digital window shopper into an eager customer.
What mattered most to potential backers, the researchers found, was a given seller’s perceived character and moral compass. In fact, that seller’s reputation mattered even more than his or her actual ability to fulfill orders.
“We found that people worry more about the seller’s honesty than whether the seller actually has the ability and knowledge to finish and deliver on the product,” explains Ali Alper Yayla, the study’s co-author and an associate professor in SUNY Binghamton’s School of Management, in a university release. “People don’t want sellers to just take their money and run.”
In terms of the good or service offered, the researchers wondered how its perceived complexity— or lack thereof — could influence its desirability. In particular, they sought to compare items that were easier to bring to market (e.g., t-shirts) to more intricate goods (e.g., 3D printers). Paradoxically, they found that the previously-documented effect — that trust mattered more than follow through — was even stronger for backers of big-ticket items.
“This was an unexpected finding,” Yayla says. “You’d assume that people would think if the product is very complex, the seller may not actually have the ability to make it. On the other hand, you’d think that people wouldn’t worry about seller competence in low-complexity products.”
Yayla’s explanation for this odd finding is that backers of higher-end campaigns are likely more familiar with the product at hand, making it easier to justify going through with the purchase.
Considering the importance of developing personal trust, Yayla suggests that those who start a crowdfunding campaign make efforts to explain their personal background. Providing links to successful current projects can be an effective way to allow consumers to do their own vetting.
The researchers presented their paper, titled “Unique Challenges of Decision-Making Process on Crowdfunding Platforms— An Exploratory Study,” at the 51st Hawaii International Conference on System Sciences.