Crowdfunding is increasingly popular for a whole range of endeavors, but it is perhaps best remembered for the kind of, slightly wacky, products that would often appear on Kickstarter. The kind that may not have secured backing any other way.
New research from UBC Saunder School of Business suggests that social good items are also popular on such platforms, and what’s more, people appear more likely to pay more for such goods after they’ve been crowdfunded.
Making the world a better place
The researchers conducted an experiment whereby a volunteer sat outside a coffee shop and asked passersby to try a new range of pens that had been made from reclaimed, sustainable materials. If they also completed a short survey, they earned $2.
After every hour, the volunteers changed the type of transaction, so that one hour it might be a traditional purchase of the pen, while another hour it might be a crowdfunding effort. The results reveal that despite it being exactly the same pen, people were far more likely to buy the pen in the crowdfunding condition, and also paid nearly 50 cents more for it.
What’s more, it’s not simply the act of crowdfunding that is enticing customers but also the impact the crowdfunding has on the perceived merits of the item itself. For instance, some customers were told about the merits of the pen while others were told about its contribution to the social good.
Collective good
It’s an outcome the researchers believe underlines the desire among many of us to improve the collective good, and how crowdfunding can provide an outlet for that desire.
“Crowdfunding activates feelings of working towards a goal with other people, and what we find is that it activates an interdependent mindset. So, it makes you feel more interconnected with other people,” the researchers say.
“When you’re in the that state of mind, you’re going to be more responsive to the goals of others — and goals that help others. So, if you’re being offered this product that helps people or the planet, it has this matching effect–people prefer social good options when they are in an interdependent state of mind.”
Indeed, the effect was so pronounced that the research assistant who was hawking the pens felt the need to speak up and reassure the researchers that no foul play was afoot.
Supporting growth
The phenomenon did have its limits, however, as it only appeared during the funding phase of the project itself. As soon as the project was funded, the effect diminished significantly, even if supporters could still contribute.
It represents a clear desire to contribute to bringing something worthwhile to market. The researchers plan to continue pursuing this line of enquiry and explore whether there are any other notable outcomes from crowdfunding.
But for now, she says people who are developing products that have a social good side may want to launch their wares on a crowdfunding site before hitting the shelves — and emphasize their collective benefits.
“If you have a product or service that has this kind of social good element to it, a good strategy might be to do some kind of crowdfunding as a promotional activity that gets attention and buy-in from customers,” the researchers conclude. “And even if it is being offered for purchase, perhaps you could word promotions in ways that activate that collective or interdependent mindset.”
