May 17, 2018

What We Learned From A Kickstarter That Didn’t Work

Honest lessons from a failure

“Are we really going to do this?”

We were about to cancel our second Kickstarter campaign in just over a month for a product we thought was going to expand our business and bring us a brand new wave of success and happy customers.

It was an outcome that we never predicted, and that we had fought hard to avoid.

Here is what happened and what we learned from two failed Kickstarter campaigns.

The original plan and product

The Ink+Volt Laptop Bag was a long time coming. It was an idea our founder, Kate, had when she looked around at the many bags she carried every day. She had her nice handbag for essentials like her wallet and phone, then a laptop bag for her computer and work papers, and usually an additional tote bag for the extra items she carried every day like gym clothes, books, or things for her kids.

Why couldn’t there be just one bag, that looked great and could carry everything a busy, successful woman actually needs during a day?

Since no one else had made a bag that could do all that, we decided it was up to us.

We thought it would be a great fit for our current customers and that it would attract some new customers too. It was our first real foray outside the world of paper products, so we were pushing our boundaries — but we felt up to the job.

Over months and months, we worked with designers to create several prototypes. We focused on using beautiful materials and luxury finishes, and packing as much function as we could possibly fit inside. Some of the early models were too heavy; others were too small to fit a larger laptop.

Ultimately, we ended up with two streamlined, endlessly practical but gorgeous bags: the Dream+Discover bag and the Above+Beyond bag. We needed to raise about $100,000 in order to produce the bags and make any kind of profit, so we started creating the Kickstarter campaign.

The first campaign

About a week before the campaign, we did tons of research and ran ads to get people to sign up for an email list about the bag. Those were really cheap experiments and had a great conversion rate — it was a great way to gauge people’s reactions to the bag concept, different price points, different photography/images, etc. We used this email list to learn about the people who would be most interested in the bag, so we could reach more of them with the ads we ran on Facebook and Google throughout the campaign.

We launched the campaign on January 29, 2018. We had a video, product photos, design specs, and tons of copy — all of which we thought were convincing and intriguing. We set our goal at $45,000.

You can see the original campaign page here: https://www.kickstarter.com/projects/katemats/the-ink-volt-laptop-bag

Why ask for $45,000 instead of thr $100,000 we actually needed? It has to do with Kickstarter psychology. People are much more likely to pledge on a campaign that has far exceeded its fundraising goal — we’ve seen this happen in the past with our own campaigns that started with a $10,000 goal and ended up raising over $130,000.

But in this case, the pledges didn’t exactly come rolling in.

We had pretty good momentum on the first day, but unlike our previous Kickstarters, we didn’t shoot past our goal on the first day. Many of the people who pledged sent us excited messages, but there were fewer of them than we expected.

We gave it time. We tweaked our ads and started seeing incredibly high clickthrough rates, but very low conversion rates. People liked what the ads were selling, but they weren’t buying once they got to the Kickstarter page.

It just didn’t happen. And with the funding deadline approaching, we had to look at the facts. Even if we did reach our goal (which we were within $300 of doing), we had nowhere near the amount of money we would need.

We decided to cancel the campaign, rework our strategy, and launch again.

Cancelling the first campaign

Here is the message we sent to our backers when we cancelled the campaign.

We got a lot of feedback to the news — as expected, a lot of it was negative. People felt disappointed that they weren’t getting the bag, they were upset that we talked about making changes to the design, and they expressed doubt about whether they would support a new campaign.

The second campaign — what changed, what stayed the same

The number one complaint we heard about the original Kickstarter campaign was that the bags were too expensive. So we looked at how we could lower the price.

  • We removed the additional cost for shipping and rolled it into the bag price
  • We removed some of the luxury extra items — like a dust bag — from the basic design and turned them into add-ons for various stretch goals
  • We offered loyalty pricing for backers of the previous campaign

Other considerations:

  • We absolutely did not want to reduce the quality of materials or function in the bag, because those were the heart of the project to begin with.
  • We hired a marketing firm to help us create more effective ads for the campaign. We had seen a very high click rate on our ads, but people weren’t pledging. Since we couldn’t figure it out on our own, we decided to bring in expert help.
  • We surveyed our campaign backers to learn more about who they were, so that we could market more effectively to the kind of people who would pledge.
  • We also tried to improve the photography and visuals to make the campaign more appealing to a high-end audience. We went with a slightly more minimal aesthetic, thinking that might click better for the kind of buyer who would want this bag.

Finally, we relaunched the new campaign on March 13, 2018, feeling that we had a much better strategy that would help us achieve our goal.

You can see the second campaign page here: https://www.kickstarter.com/projects/katemats/designer-style-all-day-function-the-ink-volt-lapto

Over the first weeks of the campaign, we reached the same level we had gotten with our first campaign, but then progress stalled. We stayed stuck at about $40,000 (or about 120 backers) for a long time.

Once again, we were nowhere near our goal. The marketing firm’s ads weren’t doing any better than ours had. After many long conversations and stressful nights, we decided we had to cancel the campaign. Again.

Here is the message that we sent to backers.

Why we had to cancel — a breakdown of the numbers

It was going to cost us $100 a bag to make 800 bags — that was the minimum order from the factory. Then we needed to pay to have the bags shipped. In total, it would cost us $160,000.

We needed to raise at least $100,000 to make these bags, and then we’d pay the difference. That was just enough to break even and not lose money. We would sell any remaining bags on our website at a higher price to clear out inventory and cover our costs.

That’s a lot of money, but we had expected to raise much more than that.

In the end, we ended up losing about $20,000 on this project. Here is where the money went:

  • $8k to make the video
  • $3k on product photography
  • $10k on Facebook and Google ads
  • $2k deposit for marketing firm + paying for work
  • $4k trip to China to oversee production
  • Additional money on design, material samples, etc.

We talked about the possibility of producing the bags even if we didn’t raise the $100,000 we needed on Kickstarter. We could have taken a risk, paid the difference ourselves, and still produced the bags — but the failure of the Kickstarter made it look unlikely that we would be able to sell the rest of the bags on our website, meaning we would lose another $60,000 and have hundreds of unsold bags sitting in our office.

If people wouldn’t pay the Kickstarter price, why would we think they would pay for them in our store?

The bag price seemed to be a big hurdle for people. It was the most common negative feedback we heard about the bag. People thought it was just too expensive.

In reality, the price was a serious deal because in retail, the markup on bags is huge. The bag cost us $100 to make, which means that in stores, it would have cost $400 or more — and we were asking for less than $300. However, if your customers aren’t willing to pay $300, it doesn’t really matter if it’s a good deal or not.

Trust me, if we could have made this profitable, we would have done it. But we were losing too much money, and we stood to lose much more.

In the end, we didn’t get to make the bags we believed in so much. But we did learn a lot. And below, we will pass along as many of those lessons as we possibly can, so that future Kickstarter creators can learn from our struggle.

Lessons learned

When pricing a product, cheaper is not always better

Lowering the price between campaigns didn’t impact conversions for us. We probably had the right price point to begin with, since it allowed us to include all the features that made the bag appealing to backers. We could have made the best possible bag and turned a higher profit, while still having the same number of backers.

Charging for shipping doesn’t impact your conversion rate

People will still pledge even if shipping isn’t included in the price. In the first campaign, we charged for shipping and in the second campaign we didn’t. Again, our conversion rate was the same.

Build a list before the launch and test your product/market fit

We started building an email list to test the product, prices, etc about a week before the campaign. However, we had prototypes long before that. We could have easily taken photos of those prototypes and been building an email list for months before launch — giving us far more time and data to help validate the concept before we launched.

Another thing we could have done to validate the idea would have been to sell someone else’s laptop bag in our online store. If we had seen lots of sales, we would have known the product was something our customers wanted — and if it didn’t sell, we would have known that a bag was maybe not the highest priority for our customers.

Your video needs to be perfect for your audience

We heard that the video was too commercial and didn’t sell the value of the bag (didn’t talk about the pockets, etc) well enough. On mobile, the video is front and center, so it needs to be perfect and ours wasn’t.

Think about where your customers spend money

It seems that our Ink+Volt audience is not the same audience as for the bag. We thought there would be more overlap than there was — again, this is a question that we could have potentially answered if we had done more testing in advance.

We modeled the bag after $1000 bags by brands like Prada and Celine, but maybe that product doesn’t resonate with our audience or our brand.

Maybe people who buy expensive handbags aren’t shopping on Kickstarter. Maybe they don’t want to wait months to get the product delivered. Maybe our marketing didn’t match the quality/style/tone they are used to. Maybe people need more time to decide whether or not to spend $300 on a bag.

Stick with the things you do best

We have run 3 extremely successful Kickstarter campaigns before (this, this, and this), but those were for $40 products. This time we were selling a $300 product.

Maybe that is just not our market. Maybe our energy would be better spent on products closer to our flagship product. (Luckily, we have several of these products in the pipeline so you will be seeing them soon!)

Not every lesson was just about what went wrong

We learned a few positive things as well:

We did as well as we probably could on ads

During the campaign, we were paying hundreds of dollars a day running ads and not getting pledges. One of the key ways we drive sales is through ads on Facebook and Google — we’ve done this on every previous campaign (which raised, $130k, $200k, and $400k) and those ads were critical.

We were seeing a very high relevance score on our ads for both of our campaigns this time — we rated 8 out of 10 — which meant that our ads were extremely well targeted. People were liking and clicking on a lot of our ads. But they weren’t converting.

The marketing firm we hired didn’t do any better on the ads than we did. While that was disappointing, it was also validating because it meant we had been doing as well as experts to begin with.

Kickstarter is a great way to test ideas

We lost $20,000 which is a lot of money to lose, no matter what. That could have been a salary for someone on our team, or could have been put towards a more successful product.

However, if we had not done a Kickstarter and had instead just plowed ahead trying to sell the bag on our website, we would be out $160,000 from producing the bags instead of just $20,000. That means we have $140,000 to spend on other product development, since that money didn’t get invested into the bag.

We saved a lot on opportunity costs

Now we know to stay away from products like the laptop bag. We most likely won’t ever carry someone else’s laptop bag in our store, since we know it won’t likely sell. — I could have tested carrying someone else’s laptop bag in our store (or another way to test it smaller) to see if people were purchasing something like what I wanted

In the end

In the end, we probably learned everything we needed to know from the first campaign. But we believed in the product so much, we figured it was something we were doing wrong and that if we could just bring in someone to help us market it better, that it would succeed.

But maybe we just don’t have the capability to sell this kind of product.

We love the bag. Whenever we carry the bag in public, we get compliments and questions about it. We still believe it is an amazing product.

If we were a bigger company, we would have taken the risk. We would have eaten the cost and still delivered on the Kickstarter campaign, even though we were so short of our goal. But the truth is we are a small company. We just can’t afford to take those kinds of risks.

In the end, we have a product we love that just didn’t sell. We will move on to the next. And we are grateful for all the support we have gotten along the way.

Read Next

Why I Love Using Paper in a Digital World

By kate matsudaira