How to create an engagement-friendly environment in reward-based crowdfunding?

The aim of this paper is to identify and classify the methods used by top creators on crowdfunding to boost and maintain backer engagement. Crowdfunding is a relatively new fundraising method (Yang et al., 2020), but it is already making a significant difference for current and potential entrepreneurs (Manning & Bejarano, 2016). It enables fundraisers not only to raise capital from the supporters (called ‘backers’ in crowdfunding) but also to gather feedback on the further development of the project (Cornelius & Gokpinar, 2020). There are now thousands of projects competing for the attention of backers (Zhang & Chen, 2019).

That attention can effectively be attracted by motivating the audience to be involved in the campaign (Celsi and Olson, 1988). Involvement is also a crucial factor in consumers’ product choices (Behe et al., 2015). However, the involvement of customers in reward-based crowdfunding projects goes beyond the provision of financial resources. Backers also use crowdfunding platforms to share ideas and suggestions for the products they support (Cornelius & Gokpinar, 2020). This makes it doubly important for crowdfunding to build the involvement of its audiences.

Two types of involvement exist. The first type – situational involvement (SI) – reflects product involvement that occurs only in specific situations, such as a purchase. The second type – enduring involvement (EI) – represents an ongoing concern with a product that transcends situational influences. Consumers also experience SI during the purchase process for high-risk products. Once the purchase has been made, consumer arousal and time spent thinking about the product decline as purchase needs and product novelty subside (Richins & Bloch, 1986). Crowdfunding in that regard is quite unique. First, even the initial decision about a purchase can be changed as long as the campaign is not finished. It means the decision making process is more dynamic, and often it requires longer customer involvement although in a limited time. Second, in the case of crowdfunding, the period from the final decision to the purchase (the last day of the campaign) and delivery of the product usually lasts from a few months up to several years in extreme cases.

While what motivates people to participate in crowdfunding has been studied (Chakraborty & Swinney, 2018, 2021; Rodriguez-Ricardo et al., 2018), it is still unclear how customer involvement is changing during this time and what can affect these changes. Research to date has focused primarily on the role of the product in building involvement and has indicated that there are low and high involvement products. In the case of crowdfunding campaigns though, there is a whole spectrum of motivators other than the product itself that may induce involvement in the campaign. The impact of such incentives both on customer involvement itself and indirectly on the financial result of the campaign remains unclear.

The theoretical lens that allows us to better understand that process the Theoretical Model of Customer Engagement (Vivek et al., 2012). According to this model, there are strong relationships between involvement, engagement, customer participation, and value. In the case of crowdfunding, all these elements dynamically change during the campaign. Importantly, they are interrelated. The key element for engagement to occur is involvement, while involvement depends primarily on value. The value is increased during the campaign through customer participation, which is a result of engagement. However, how to influence all these areas is still unclear. Therefore, our research question is which elements of the crowdfunding campaign environment influence both engagement and involvement.

Consistently with prior research on crowdfunding (Anglin et al., 2014; Skirnevskiy et al., 2017), we used data from the world's biggest crowdfunding platform – Kickstarter. In order to answer our question, we created a cross-case study of the top 30 most funded campaigns in the tabletop category in Kickstarter's history. Kickstarter is an ideal setting for two reasons. First, because involvement and engagement are crucial both for creators and backers. It can improve the quality of the products, increase funding success and reduce agency costs (Cornelius & Gokpinar, 2020). Second, because Kickstarter provides the history of the interactions between backers and creators, we can track how the campaign has changed during fundraising. We have access to updates and campaign content. Data on the success of the campaign or the number of commenting backers is also easily accessible.

Our research makes three key contributions. First, we extend the literature examining the role of engagement and involvement in crowdfunding (Cornelius & Gokpinar, 2020; Kuppuswamy & Bayus, 2017). More precisely, we demonstrate how these same tactics can create an environment that has a positiveimpact on both engagement and involvement (Cornelius & Gokpinar, 2020). Second, we contribute to the Theory of Intrinsically Motivating Instruction showing how it can be extended to include the role of social interaction as a factor influencing engagement (Butticè et al., 2017). Finally, our work also offers contributions for practitioners. We show what actions realised during a crowdfunding campaign can influence the creation of the right environment to foster backer engagement. As a result, this can contribute directly to better fundraising results.

Crowdfunding has an innovative character, but it already has a wide application. It constitutes an attractive alternative to traditional sources of financing (Manning & Bejarano, 2016) and is more than just a way of financial support. There are four types of crowdfunding: reward-based crowdfunding, equity-based crowdfunding, donation-based crowdfunding, and lending-based crowdfunding (Belleflamme et al., 2010). It can be said that despite having the same mechanism, all these forms have different characteristics. As lending-based crowdfunding constitutes a marginal source of financing and charity crowdfunding is characterised by completely different assumptions, reward-based and equity-based crowdfunding are of significant importance for the financing of potential and existing entrepreneurs. Nevertheless, both are referred to as ‘intrinsically different’ (Vismara, 2015).

We decided to focus on reward-based crowdfunding which offers a ‘repeatable way’ of financing innovative products by one entity. This form of fundraising can become a running model for innovative teams where knowledge of building engagement of a crowd can have a significant impact. The motivations of backers of reward-based campaigns are also totally different. This attracts individuals to support projects that they like and want to support and who also want to receive an innovative product as a result (Bao et al., 2019). In the opposite equity-based platforms attract people by return on investment (Vismara, 2015). Because reward-based campaigns are much more associated with the activity of the community, they also contain ‘community belonging’ rewards such as social events (Block et al., 2018) and the final reward – a product. Equity-based crowdfunding can still be treated as a less profitable business approach to obtaining financing that cannot be found otherwise. This is not in line with the understanding of crowdfunding as a way of financing innovative projects (Ahlers et al., 2015; Walthoff-Borm et al., 2018). Nevertheless, such capital fundraising opens, more broadly than classical forms, opportunities to finance projects, making this world a better place, not necessarily maximising the rate of return. Crowdfunding sustainability-oriented campaigns attract more investors, including a higher number of small investors, who make the decision more with use of community logic and forward-looking variables (Vismara, 2019).

Despite the nature of purchasing, reward-based product crowdfunding projects are affected by agency issues. There are two prominent ones highlighted in the literature: information asymmetry on product quality and specifications of a product that are not fixed (Chakraborty & Swinney, 2021; Cornelius & Gokpinar, 2020; Cumming & Hornuf, 2018). Backers have to judge the product's value and the creator's ability to deliver a final product. Depending on the model in which the crowdfunding platform operates, the early backers expose themselves to a particular risk. The final product may be different from their expectations. Therefore backers are, in some way, forced to follow the project and to get involved in it to secure its interest. This relationship between creators and supporters is different from theproduct buying context. Products in crowdfunding campaigns are under development, so supporters can be called ‘customer investors’ (Cornelius & Gokpinar, 2020) or ‘consumer investors’” (Kuppuswamy & Bayus, 2015). This leads to some behaviour patterns among both creators and backers who have to find their way to operate in this context.

2.1

Involvement, engagement, and backing the project

Involvement, engagement, and support (backing in the case of crowdfunding) are considered synonyms in the colloquial sense. The meaning of these basic concepts seems to be important for understanding the dependencies we undertake to analyse. To organise our research, we would like to refer to concepts related to the growing literature on consumer engagement of the Theoretical Model of Customer Engagement presented by Vivek, Beatty, and Morgan (2012), shown in Figure 1.

Figure 1

This model incorporates involvement as an essential driver of engagement. Interestingly, in the case of crowdfunding project in Vivek et al., the model includes an antecedent of engagement. Participation defined as a level of involvement in producing or delivering the service which ‘can produce higher levels of enthusiasm and subsequently greater engagement’ (Vivek et al., 2012). Higher engagement results in multiple outcomes such as value, trust, affective commitment, word of mouth, brand community involvement, and loyalty, which also take a particular place in a study by Parihar, Dawra, Sahay (Parihar et al., 2019).

Integrating the unique crowdfunding backer roles (Cornelius & Gokpinar, 2020; Kuppuswamy & Bayus, 2015) and customer engagement literature, we propose a theoretical model of backer engagement.

We left engagement in the centre as a level of interaction of the backer or potential backer with the project creator that is different from the pledge. We use involvement as a non-behavioural level of interest in the project and participation as involvement in project development. We decided to limit potential outcomes to value and community involvement (regarding brand community involvement) for greater transparency of relationships. As in the case of the Theoretical Model of Customer Engagement, our model has two feedback loops related to the outcomes. Higher value and community involvement result in becoming more involved and participating more by backers and potential backers. This form of presentation of antecedents and outcomes of engagement also allows the conceptualisation of the two roles of the backer as an investor and as a customer or consumer. Considering the explorative character of this paper, we treat this model as a starting point to collect results indicating future research.

Figure 2

We conducted our research on data from the world's biggest crowdfunding platform – Kickstarter. Over the last decade, 200,000 projects have been successfully funded through that platform, with support worth over $5.25 billion (Kickstarter, 2021). We used tabletop game campaigns for three reasons. First, of the top 100 campaigns in Kickstarter history, 36 are products in the tabletop games category. Second, projects in the games category raised by far the most funds with $1.48B, which is almost 30% of the value of all the projects in the platform's history. It represents nearly 50% (214/549) of all projects that have reached over $1 million. Third, games are among the projects closest to those pursued by serial entrepreneurs (Xu, 2015) and aimed at creating or sustaining an organisation rather than a one-off campaign (Mollick, 2018; Parhankangas & Renko, 2017). It also allowed us to see if the creators repeat the same tactics in different campaigns and how their strategy changes.

Then, from among these campaigns, we manually collected data about the top 30 most funded projects. We finished collecting data on 1 May 2021, so we focussed only on campaigns that ended before that date. First, we collected campaign performance indicators such as total funds raised, the funding period, number of comments, number of updates, and number of backers. We focussed on the campaigns that achieved the most success as measured by the total funding raised. This approach is consistent with previous work in this area (Anglin et al., 2018; Belleflamme et al., 2014). We assumed that an important measure to monitor success is the number of people supporting the project – backers (Vismara, 2016). It allows us also to measure how large a group of people was attracted by the signals sent during the campaign. The number of backers is directly related to the value of the funds collected and can also be a source of whispered marketing and social proof in the form of ‘wisdom of the crowd’, which determines the quality of the project.

The next step was a cross-case study of each of the 30 campaigns. We compared both the campaign's content and all of the updates that occurred throughout the campaign. Next, we highlighted those tactics that most frequently appeared in more than one campaign and those that occurred incidentally. Finally, we created a classification of these tactics based on the three areas that influence involvement – challenge, fantasy, and curiosity – based on intrinsic motivation. For a fourth area, we divided tactics regarding positive outcomes of engagement that create a feedback loop to involvement in our model proposition. It contains all social interactions that generate higher value and community involvement.

Our sample was dominated by two development studios – Polish Awaken Realms and American CMON. These two companies are responsible for almost half (14/30) of the campaigns in the top 30 most funded tabletop games in Kickstarter history.

By far the most commonly used tactics are stretch goals. They link the product content to the campaign result. As the funds raised during the campaign increase, the content is expanded, or the quality of components is improved. Another form of stretch goals is social goals, related to the activity of backers in social media, e,g a given number of shares of information about the product on Facebook. The third type is daily goals. These consist of unlocking new content every day. It makes the game systematically increase its value during the campaign regardless of the activity of backers. Simultaneously, it maintains the backers’ impression of the importance of their contribution to the product's success.

The second group of tactics interferes with the number of products that can be purchased during the campaign. A popular strategy is to vary the rewards throughout the campaign. As goals are unlocked, the game content increases. A distinction is often made between the core game and add-ons (optional buys) to allow more people to participate in the campaign. The core game primarily includes the game, but during the campaign, so-called ‘optional buys’ appear to increase the involvement of backers. These are either additional elements to the game itself – gameplay add-ons (eg different scenarios) or related products (eg an art book created based on the game).

Figure 3

On the other hand, a reward is a bundle of products that backers can choose during the campaign. It may include different sets, eg only the core game or the core game and selected add-ons. Popular types of rewards are the early bird, which gives a significant discount on the first day of the campaign, and the all-in, which offers a substantial discount for people who buy the game and all gameplay add-ons.

The third group of tactics allows backers to influence the content of the game. It is done either through voting or contests. The first ones are mainly aimed at determining the direction the game should develop, eg what further stretch goals should be proposed. Contests can aim to popularise the game using social media and often involve backers co-creating parts of the game, such as suggesting a new character for the game or a scenario.

Social media are used not only as a way to advertise. Another type of strategy, which this time does not directly affect the game's content, is to create dedicated groups for backers, for example, on Facebook or Discord. It allows users to build a community both around a single game and a particular game developer. This tactic is noticeably linked to the others. Within community groups, many ideas for the following stretch goals are generated, or competitions are decided.

There are also interesting examples of those that have occurred incidentally. These include, for example, meetings with backers, both online and in real life, or joint involvement in some charity action.

The tactics we have identified fit into the four characteristics of an engagement-friendly environment. We have included in the challenge category all those activities that involve carrying out various tasks, and their completion will unlock, for example, further stretch goals. Within fantasy, the creators used storytelling. It is quite characteristic of the game category, where there is a substantial story introduction. The promotional video of a particular game usually puts the player in the role of a hero who, for example, has to save the world. All campaigns contained this type of element, but they are also unique to the games industry, so they were not included in the earlier table. We put in the curiosity category all new elements that emerged during the campaign and that backers were not previously aware of. The last group consists of those activities that foster social interactions both on the creator-backers and backer-backers lines.

Figure 4

Figure 5

All the tactics we have highlighted influence both engagement (directly) and involvement (indirectly through value). While the value is evident, as you can see, for example, the number of components of the game and the engagement are a more subjective feeling. Therefore, in the following table, we have presented examples of comments made by backers, which show their engagement.

In crowdfunding, most activity takes place on the first and last day of a campaign. It can make it challenging to maintain high levels of engagement from backers over multiple days. Quite clearly, there is a growing trend towards shorter, more dynamic campaigns.

It is worth noting that campaigns with the highest number of backers do not encourage active engagement. It may be related to the fact that the games in these campaigns were relatively cheap and aimed at a vast audience that did not necessarily have the knowledge or desire to help develop the game.

However, regular communication and the use of different tactics (eg the announcement of new stretch goals) influence the average value of support provided by backers.

Drawing on recent advances in crowdfunding research, the present article has aimed to answer which elements of the crowdfunding campaign environment influence the engagement of backers. The most successful creators use similar tactics to create an environment that fosters both involvement and engagement. Applying the Framework for Theory of Intrinsically Motivating Instruction, we divided them into three groups corresponding to challenge, fantasy, and curiosity, respectively. The area that is common but has so far been unaddressed in this theory is the fourth category we highlighted – social interaction. It refers to a group of tactics that emphasise collective action among backers, enhancing their engagement.

First of all, we noticed that the tactics used by the best creators work on two levels. The first level is the direct impact on engagement and value (and consequently indirectly on the involvement). For example, daily goals increase the value of a product (a game in our case) by expanding its content, fitting it into the area of curiosity, and encouraging people to check the campaign website for news every day. We propose to call the second level ‘the loop of engagement’. It is mutually reinforcing between engagement and involvement. We therefore suggest treating the actions of creators as providing a suitable environment in which these processes can take place, rather than as isolated tactics. In this environment, the initial value of the project creates the involvement of the backers. Involvement is crucial for engagement to occur. By providing the right conditions for the challenge, fantasy, curiosity and social interaction, creators can stimulate backers’ engagement. As a result, they are more willing to participate in achieving social goals or voting. It consequently increases the product's value and attracts new backers who need a higher value to be involved. The emergence of new backers then contributes to achieving the next stretch goals and thus again increases the product's value. More backers also mean more community engagement. In this way, an appropriately created environment is ideal for simultaneously stimulating involvement and engagement and achieving excellent fundraising results.

There are two possible explanations for these results. First, top creators may be aware of these relationships. This can be seen for example, in the direct incentives to get engaged and the emphasis on the role of active participation in the campaign for its ultimate success. This may also be indicated by the fact that more of these tactics appear over time. For example, stretch goals were already present in the oldest campaigns in our sample, while daily goals emerged much later. It may suggest that the developers are experimenting by observing which campaign elements are effective. It would confirm, in turn, the existence of learning by doing in crowdfunding (Lin et al., 2020; Xu, 2015). The occurrence of very similar tactics in most top creators also suggests that social learning may occur here (Bandura, 1979). It means that creators learn by launching new campaigns, observing other creators, and implementing the best practices in their projects.

A second explanation could be that the creators are not aware of the impact of involvement and engagement on the financial success of the campaign but see that others are using such tactics, so they copy the same behaviour. These are then imitation strategies or even some form of herding behaviour. Our work is part of a lively discussion about the role of engagement in crowdfunding campaigns. Some authors indicate that engagement is a measure of campaign success (Vismara, 2015), while others suggest its role is as an essential determinant of that success (Cornelius & Gokpinar, 2020; Kuppuswamy & Bayus, 2017). In our work, we show that an engagement loop occurs. The funders can influence the supporters’ engagement while designing the campaign, and a good campaign performance reinforces this.

Our research helps to understand better the unique role of backers and their involvement in projects. Therefore, it is used as a basis for future study of this context and the practical design of future campaigns. A comprehensive overview of the methods offers a structured set of campaign design tactics, which increases the involvement and engagement of backers. It provides excellent directions for further research. We would like to encourage other academics to verify quantitatively the model we have developed. Future research should also include projects in less engaging categories than games. Additionally, it would be helpful to include the best projects in the sample and see how the same tactics might work when the initial project value is lower. This would also be consistent with the results of Chakraborty and Swinney's work (2021) where they found aspects of the campaign “creator can signal high quality by setting a higher campaign target” with no reference to what is presented in this work.

In the present article, we investigated the unique role of involvement and customer participation with respect to engagement and its interrelationship with value and community involvement. The results of our paper suggest that it is possible to create an engagement-friendly environment. Studies have so far suggested that engagement can be either a campaign performance indicator (Vismara, 2015) or one of the determinants of the campaign's success (Cornelius & Gokpinar, 2020; Kuppuswamy & Bayus, 2017). Within the framework of the Theoretical Model of Customer Engagement (Vivek, Beatty, and Morgan, 2012) and the Framework of Theory of Intrinsically Motivating Instruction (Malone, 1981), our paper offers a novel perspective on a role of engagement in the crowdfunding.

We have shown that it is possible to create an environment that fosters engagement among backers, which influences the perception of campaign success, which in turn attracts more backers and strengthens engagement. In this way, engagement is both an indicator of campaign performance and a catalyst for success. We focus on the tabletop category. It allows us to take a look inside the popular and crowd-engaging category of reward-based campaigns. However, it is also a limitation of our study. Further research may extend this work by including other categories and unsuccessful projects.

We hope that the results of our research will show paths for the creators of crowdfunding campaigns, allowing them to achieve greater involvement and engagement of supporters and, at the same time, more significant funding.