What can a fledgling business possibly teach an established company about engagement and identity? The startups who ‘win’ at crowdfunding have the answer. They come to the table armed with little more than a raw concept and their story. And yet, this is all they need.

“I wanted to give the good old cup of tea a bit of love and make you a proper one.”  This quote comes from the Kickstarter pitch of Emilie Holmes, a startup owner who in 2012, successfully obtained financial backing via the UK’s alternative finance market. She’s by no means alone: currently, the market as a whole is valued at an estimated £4.4 billion, with the UK equity crowdfunding witnessing 410% growth in the space of two years.

So why should this be of interest if you’re well-past the seed capital stage? To unpick this, think less about the platforms themselves and more about how organisations use those platforms to achieve their goals.

With tons of entrepreneurs vying for attention, the crowdfunding market is a competitive one. Businesses are winning the support of backers. But, time and again, they’re not doing it with stellar sales projections or traditional business plans. They typically have little in the way of physical assets and their product itself may exist only on paper. But they do have one very valuable chip to play – and they play it to full effect: their story.

Emilie needed £10,000 for a tea van. It might not sound like much of a story until you hear Emilie tell it. As a tea lover, she speaks of the realisation that in a city boasting the world’s best coffee shops, tea drinkers had been left behind: “That’s what I wanted to change, by offering fellow tea drinkers the same quality experience that my coffee-junkie friends currently enjoy. A Good & Proper cup of tea.”

Cue images of the beautiful vintage Citroen van she intends to convert, her plans for the van, along with a description of the care she takes in making the perfect cup of tea. With various tea-related packages offered in reward, within a month she had raised over £14,000 with 372 backers.

Now try removing the story to see what’s left: essentially a transactional relationship consisting of tea in exchange for cash. The packets of tea offered were no doubt very good, but so is the tea available from countless sellers across the country. Rather than the product, those backers were buying the story and the chance to be part of that story.

For the rest of us, crowdfunding offers three valuable lessons.

Lesson one: the importance of your story

The founder of Zip Fit went all out to create “the best fitted shirt in the world”. Yet his Kickstarter pitch opens not with shots of this wonderful shirt on the back of an athletically-torsoed model, but with a motorbike ride through the streets of Bangkok. It’s the story that’s emphasised – almost, it might seem, at the expense of the product.

In the story, Brian is pulled over by the police but is instantly struck by what the cop is wearing; “the best fitting button down shirt I had ever seen – and I instantly wanted one…” You see pictures of the cops; you’re told of a visit to an old Thai tailor and you learn how Brian “discovered something revolutionary…” After a closer look at the shirt comes the invitation to be part of that story: “This whole thing started with a traffic ticket on the other side of the world. Today, you can help us complete the journey.”

Many companies could no doubt lay claim to the title of producer of “the best fitted shirt in the world”. Yet only one company has this particular story – and that’s what those thousands of backers have bought into.

The clothing retailer, TOMS demonstrates that the power of an origin story can echo far beyond the startup stage. “TOMS didn’t start with the idea of a shoe. In fact it was the absence of a shoe that started it all.” So begins a journey that has it roots in the slums of Argentina and triggers the creation of the TOMS ‘One for One’ model: where, for each item of clothing bought, another is donated, so that, “We realised we weren’t a shoe company at all; we were a giving company. And this changed everything.”

In a space of two years, the company has donated more than 45 million pairs of shoes. Its story is evolving constantly; it remains compelling and it places TOMS a million miles away from being just another shoe seller.

Now consider your own product range. If tomorrow you wake up to find it has been replicated or bettered, are your customers likely to stick around? Crowdfunding winners remind us – perhaps better than anyone of the truth in Zig Ziglar’s theory: “People don’t buy for logical reasons. They buy for emotional reasons.” In a noisy marketplace, your story, when told well, can be just what’s needed to make that vital emotional connection.

Lesson two: the value of a community

In a transactional relationship, you have what the customer wants and you give it to him. If it suits his needs, he comes back for more; not because of any loyalty, but because it suits him to do so. Conversely, if it doesn’t immediately meet expectations, he walks away. And in an age where peer-to-peer reviews are king, he tells others to stay away too.

A loyal community is the exact opposite of a transactional model, and crowdfunders are experts at creating such communities. Gabriel Bestard-Ribas, who successfully raised $300,000 for his Goji smart lock via Indiegogo speaks of the benefits of this in a Forbes interview. “The feedback we get is 10-fold more valuable than the money we raised… With crowdfunding we get customer feedback before the product is finalized.”

Few companies harness the power of community more completely and effectively as Giffgaff. The mobile network operator doesn’t do big budget advertising or retail distribution. It doesn’t even have a customer service call centre. Instead, customer queries are answered via a user-generated knowledge pool supplied by a community of fellow customers, or ‘giffgaffers’.

This is the same community that generates the ideas that drive forward the development of the company’s service offering and act as brand ambassadors – even going so far as to create Giffgaff’s promotional material. The fact that Giffgaff is now the UK’s third largest virtual network speaks volumes about just how valuable a community can be.

A community of followers is more likely to fight for you. For a start-up, it’s often about a desire on the part of the community to see their chosen start-ups hone their prototypes so they’re the best they can be. Communities offer their input before purchase. They advise. They point you in the right direction. And they will you to succeed. Are you doing enough to nurture your own community – or are you focusing solely on the transaction?

Lesson three: achieving product/market fit

Failing to reach a product/market fit in a way that’s efficient and effective can cost you dearly. Competitor research and market surveys are often the go-to tools for this but essentially, these are indirect methods of trying to work out what the market really wants.

Startups involved in crowdfunding are good at finding out precisely what their customers want well before the finished product is made available. It goes back to the idea of community: supporters want to see you get it right. They want to be part of your story and they want that story to have a happy ending.

Now come the finer details: honing your concept or prototype so it meets a market need. Instead of relying on rather abstract and potentially unreliable research in the development stage, imagine being able to turn directly to entire community of followers for opinions, criticism and suggestions. Better still, this input comes not from “the market”, but from the individuals who are self-selected as your actual customers. Here, you are infinitely more likely to be saved from the embarrassment, waste and sheer cost of a product or service launch that’s out of step with what real people want.

T-shirt manufacturer, Threadless uses crowdsourcing to achieve this product/market fit. Its business grew from an online community for designers and evolved into a competition model. Designers are invited to submit their T-shirt ideas and the Threadless community chooses which concepts should be turned into actual products. The company knows what’s going to sell because its community has told it precisely what designs to produce.

Meanwhile, First Direct has built a social media platform dedicated to finding out what its customers think about its latest innovations and ideas. Attracting more than 4,000 comments in its first month, the First Direct Innovation Lab demonstrates that a community can be more than willing to engage to keep you on track.

Story, community, market fit: bringing it all together

To begin with, a story in itself can be powerful enough to persuade people to take a huge leap of faith and back an idea – even a totally untested one. Inviting supporters to become part of that idea gives you the chance to grow not just a customer base, but a loyal community. And in turn, harnessing the power of that community gives you unique and reliable insights on what form your products and services should take.

The winners of crowdfunding engage. They inspire people to act. They attract a powerful following; in many cases without a finished product to their name. Maybe we all need to sit up and listen to their stories to remind us of the importance of our own?