Satisfaction (guaranteed) Ross and Mike | March 11th, 2010

Later today begins a new day at crowdSPRING and a new approach to our community. When we launched in May of 2008, we offered buyers a simple guarantee, and made an equally simple promise to creatives. We guaranteed “25 entries or your money back” and promised creatives that when a project reached the 25 entry threshold, someone would be paid. Buyers could be confident that they would have a choice of designs, and Creatives could be comfortable knowing that their interests were being protected.

Our guarantee was effective – we refunded a very small percentage of the projects on the site. But those refunds still represented awards that designers in our community would not receive, and the policy left a few buyers unhappy (a few who had received more than 25 entries, but could still not find “the one”).

We want every buyer to be happy with their experience on crowdSPRING and with our community. We also want our community to benefit from every project posted.

Later today, we are introducing a new guarantee: to buyers we say “you will be 100% happy with your project or your money back” and to creatives we promise that one of you will be paid for every project on the site, even if the project ends in a refund. The benefits to the community are clear: buyers will feel more comfortable posting their project (which we believe will lead to more projects on the site) and creatives will take home more cash.

Here’s how it works: when a buyer posts a project, they will still determine the amount of their awards and will  pay the crowdSPRING project fee of 15%. They will also pay a $39 “listing fee” – the listing fee will be non-refundable. These fees will fund a “kill fee” pool, for any project which ends in a refund, and we will choose one participant from the project who will receive the kill fee. The kill fee will be capped at $250 and the person who is paid the fee will retain all of the rights to their entry. There will be no wrap-up in such projects.

We are proud to continue to innovate as we refine and improve our business model. If this policy had been in place in 2009, our community would have received an additional $73,000 in project awards!

More than 54,000 designers and writers now work on crowdSPRING, and we’re excited about the opportunities ahead. We hope you’ll agree that the new guarantee benefits the entire community, and we hope you will join us in wishing everyone good luck with their projects!

Need something designed? Name your price. Pick from 110+ entries. Love it or your money back.

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  • Otte

    DigitalBeckley

    …”yeap – if we post 1 project a month, thats like almost $500 extra on the year of overhead and its lost money – to me thats like throwing away $500 for nothing. it in no way protects me nor does it provide any additional assurances.”

    It looks to me though that your ‘assurances’ would come from the fact that you can say no to a project and not pay the full thing wheras before, you had to pay no matter what.

    That means if you say no to even 1 project (if it’s large enough), your extra fees are pretty well covered and you get better work overall. You’d have to use it right though…….. If the work you buy here is 100% all the time anyway it would seem a shame to complain about a few fees that might let the wonderful people that work for you so brilliantly have a bit of insurance too.

    Not sure about it though…. just thinking.

  • branding

    I think when something is new, i have ideas about how will work, but at same time i have to wait and see if this work right, then i can say in base at how works, the opinion about it. for know i can say im open mind.

    @hangar79
    3/ i think the same.

  • Otte

    DigitalBeckley

    …”yeap – if we post 1 project a month, thats like almost $500 extra on the year of overhead and its lost money – to me thats like throwing away $500 for nothing. it in no way protects me nor does it provide any additional assurances.”

    It looks to me though that your ‘assurances’ would come from the fact that you can say no to a project and not pay the full thing wheras before, you had to pay no matter what.

    That means if you say no to even 1 project (if it’s large enough), your extra fees are pretty well covered and you get better work overall. You’d have to use it right though…….. If the work you buy here is 100% all the time anyway it would seem a shame to complain about a few fees that might let the wonderful people that work for you so brilliantly have a bit of insurance too.

    Not sure about it though…. just thinking.

  • branding

    I think when something is new, i have ideas about how will work, but at same time i have to wait and see if this work right, then i can say in base at how works, the opinion about it. for know i can say im open mind.

    @hangar79
    3/ i think the same.

  • alancreative

    Solution: CS sets up an insurance account where .25% is taken out of the 15% fee they receive from each client – maybe the actual % is less than that – whatever – this is hypothetical. CS now receives only a 14.75% fee on each project. Considering that very few projects are not awarded, the insurance fund should grow to be quite substantial. This would of course be kept in an interest baring account that CS would make income from in the form of earned interest. In case of client default on a project, the creatives are awarded 75% maybe 100% of the stipulated award from the insurance fund. The client is given a refund. Win, win, except the client still leaves without a solution to their creative dilemma. I would make a suggestion to the clients – give more feedback – and give it far in advance of 2 hours before the project closes.

  • alancreative

    Solution: CS sets up an insurance account where .25% is taken out of the 15% fee they receive from each client – maybe the actual % is less than that – whatever – this is hypothetical. CS now receives only a 14.75% fee on each project. Considering that very few projects are not awarded, the insurance fund should grow to be quite substantial. This would of course be kept in an interest baring account that CS would make income from in the form of earned interest. In case of client default on a project, the creatives are awarded 75% maybe 100% of the stipulated award from the insurance fund. The client is given a refund. Win, win, except the client still leaves without a solution to their creative dilemma. I would make a suggestion to the clients – give more feedback – and give it far in advance of 2 hours before the project closes.

  • micard

    That’s just great. A buyer can see hundreds of designs and still back out and pay a whopping $39! A creative who was maybe shooting for $1K gets $250., plus the “honor” of owning a concept that is probably good for nothing else. There are never guarantees buying creative work.You are destroying the graphics arts business whether you can see it or not or don’t want to admit it. There is NOTHING stopping a buyer from spending $39. (a laughable amount)getting all the work from Cs and asking for something like this one, this one and this one from a designer they know and pay THAT designer a reasonable fee.
    Someone made reference to agencies that spend thousands on spec. creative. This is done for million dollar accounts! Get real. Besides, the agencies get all the placement fees for any media buys. They can pretty much do the creative work for free and still make a profit with the media money alone, anyway.
    It was a ridiculous analogy.
    Let’s keep making all this stuff cheaper and cheaper until the creatives can’t afford to buy lunch for their efforts.
    Both buyers and creatives take risks. The buyer may not get what he wants. The creative may not sell an idea. You’ve just taken all the risk away from the buyers. (I don’t consider $39. a risk)If you want to even it up, award the creative the original amount even if the buyer backs out. It’s your decision to let them do that. They should hire Cs because they like the quality of the work and are willing to take the chance that they get that “perfect” (HA!) design. That’s how the rest of the world does it…

  • micard

    That’s just great. A buyer can see hundreds of designs and still back out and pay a whopping $39! A creative who was maybe shooting for $1K gets $250., plus the “honor” of owning a concept that is probably good for nothing else. There are never guarantees buying creative work.You are destroying the graphics arts business whether you can see it or not or don’t want to admit it. There is NOTHING stopping a buyer from spending $39. (a laughable amount)getting all the work from Cs and asking for something like this one, this one and this one from a designer they know and pay THAT designer a reasonable fee.
    Someone made reference to agencies that spend thousands on spec. creative. This is done for million dollar accounts! Get real. Besides, the agencies get all the placement fees for any media buys. They can pretty much do the creative work for free and still make a profit with the media money alone, anyway.
    It was a ridiculous analogy.
    Let’s keep making all this stuff cheaper and cheaper until the creatives can’t afford to buy lunch for their efforts.
    Both buyers and creatives take risks. The buyer may not get what he wants. The creative may not sell an idea. You’ve just taken all the risk away from the buyers. (I don’t consider $39. a risk)If you want to even it up, award the creative the original amount even if the buyer backs out. It’s your decision to let them do that. They should hire Cs because they like the quality of the work and are willing to take the chance that they get that “perfect” (HA!) design. That’s how the rest of the world does it…

  • alancreative

    @Micard: See solution just above your comment. Not bad, I think.

  • alancreative

    @Micard: See solution just above your comment. Not bad, I think.

  • Ross

    @SamFox – the new policy replaces the 25 entry guarantee policy.

    @davebowman – much thanks for those words of support. I wish we were as successful as Kellogg’s…

    But you’re absolutely right that we see great work in nearly all projects. We too think this is a bold move because it further differentiates us from other marketplaces and puts our money where our mouth is.

    To answer your question – we will post a project comment announcing the award to the specific creative who receives it.

    @DigitalBeckley – I do appreciate your point of view. We’ve spent a lot of time discussing this policy, including how some buyers like yourself might react to it. The added cost is meaningful to a buyer posting many projects, but we think that the added assurance to our community will allow us to build a stronger and more capable community. We want buyers to leverage crowdSPRING not because they can get at least 25 entries, but because we have the best creative community on the planet. As we work to further evolve and refine our business model, we must continue to find ways to support that community and to offer buyers a great product and a great community.

    @hangar79 – we will look at these changes and make any adjustments that are necessary. As you know, we do our best to innovate and we’ll continue to find other ways that we can protect both parties.

    We’re not yet in a position to award creatives beyond the first in multiple award projects. However, this is something we’ve discussed and something we’ll certainly keep an eye on and possibly introduce in the future.

    To answer your question about LG – they made this decision to include only US citizens and residents. We did our best to persuade them to open this competition to everyone in the world. We’re amazed by the great talent on crowdSPRING and elsewhere in the world – but they declined to do so and kept it US focused.

    @SUBHADIP – We’ll keep encouraging LG to open up future competitions to the whole world. We’d love to see ALL of you have an opportunity to participate.

    @tygraphics – There’s much truth in your comment. Many of the failed projects do in fact result from poorly written briefs and lack of feedback. We’ve seen briefs improve considerably over the past year, and we’re seeing feedback moving too.

    The suggestion to inspect projects is a good one. In fact, Audress has been reviewing every project and where we see inadequate briefs or too much scope for the amount of the awards, we act promptly to remedy that issue.

    As for your suggestion to vary fees – it’s tough for us to operate a service where some but not others are charged a fee. I understand why you’ve made the suggestion, and it’s an interesting concept, but not easily executable at this moment.

    @mike – Thanks for your perspective. It’s a valuable point and I hope that the designers and writers following this discussion consider it…

    @Marc Hughes – Thanks for your comment. It’s very valuable to hear from buyers and potential buyers because it helps our creatives to better understand how buyers evaluate our policies (including the guarantee) and fees.

    @Otte – Good points all around, as you’ve recognized.

    @branding – well said.

    @alancreative – We’ve considered this suggestion and ultimately, the economics were too difficult. Have you seen the interest rates that savings receive these days? But as with everything, we’ll keep a close eye and always consider ways to improve …

    @micard – Thanks for adding your thoughts. There is a risk balance and you might be right that $39 is a low barrier. Ultimately, we think that projects on crowdSPRING should be about quality and want all buyers to be very happy with the quality of the work here. I tend to believe that people are generally good and that we’ll see few abuses of this new policy. However, if you’re right and it is abused more than we anticipate, we will not hesitate to make adjustments.

  • Ross

    @SamFox – the new policy replaces the 25 entry guarantee policy.

    @davebowman – much thanks for those words of support. I wish we were as successful as Kellogg’s…

    But you’re absolutely right that we see great work in nearly all projects. We too think this is a bold move because it further differentiates us from other marketplaces and puts our money where our mouth is.

    To answer your question – we will post a project comment announcing the award to the specific creative who receives it.

    @DigitalBeckley – I do appreciate your point of view. We’ve spent a lot of time discussing this policy, including how some buyers like yourself might react to it. The added cost is meaningful to a buyer posting many projects, but we think that the added assurance to our community will allow us to build a stronger and more capable community. We want buyers to leverage crowdSPRING not because they can get at least 25 entries, but because we have the best creative community on the planet. As we work to further evolve and refine our business model, we must continue to find ways to support that community and to offer buyers a great product and a great community.

    @hangar79 – we will look at these changes and make any adjustments that are necessary. As you know, we do our best to innovate and we’ll continue to find other ways that we can protect both parties.

    We’re not yet in a position to award creatives beyond the first in multiple award projects. However, this is something we’ve discussed and something we’ll certainly keep an eye on and possibly introduce in the future.

    To answer your question about LG – they made this decision to include only US citizens and residents. We did our best to persuade them to open this competition to everyone in the world. We’re amazed by the great talent on crowdSPRING and elsewhere in the world – but they declined to do so and kept it US focused.

    @SUBHADIP – We’ll keep encouraging LG to open up future competitions to the whole world. We’d love to see ALL of you have an opportunity to participate.

    @tygraphics – There’s much truth in your comment. Many of the failed projects do in fact result from poorly written briefs and lack of feedback. We’ve seen briefs improve considerably over the past year, and we’re seeing feedback moving too.

    The suggestion to inspect projects is a good one. In fact, Audress has been reviewing every project and where we see inadequate briefs or too much scope for the amount of the awards, we act promptly to remedy that issue.

    As for your suggestion to vary fees – it’s tough for us to operate a service where some but not others are charged a fee. I understand why you’ve made the suggestion, and it’s an interesting concept, but not easily executable at this moment.

    @mike – Thanks for your perspective. It’s a valuable point and I hope that the designers and writers following this discussion consider it…

    @Marc Hughes – Thanks for your comment. It’s very valuable to hear from buyers and potential buyers because it helps our creatives to better understand how buyers evaluate our policies (including the guarantee) and fees.

    @Otte – Good points all around, as you’ve recognized.

    @branding – well said.

    @alancreative – We’ve considered this suggestion and ultimately, the economics were too difficult. Have you seen the interest rates that savings receive these days? But as with everything, we’ll keep a close eye and always consider ways to improve …

    @micard – Thanks for adding your thoughts. There is a risk balance and you might be right that $39 is a low barrier. Ultimately, we think that projects on crowdSPRING should be about quality and want all buyers to be very happy with the quality of the work here. I tend to believe that people are generally good and that we’ll see few abuses of this new policy. However, if you’re right and it is abused more than we anticipate, we will not hesitate to make adjustments.

  • Project Drawing

    Does this new policy affect already opened contests? When exactly it is going live?

  • Project Drawing

    Does this new policy affect already opened contests? When exactly it is going live?

  • Alan

    I just used CS for the first time this week as a buyer and was very impressed. I have to say that I don’t like the new suggested policy at all though.

    As a buyer, I’m not keen on the idea of subsidizing people who don’t know how to engage on CS in order get the right results. It’s clear to me that a wealth of talent can be found on this site. If you don’t get the result you’re looking for, you probably either have unrealistic expectations, or you don’t know how to engage. CS should not be seeking those kinds of buyers, and I’d rather not subsidize their mistakes either. Better to put those extra funds towards the price of the prize.

    I also think that the guarantee to the designers is actually a pretty shoddy guarantee. To do it right, the guarantee should match the price of the prize. If that’s what a designer sign up for, then that should be what they get – no if ands or buts. Otherwise CS is simply pushing the risk onto the designer. If CS was to take that risk on instead (by making good on the commitment of the full prize), then they’d be more apt to take measures to ensure that a failure doesn’t happen.

    My overall impression is that this is just a new service fee for CS wrapped up in the guise of a “guarantee”. You are now in the “project insurance” business, but at very high margins.

    Focus on improving the efficiency of the system instead (rather than trying to take a bigger bite out of each transaction as this guarantee attempts to do), and I bet you will find that the higher volumes in the better market will be a more sustainable path to profit.

  • Alan

    I just used CS for the first time this week as a buyer and was very impressed. I have to say that I don’t like the new suggested policy at all though.

    As a buyer, I’m not keen on the idea of subsidizing people who don’t know how to engage on CS in order get the right results. It’s clear to me that a wealth of talent can be found on this site. If you don’t get the result you’re looking for, you probably either have unrealistic expectations, or you don’t know how to engage. CS should not be seeking those kinds of buyers, and I’d rather not subsidize their mistakes either. Better to put those extra funds towards the price of the prize.

    I also think that the guarantee to the designers is actually a pretty shoddy guarantee. To do it right, the guarantee should match the price of the prize. If that’s what a designer sign up for, then that should be what they get – no if ands or buts. Otherwise CS is simply pushing the risk onto the designer. If CS was to take that risk on instead (by making good on the commitment of the full prize), then they’d be more apt to take measures to ensure that a failure doesn’t happen.

    My overall impression is that this is just a new service fee for CS wrapped up in the guise of a “guarantee”. You are now in the “project insurance” business, but at very high margins.

    Focus on improving the efficiency of the system instead (rather than trying to take a bigger bite out of each transaction as this guarantee attempts to do), and I bet you will find that the higher volumes in the better market will be a more sustainable path to profit.

  • Otte

    After thinking about this for a few weeks I’ve had a few questionable thoughts…..

    If the contest holders can always get their money back, then the incentive to participate (ie, feedback ect.) diminishes. Lack of participation by the CH results in poorer quality submissions, increasing the risk of withdrawal, and it might snowball……

    CS might end up paying big time for this, with little or no real improvement.

    I might be thinking about this wrong, but I had always figured the thought that the contest holder wasn’t going to get his money back was what kept the contests here healthy and active.

    I know, somebody has probably already said it, but I’m starting to think they might be right if they did. You can’t help but wonder about it when considering whether or not to enter a particular contest and watching it. The chance of a small reward should something go wrong might be great for me as a designer, but the lessening of the risk for the CH might backfire with CHs getting increasingly lazy knowing they can just dump it for $39.

  • Otte

    After thinking about this for a few weeks I’ve had a few questionable thoughts…..

    If the contest holders can always get their money back, then the incentive to participate (ie, feedback ect.) diminishes. Lack of participation by the CH results in poorer quality submissions, increasing the risk of withdrawal, and it might snowball……

    CS might end up paying big time for this, with little or no real improvement.

    I might be thinking about this wrong, but I had always figured the thought that the contest holder wasn’t going to get his money back was what kept the contests here healthy and active.

    I know, somebody has probably already said it, but I’m starting to think they might be right if they did. You can’t help but wonder about it when considering whether or not to enter a particular contest and watching it. The chance of a small reward should something go wrong might be great for me as a designer, but the lessening of the risk for the CH might backfire with CHs getting increasingly lazy knowing they can just dump it for $39.

  • Ross

    @Alan – Thanks for sharing your thoughts. While I can appreciate why you see the posting fee as a subsidy, it’s not. We must constantly find ways to balance our community (both the buyer and creative communities) and we’ve learned over the past few years that doing so is easier said than done. For example, we’re the only marketplace in the world that pays the “kill fee”. On all other marketplaces – designers get zero dollars. But we’re a small business ourselves, and it would be impractical and impossible for us to to bear the full risk of refunds (which are very low, incidentally). By sharing some of the risk, we’re able to provide a stronger guarantee to buyers, a real benefit to designers, and at the same time, make sure that we stay in business long term to be able to continue to improve our service and community. We work very hard to ensure that failure doesn’t happen – we’ve done that from day one, even before we began paying a kill fee.

    @Otte – Our refund rates are historically low. The vast majority of buyers are very happy with the quality of the work and the service, but since this was a relatively new change, we don’t yet have sufficient data to be able to assess how this policy will impact feedback, quality, etc. You are of course right that we might end up paying “big time” for this without much improvement. If true – we’re always ready to make adjustments to make sure that our policies are sensible, reasonable, and practical.

    Let’s see what actually happens in the projects and if we’re seeing buyers abuse the guarantee, we’ll make the necessary adjustments. We believe, however, that the vast majority of buyers will continue to be thrilled with the work and that the issues you’ve articulated are not very likely to occur.

  • Ross

    @Alan – Thanks for sharing your thoughts. While I can appreciate why you see the posting fee as a subsidy, it’s not. We must constantly find ways to balance our community (both the buyer and creative communities) and we’ve learned over the past few years that doing so is easier said than done. For example, we’re the only marketplace in the world that pays the “kill fee”. On all other marketplaces – designers get zero dollars. But we’re a small business ourselves, and it would be impractical and impossible for us to to bear the full risk of refunds (which are very low, incidentally). By sharing some of the risk, we’re able to provide a stronger guarantee to buyers, a real benefit to designers, and at the same time, make sure that we stay in business long term to be able to continue to improve our service and community. We work very hard to ensure that failure doesn’t happen – we’ve done that from day one, even before we began paying a kill fee.

    @Otte – Our refund rates are historically low. The vast majority of buyers are very happy with the quality of the work and the service, but since this was a relatively new change, we don’t yet have sufficient data to be able to assess how this policy will impact feedback, quality, etc. You are of course right that we might end up paying “big time” for this without much improvement. If true – we’re always ready to make adjustments to make sure that our policies are sensible, reasonable, and practical.

    Let’s see what actually happens in the projects and if we’re seeing buyers abuse the guarantee, we’ll make the necessary adjustments. We believe, however, that the vast majority of buyers will continue to be thrilled with the work and that the issues you’ve articulated are not very likely to occur.

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