At LaunchBoom, we’re helping our clients get their pre-launch advertising completely paid for.
This year, two campaigns stand out from the rest: Nomad’s Pad and Xion CyberX. What makes these campaigns special isn’t just their impressive fundraising totals (though they did exceptionally well). What’s truly noteworthy is how little we spent on pre-campaign advertising while still building massive pre-launch email lists that generated hundreds of thousands in sales.
For Nomad’s Pad, we built a list of 22,844 emails that drove $358,602 in direct sales with zero dollars in net ad spend.
For Xion CyberX, we collected 23,765 emails that produced $813,019 in direct sales, while spending just $18,677.88 in net ad spend.
Before I explain exactly how we did this, let me share some context on why pre-launch advertising matters so much, and how we’ve refined our approach to achieve these results.
The Power of Your Pre-Launch Funnel
Without a pre-launch email list, your campaign will likely fail.
But if you have a qualified pre-launch email list, you can blow past your funding goal in the first day. Doing that will make your project more discoverable on Kickstarter or Indiegogo, and get you extra eyes on your campaign for free.
That free traffic and additional revenue helps set up momentum that will carry through the rest of your campaign. If your Day 1 flops and you don’t even get close to hitting your goal, it’s difficult to dig yourself out of that hole without investing heavily into additional ad spend.
However, investing ad spend in the pre-launch is risky. You’re spending a ton of money collecting emails, and you have no guarantee on if they’re going to convert.
Calculating the risk of your pre-launch investment is really broken down into two parts:
- How can I make sure that the emails I’m collecting are going to convert?
- How much money should I invest in my pre-launch advertising?
Let’s now talk about how we can answer both of those questions
The $1 Reservation Strategy
As far as the first point, to make sure the email lists we build convert, we take things a step further than just collecting emails.
LaunchBoom pioneered the “reservation funnel” all the way back in 2017, where we asked emails to deposit $1 to lock in the best discount possible, after they gave us their email. This simple addition resulted in a list of people that were 30 times more likely to convert on average, as opposed to people who just gave us their email.
This innovation really helps with the first part of the risk calculation, because we can predict a much higher conversion rate of that list into customers. This makes it easier to invest confidently in building a pre-launch list that you know will turn into customers when you launch your campaign.
However, that still leaves the second issue of how much do you want to spend?
Even if the likelihood of conversion is high, the more you spend, the bigger the risk. Spending $10k on a list you’re confident is going to convert is one thing. But spending $100k is a lot scarier. For a lot of us, where are we even going to get $100k to spend before we start generating any sales at all?
This is where the next evolution of our reservation funnel comes into play, and how we’ve been able to spend $100K building a pre-launch email list while getting it all covered.
Increasing The Reservation Deposit
The $1 deposits are great. They build email lists that convert, but even if you collect thousands of reservations, after payment processing fees, it’s not really a lot of money.
But, that got us thinking. What if instead of taking $1, we took $50? Or maybe even $100? If we got a much larger amount of money back in deposits, we could spend even more on pre-launch advertising because we were getting the ad spend subsidized by deposits.
Our process in experimenting with this started with looking for two things:
- Price Point: We needed a price point that was high enough to justify a higher reservation deposit. It makes sense to ask for a $50 deposit on a $500 product, but nobody would reasonably pay $50 to reserve a $75 product.
- Performance: We needed to see strong enough Cost per Reservations on the $1 for it to make sense to try a higher reservation deposit. If we increased the price of the deposit, it’s only natural that your Cost per Reservation will increase as well. So, we needed a low enough starting Cost per Reservation to have room for that spike.
So, we decided on these two campaigns: Nomad’s Pad and Xion CyberX.
- Nomad’s Pad was a $500 price point, and was getting Cost per Reservations as low as $8
- Xion CyberX was a $2,900 price point, and was getting Cost per Reservations as low as $35
For Nomad’s Pad, we upped the $1 Reservation to $50. For Xion, we upped it to $100.
Here were the results.
The Results of Our Test
Not only did we build an email list that was way more likely to convert (up to 85X more likely than a regular lead for Nomad’s Pad), but we were also able to invest the deposits back into ads. This significantly reduced our actual cost per reservation and our clients’ out-of-pocket costs.
On Nomad’s Pad, we actually went cash positive on just reservation deposits. We were generating $50 reservations for as little as $42 each. Meaning, we were cash flow positive $8 for every reservation we got.
On Xion CyberX, we generated $100 deposits for around $120. This means we were earning around 80% cash back on the ad spend we were using. By investing the $100 deposits back into our pre-launch, we were able to spend $103,665.71 on ads, while earning back $84,987.83 in deposits. That means the total out of pocket ad spend was only $18,677.88.
Here are the final, exact numbers for pre-launch performance on both of these campaigns:
Nomad’s Pad
- Pre-launch Ad Spend: $44,515.80
- Pre-launch Deposit Revenue: $45,803.79
- Pre-launch Net Ad Spend: -$1,287.99 (yes, that’s negative)
- $50 VIP Conversion Rate: 22.34%
- Direct Pre-launch Revenue: $358,602.00
- ROAS: 9.1x – the calculation: ($45,803.79 x $358,602.00) ÷ $44,515.80
Xion CyberX
- Pre-launch Ad Spend: $103,665.71
- Pre-launch Deposit Revenue: $84,987.83
- Pre-launch Net Ad Spend: $18,677.88
- $100 VIP Conversion Rate: 33.24%
- Direct Pre-launch Revenue: $813,019.00
- ROAS: 8.7x – the calculation: ($84,987.83 x $813,019.00) ÷ $103,665.71
Wrapping Up
When this strategy works, it’s great, but it won’t work for everyone. I want to remind you that it requires that you (1) have a high enough price point to justify a higher reservation deposit and (2) a low enough cost per $1 reservation. If you want help figuring out if this strategy can work for you, we’re here to help.
Reach out to us here and jump on a call with one of my team members. We’ll chat about your product and figure out a plan to launch together. Looking forward to learning about your product.
