At LaunchBoom, we’re getting our clients free pre-campaign ad spend.
This year, we launched two exceptionally notable campaigns: Nomad’s Pad and Xion CyberX. These campaigns were not special because of how much money they’ve raised (although they both did incredibly well). They were special because of how little we spent on the pre-campaign while still generating massive lists that drove hundreds of thousands of dollars in sales.
For Nomad’s Pad’s pre-campaign, we generated 22,844 emails that drove $358,602 in Direct Sales, while spending zero dollars in ad spend.
For Xion CyberX, we generated 23,765 emails that drove $813,019 in Direct Sales, for just $18,677.88 in ad spend. That’s a 43.53X Direct Return On Ad Spend (ROA).
Before we share exactly how we did this, let’s provide some background on why pre-campaign advertising is so essential, and how LaunchBoom has perfected it to drive the returns that we just shared.
The Power of Your Pre-Launch Funnel
Your campaign is doomed to fail without a strong pre-campaign email list that will set you up for a high-revenue launch day.
If you have a strong Day 1 that blows past your funding goal, your project starts charting as a trending project, and you get 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-campaign 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-campaign investment is really broken down into two parts:
- How can I make sure that the leads I’m collecting are going to convert?
- How much money should I invest in my pre-campaign advertising?
The $1 Reservation Deposit
As far as the first point, LaunchBoom has always been incredible at generating leads that convert by taking our lead-gen a step further than just collecting emails.
LaunchBoom pioneered the “reservation funnel” where we asked our leads 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 30X more likely to convert, 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-campaign 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 can generate you $100k worth of leads and reservations without a single dime of ad spend coming out of your pocket.
The $1 Reservation Deposit Turns Into The $100 Reservation Deposit
The $1 deposits are great. They generate leads that convert, and when you collect thousands of reservations, you also get a little chunk of ad spend to invest back into your campaign. However, it’s a pretty small dent in the grand scheme of things.
But, that really 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 invest that back into the pre-campaign, and scale our spend way more aggressively without needing our clients to cough up additional cash.
We had to try this out!
Our process in experimenting with this started with looking for two things: Price Point and Performance.
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.
The results were incredible.
Using Deposits to Subsidize Ad Spend (and even EARN money!)
Not only did we generate leads that were way more likely to convert (up to 85X more likely than a regular lead for Nomad’s Pad), but we were also able to pump the deposits we were collecting back into our lead-gen campaigns to subsidize ad spend! This significantly reduced our actual cost per lead and our client’s 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 made $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 pumping the $100 deposits back into our pre-campaign, 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-campaign performance on both of these campaigns:
– Pre-Campaign Ad Spend: $44,515.80
– Pre-Campaign Deposit Revenue: $45,803.79
– Total Out of Pocket Cost: -$1,287.99 (Yes, that’s negative. We actually went cash positive and MADE over $1,200 during the pre-campaign.)
– $50 VIP Conversion Rate: 22.34%
– Direct Pre-Campaign Revenue: $358,602.00
– ROA: #N/A – Can’t calculate $358,602 in revenue divided by $0 in ad spend
– Pre-Campaign Ad Spend: $103,665.71
– Pre-Campaign Deposit Revenue: $84,987.83
– Total Out of Pocket Cost: $18,677.88
– $100 VIP Conversion Rate: 33.24%
– Direct Pre-Campaign Revenue: $813,019.00
– ROA: 43.53X Direct
What About Refunds?
You’re probably wondering, “Do you really get to keep all those deposits? Nobody who didn’t end up purchasing wanted their money back?”
The most important thing here is that those deposit numbers listed above have already taken into account Stripe’s processing fees AND refunds. The vast majority of reservation VIPs who deposited their money, didn’t want a refund after the campaign launched and didn’t convert. The deposits ARE refundable, and we make sure to share that on our landing pages, but most people just wrote off that deposit when they decided not to convert.
That behavior, specifically, is WHY this system works. It’s honestly crazy.
The Highest ROA You Will Ever Get
There will never, EVER be another stage in your business, where potential customers will come to your website, check out your product, and decide “Hey, this is really cool. I don’t want to buy it, but here’s $100.” – Justin Arakaki, LaunchBoom Director of Crowdfunding
The fact that we’re still able to get some sort of revenue from leads that DON’T convert is the basis of this whole strategy.
If your product is the right fit for our system, LaunchBoom’s Pre-Campaign System will generate the absolute HIGHEST ROA that you will ever get at any stage of your business, ever again, with this methodology.
If you want to learn more about our pre-launch funnel system, book a call with our team today!