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📝 Intro

Pre-orders help you understand your product’s demand and make the most of the launch time buzz - when you already have attention on your product.

But unless a product is likely to sell out (be careful with using scarcity, you may anger customers), there are few reasons to pre-order rather than buy when it’s launched.

So we need to offer incentives. These mainly come in two categories:

• Discounts (e.g. 30% off if you pre-order now)

• Free gifts (e.g. pre-order the new Samsung Galaxy and get a free VR headset)

Which of the two is most effective?

It depends on how far out your launch is and what your product is.

Let’s take a look.

Previous insight: Short, easy names are more trustworthy (All insights here)

Free gifts encourage pre-orders, even if the launch is far away

Impacted metrics: Customer acquisition
Channels: Product launch | Pre-orders | Promotions
For: Mostly B2C
Research date: September 2021

📈 Recommendation

Offer pre-orders before launching your product to maximize sales.

For short-term pre-orders (e.g. 1 week) you can use either free gifts (e.g. an additional item, a sweepstake) or a price promotion (e.g. 25% off, get a $50 coupon for your next purchase).

For long-term pre-orders (e.g. 9 weeks) stick to free gifts, they are much more effective.

If your product appeals mainly to rationality (e.g. efficient solar panels) stick to a short-term pre-order time. Products that appeal to emotions (e.g. video games, designer clothes) are less sensitive to long launch time frames.

Try to generate as much launch buzz as possible during your pre-order window (e.g. collect early shoutouts and testimonials, pre-launch events).

🎓 Effects

• Incentives are an effective way to boost pre-orders:

  • When a product launch is near (e.g. 1 week), both free gifts (in addition to the core product) and monetary promotions (e.g. price discounts, coupons) are effective to increase pre-orders.

  • When a product launch is far (e.g. 9 weeks), free gifts are more effective at increasing pre-orders

• In general, people are less likely to pre-order a product the further away its launch is (e.g. 3 days vs 2 months). This changes slightly depending on the product type (or how it’s described):

  • Pre-orders for hedonic, emotional, experiential products (e.g. fashion, decorative candles) are less affected by far off launch dates

  • Functional, utilitarian products (e.g. kitchen appliances, insect-repellent candles) are strongly harmed by far away launch dates

• For example, in experiments:

  • When people were asked if they would pre-order a DSLR camera:

    • Gifts boosted orders equally both 1 week and 9 weeks from launch

    • A 25% off discount worked similar to gifts 1 week from launch but was 19.5% less effective 9 weeks away

  • Pre-orders of Halloween pastries in a bakery:

    • For orders taken 3 days before, both a 25% discount and an additional small free pastry had the same effect

    • For orders taken 21 days before, the extra pastry gift was 125% more effective than the 25% discount

(Effect of pre-order offers on purchase intentions of a DSLR camera - Click to zoom in)

(Pre-orders of a Halloween pastry at a bakery, 3 or 21 days before customers could pick up their order - Click to zoom in)

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🧠 Why it works

• We prefer immediate rewards rather than investing in future rewards. Incentives make future rewards more appealing.

• However, our wait can be made less dreadful if our anticipation for the product is positive and exciting.

• Free gifts (e.g. I wonder if I’ll win the sweepstake or what the free gift is like) encourage that feeling of anticipation, compared to the rational benefit of a discount.

• Hedonic products are also more prone to anticipated enjoyment (e.g. how we enjoy a holiday even before going on it), while functional products lack that benefit.

✋ Limitations

• Other factors could encourage pre-orders, such as limited stock, feeling like an early adopter, or a strong attachment to a brand. These were not compared to the effectiveness of incentives.

• We don’t know whether the value (small or large) of a free gift or its form (e.g. a surprise) make free gifts more or less powerful.

• Free gifts should probably be relevant to the main product (e.g. a free lens vs free jeans for a DSLR camera pre-order), although this was not tested.

🏢 Companies using this

• Apple is one of the masters at generating pre-order buzz. Two weeks before the launch of the Apple Watch, two million people had pre-ordered it.

• Video games often correctly use free virtual gifts (e.g. exclusive downloadable content), rather than discounts, to encourage pre-orders.

• Pre-order release times on Amazon, GameStop, and Best Buy are rarely longer than 2 months, and generally much shorter.

⚡ Steps to implement

• Lean towards offering a relevant free gift rather than a price discount to encourage pre-orders.

• If your pre-order time window is short (1 week or less) you can also decide to offer a price discount for a similar effect.

• Drum up as much media buzz as you can right before and during your pre-order time window (e.g. shoutouts or early reviews on social media, mentions in relevant news publications).

🔍 Study type

Online experiments and a field experiment (on pre-orders of Halloween-themed pastries at a bakery). United States

📖 Research

Mukherjee, A., Smith, R. J., & Burton, S. (September 2021). The effect of positive anticipatory utility on product pre‑order evaluations and choices. Journal of the Academy of Marketing Science.

[Link to paper]

🏫 Affiliations

The School of Business, Portland State University; College of Business, University of Wyoming; and Walton College of Business, University of Arkansas. United States

Remember: Because of the groundbreaking nature of this paper, it could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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