The One Thing That Matters More Than Your Ad Spend

Your offer is the most important part of your e-commerce strategy.

It's not how many channels you advertise on.

It's not your subscriber opt-in rate.

It's not how many ads you're making, pages you're testing, or emails you're sending.

Everything you do always comes back to your offer.

Most people conflate "offer" with the amount they're willing to discount a certain SKU during a flash sale. But the idea of an "offer" is way more than using VIP20 in a text message.

At its core, offer is the intersection of:

Product
Price
Story

At its most fundamental level, your strategy is a delicate balance between these three components.

It All Starts With Product

Nobody likes to hear this, but it's the truth.

You cannot win with a bad product.

But what does it mean to have a "good" versus "bad" product?

When most people think of a bad product, they picture some poorly-designed, cheaply-made, unappealing caricature of some imaginary product and label it as bad.

But even good products can sometimes be bad. What do I mean?

In DTC specifically, your first-order contribution margin is often one of your best predictors for whether that channel can produce durable cashflows for your business for many years into the future.

If your unit economics, acquisition costs, and intrinsic LTV do not create positive contribution dollars on either first-order or on a consecutive order, the chances of successfully scaling that business through paid acquisition efforts is unlikely.

Bad products don't necessarily have to be poorly designed or cheaply made. Bad products can be great products that are bought once, have low gross margins, and compete in an over-saturated category.

Now that's not to say that challenging product categories cannot work – there are absolutely exceptions and exceptional people building exceptional businesses in very difficult consumer categories by conventional standards.

However, regardless of the product you're selling, you need clarity about what type of game you are playing, and how the economics of your product or category can impact the long term viability of your business.

Price Is Your Strategic Weapon

The next part of your offer strategy is pricing – this includes your discounting strategy as it directly is reflected in the price of your product.

There are a number of ways to go about choosing a discounting strategy. But before you can decide on discounting, you first need to have clarity about your financials and unit economics. Without understanding your COGS and related variable costs, it is impossible to arrive at an offer that is viable for your business.

This is where having the right financial controls and accurate financials in place is key for data hygiene and ultimately good decision making. Without this, you are playing a very risky game and committing to a pricing strategy that can lose you money without you even knowing about it.

On the discounting side, there are a number of ways to frame the same discount amount to make the offer more enticing:

Flat rate discounting: Typically done through a coupon code, this can be dollar amount or percentage off. Simple, clear, and effective for driving immediate action.

Flat rate site-wide discounting: Same idea as any flat discount, except you apply it to all products and categories. Great for inventory clearing and simplifying customer decision-making.

"Up to" percentage off discounts: Great for stores with large catalogues and disparities in inventory turnover across different products. Allows flexibility while still offering a price-based incentive.

BOGO offers: Buy one, get one free (or at a discount). Particularly effective for consumable products or when you want to increase average order value while moving inventory.

Subscribe and Save: Recurring discounts that improve customer lifetime value while providing predictable revenue streams. Especially powerful for consumable products.

Buy More, Save More: Tiered discounting that incentivizes larger purchases. Can present itself as percentage increases with quantity or flat rate savings at different thresholds; commonly found in bundles.

GWP (Gift with Purchase): Adds perceived value without directly discounting your core product. Effective for introducing new products or clearing slow-moving inventory.

You're Always Telling A Story

Most purchasing decisions are (more or less) emotional decisions. Even in the most boring, commoditized category you can think of, humans oftentimes will make purchase decisions within an emotional framework.

How you communicate value, quality, benefits, status, bargain, and scarcity is intrinsic to your offer. It must be congruent across your product and pricing strategy, and it must be reflected in your creative and messaging.

Maybe you're a clothing and apparel brand and you offer up to 40% off sale items, promote new collections at full price, and free shipping on orders over $200. This tells a story of accessible luxury – quality pieces at fair prices with rewards for loyal customers.

Or maybe you're a CPG brand with a Buy More, Save More subscription as your hero offer; save 10% on the 4-pack with Subscribe & Save, save 20% when you upgrade to the 12-pack. This communicates convenience, value, and forward-thinking – you're helping customers stock up smartly.

Or maybe you operate in the luxury space, where quality, scarcity, and high pricepoint all converge around an aspirational purchase for the customer. Here, the story is about exclusivity, craftsmanship, and the transformation that comes with owning something truly special.

In each of these cases, you are communicating a unique story about your product – and its relationship to price – to the customer.

Storytelling is a fundamental component of any offer, whether it be a story of great value and everyday low prices, or whether it be a story about how a certain purchase will make that customer feel in the future.

How Brands Can Build A Winning Offer

Building a winning offer starts with clarity around data, particularly on the financial side.

If you don't have absolute certainty around your product and variable costs, it is virtually impossible to build a reliable offer strategy.

Working backwards from unit economics, pricing is the next critical step to determining your offer strategy. This includes how much you're willing to discount and using what strategy; will you use flat discounts, "up to" discounts, BOGO, threshold offers, Subscribe and Save, Buy More/Save More, bundles, etc.

Next, implement rigorous price testing strategies using tools such as Intelligems to continuously optimize your pricing strategy. Measure your success by understanding which price yields the highest contribution margin or gross profit per session.

Lastly, ensure congruence in messaging and creative strategy. Focus on storytelling that clearly communicates your offer and resonates on an emotional level with your customers. To the degree that it's possible, try to understand who your customers are, what their pain points are, and how you can best relate to them in the stories you tell.

Remember: your offer isn't just what you're selling or how much you're charging. It's the complete value proposition that bridges what your customer wants with what your business can sustainably deliver. Get this right, and everything else becomes easier. Get it wrong, and no amount of marketing sophistication will save you.

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Check out more DTC content here, or subscribe to the Ecom Scaling Show on Youtube, Spotify, or Apple Podcasts.

Ready to optimize your offer strategy? Start with your unit economics, test your pricing, and ensure your story resonates. The data will tell you what's working – but only if you're measuring the right things.