Offer Essentials
Evergreen - A hero offer should be evergreen, meaning it should not be tied to a specific time or event. It should be able to run indefinitely.
The power of an evergreen offer lies in its ability to contribute to sustainable growth. When you have an offer that's always available and consistently valuable to your customers, you create a stable, predictable revenue stream.
You're not relying on seasonal surges or one-off promotions to drive sales. Instead, you have a solid foundation of consistent sales that you can build upon.
Profitability - A hero offer needs to have a gross margin of at least 65% (ideally more). This ensures there’s enough margin in order to effectively spend on marketing.
This gross margin can be on the LTV of a customer, or the AOV of a customer. It’s important to also consider the payback period if utilizing LTV.
Does it take 30 days for a new customer to mature to their LTV? Or does it take 270 days for a new customer to mature to their LTV? This will have implications on MER and cash flow.
Compelling - Customers purchase when they perceive that the value they're getting outweighs the cost. Our job is to increase this value-to-cost ratio as much as possible.
This should be done through product selection, value incentives, risk reversals, and scarcity/urgency.
Offer value = (Perceived Value x Perceived Likelihood of Achievement) / (Time Delay x Money and Energy Cost)
Types of Offers:
Customer Acquisition Offer: This offer type is focused on the LTV of a customer. Typically this offer has a lower AOV and relies on the 2nd or 3rd purchase as the source of profitability.
Example: Subscription offer, Low ticket offer, etc..
Cash Flow Offer: This offer type is focused on the AOV of a customer and maximizing first purchase profitability.
Example: Bundle offer, High ticket offer, etc..
Selecting a Hero Offer:
Identifying the best, most profitable offer to run on paid media relies on using the following equation:
A hero offer should be the one that gives the highest value when plugged into the above equation. It’s the offer that, when promoted, will yield the greatest return on investment.
Plug your offers into this Google Sheet to help assist you in identifying your hero.
Running Multiple Offers:
Limitations of Multiple Offers - Promoting several offers at once on Paid Media can often be detrimental to the growth of brands.
With each additional offer run, resource demands exponentially increase. This often leads to poor execution because resources are spread thin. From an executional perspective - it’s much better to be great at 1-2 things than okay at many.
Beyond this, every additional offer adds complexity to the customers we acquire. Our LTV becomes less projectable, our CAC becomes more unstable, and our Gross margin begins to fluctuate heavily.
When to Introduce Additional Offers - Additional offers should only be introduced when growth with the current offers plateaus. If new ad creatives, landing page tests, and retention efforts fail to maintain the desired growth rate and targets, it's time to consider another offer.
Strategizing Additional Offers - A new offer should either differ in it’s type (Customer Acquisition vs Cash Flow) or should appeal to a different consumer base or solve a different need.
For instance, say the original hero offer was a premium Men’s T-Shirt.
A new offer could be ‘Buy 3 get 1 free’ or a T-Shirt Bundle (Cash Flow Offer), or could be premium Men’s Pants (solving different need).
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