The best way to increase ROAS - 3 proven methods to maximize your ad spend

The best way to increase your Return on Ad Spend (ROAS) today isn't by doing something generic like "building community" or "rewarding loyalty." Gurus love to push tactics like setting a free shipping threshold or offering a discount. Sure, those tactics can boost ROAS, but they also eliminate your margins, like your favorite cast member on Love Island. 

In today's article, I'm sharing how my team and I generated millions by improving ROAS using 3 proven, data-backed methods that nobody talks about. We're going deep on what works and skipping the generic advice you see everywhere else.

If you're new to my work, my name is Lester, but feel free to call me Les. I'm a founder with a successful exit, currently the executive chairman of a group of DTC brands, and an award-winning performance marketer and 4x Shopify award winner.

I can say with 10000000% certainty that what I'm about to share is a game-changer.

BTW, if you're looking for tips and tricks on how to grow your DTC brand, consider signing up for my free newsletter, No Fluff Just Facts. I share what's working, what to watch for, and the DTC innovations that are worth your time.

But enough about me, I need to give you the full playbook on how to improve your ROAS as soon as today.

When it comes to increasing your ROAS, we need to focus on what you are selling. You see, ROAS, in many ways, is a function of your business model rather than your marketing tactics.

Some products, regardless of your efforts, may not be in demand or have a price that is too low, which can negatively impact your ROAS.

To improve ROAS, it's important to focus on the problem your product solves, though not for the reason you might think.

Let me explain.

Your product solves a problem, and in doing so, it often uncovers other problems that you can solve as well.

For example, let's say you are a landscaper cutting someone's grass; they could also benefit from having their hedge shaped up.
Solving more problems helps boost ROAS by getting customers to spend more at the time of purchase.

What really made a difference for me was when I stopped thinking like a marketer and started focusing on the actual problem I was solving and how to serve my customers better. The boost in ROAS didn't come from adjusting the ad account; it came from understanding my customer and what they truly needed.

Strong ad creative matters. Targeting the right audience matters, but none of that works if your business model and product aren't solid.

No matter how good your creative or targeting is, it won't give you a positive ROAS if you're trying to sell CD players today, ya feel me?

All that said, let's jump into the 3 proven ways we increased our ROAS.

Tip # 1 Clear value prop

Having a clear value proposition is underrated in the e-commerce world; it's actually quite sad.

If your ROAS is lower than you'd like, there's a good chance your customers don't see a compelling reason to make a purchase. That usually comes down to one thing: your message isn't clear enough. Whether it's in your ad creative or on your landing page, strong, well-structured copy plays a huge role.

Sometimes, improving ROAS really is that simple. Your ability to communicate effectively might be the missing piece of the puzzle.

In the hyper-competitive world of e-commerce, effective communication is what sets you apart from the competition. Your ability to connect with your customer in a way no one else in the world can, so your audience knows you are the only person who can help them solve their problem.

This approach not only improves your ROAS but also helps with your conversion rate and ultimately helps reduce your Customer Acquisition Cost (CAC).

The magic trick here is experimentation, which involves conducting several experiments and testing almost everything, from your content to your product title, and so on.

Experimenting is so crucial that Jeff Bezos attributes a significant portion of Amazon's success to it. In an old interview, he explained that reducing the cost of experimentation unlocked Amazon's pace of innovation.

So, I'm sure you're wondering how, as a small brand with limited resources, you can experiment quickly. That's where FERMÀT comes in. It removes bottlenecks, allowing founders to launch experiments quickly using FERMÀT Forever Links.

With FERMÀT Forever Links, you can run A/B tests on your content without ever touching your ad campaigns. You can swap out messaging, pricing, or creatives in the background, and customers see the updated version instantly. There is no need to restart the learning phase in your ads or start a new ad.

Tip #2 Offer a mystery gift

I've never spoken about this publicly, but it's next level and almost guaranteed to increase your ROAS immediately by offering a gift threshold.

Storytime!

If you handle your own fulfillment, you may be familiar with a large packaging supplier that offers different thresholds for gifts based on the amount you spend, starting as low as $250.

There I was one day, checking out, and I was a few bucks short of this speaker I really wanted. I went back and added more products to the order so that I could get a "free speaker."

Then one day, it hit me: why don't I do that on our website? What we did differently was make our gift a "mystery," and that was SOOOOOO effective. The only thing people like more than a gift is one that comes as a surprise, and you can take that to the bank.

The magic is in testing your pricing, images, and messaging. With FERMÀT, you can quickly test different versions to find what works. You might be leaving money on the table by pricing too low, so testing is key.

Tip #3 Create and sell bundles

Trust me when I tell you, bundles are the 8th wonder of the e-commerce world when it comes to improving your ROAS.

You can use FERMÀT to start testing what bundles work best on your site.

Here's a secret the gurus never tell you: you don't "have to" offer a discount. You can bundle products that aren't available anywhere else on your site and achieve exceptional results, like an exclusive product or colorway.

We saw our AOV jump by introducing simple bundles on our site. Customers who might have bought one item were now buying two or three because the offer made sense to them.

Pro tip: test different bundle combinations and price points to optimize your offerings. Sometimes, the "obvious" bundle isn't the one that converts best. Tools like FERMÀT let you swap out bundle offers to see what works without waiting on your dev team.

Here's a real-world example of a bundle. Think about a variety pack of Lay's chips. They give you 10 original chips and 1 of the flavor you want, and while that's effective, I think it blows for the consumer. The magic here is finding the balance of matching things people want with slower-moving items. You don't want your customers to feel like you're taking advantage of them.

‍

Hero Bread makes low-carb baked goods that taste great. They wanted to attract more first-time buyers and encourage them to spend more when they do. However, like most DTC brands, ads were becoming expensive and difficult to scale.

So they tried something different.

Hero Bread took influencer videos that were already doing well and turned them into full shopping pages using FERMÀT. That meant people could watch the video, shop for products, and check out all in one place, without having to leave the content.

They tested this with a creator named JJ Yosh. His videos were turned into storefronts using FERMÀT. These pages made it easy for people to shop while watching, and it worked.

The results:

AOV went up 85%

ROAS increased by 63%

This strategy now drives 8% of their total DTC sales.

Hero Bread used what was already working and made it easier for people to buy. FERMÀT helped them do it fast, without changing their site or slowing down the team.

My two cents

Improving your ROAS is a simple formula:

Increase AOV while decreasing your CAC.

For sustainable results, ensure that your product and messaging resonate with your customers because you can't out-market a bad product or business model. 

Lastly, if you believe you have the right product, the only thing left to do is experiment, experiment, experiment, and then guess what, experiment some more. If you're unsure where to start, click here to book a demo with the team.

Hope this helps, I'm rooting for you. 😇