Most ecommerce promotions start with the offer itself. A team decides to run 10% off, 20% off, free shipping, or a bundle deal and then works backward from there.
A better approach is to decide the offer only after looking at two things: how much incentive the product can support, and how much incentive the customer actually needs.
The first depends on product economics such as margin, sales velocity, inventory, and repeat-purchase potential, while the second depends on customer behavior, especially whether someone tends to buy at full price or usually waits for a promotion.
So instead of asking, "What discount should we run?", the better question is, "What is the smallest incentive that is likely to change the purchase decision while still making commercial sense?"
Start with the economics of the product or category
Before deciding how aggressive an offer should be, look at whether the product can support it.
Margin is the obvious starting point. A product with strong margin gives you more room than one with very little margin left after cost of goods, shipping, and other expenses.
Sales velocity matters as well. A product that is already selling strongly does not need any help from a promotion, while a product with healthy stock and weakening sales may be a better candidate for a promotion.
Inventory also affects the decision. If stock is limited and demand is already strong, a discount only accelerates sales that would have happened anyway. If inventory is building and the business has enough supply to support more demand, there is a stronger reason to promote the product.
For results to show, these inputs should be looked at together.
Let's take an example. Imagine two products with similar margins. One is selling quickly and has limited stock, while the other has healthy inventory but sales have slowed over the last month. The second product has a much clearer reason for a promotion, even though the margin is the same.
The offer should come from the economics of the product, not simply from the promotional calendar.
Factor in what happens after the first purchase
The first order does not always tell you whether a promotion is profitable.
Some products are strong entry points into the brand. Customers who buy them may be much more likely to return, replenish the same item, or purchase from another category.
That changes how much margin the business should be willing to give up on the first transaction.
Look at what happens after customers buy the product:
- How often do they make a second purchase?
- How long does that second purchase usually take?
- What do they tend to buy next?
- Do they repeatedly purchase the same product?
- Do customers who start with this product become more valuable over time?
If a product reliably creates repeat customers, the business may be able to offer a stronger first-purchase incentive than the margin on the first order would suggest.
That does not mean every acquisition product should be sold at a deep discount. It means repeat-purchase potential should be part of the offer decision.
A product with mediocre first-order economics can still be commercially attractive if it consistently creates valuable future purchases.
Decide what kind of offer is actually needed
A better promotion does not always mean a bigger percentage discount.
Different offers solve different problems.
- A percentage discount may make sense when the goal is to reduce the price barrier.
- A spend threshold can help increase basket size.
- A bundle can make several products more attractive together.
- Free shipping may remove enough friction without cutting the price of the product itself.
Other possibilities include a gift with purchase, a category-specific offer, fixed-value savings, or early access for customers who already have strong purchase intent.
The offer should match the problem you are trying to solve.
If customers are already interested but hesitate because of shipping cost, 20% off may be unnecessary. If the goal is to increase average order value, a flat sitewide discount may be less useful than a threshold-based offer.
Understanding the customer psychology is important too. If the customer already buys at full price, simply giving them first access to a new product may be enough.
The useful question is not, "How much can we discount?" It is, "What is the smallest incentive that can change the behavior we want to change?"
Separate customers who need an incentive from customers who do not
Some customers regularly buy at full price while others consistently purchase during promotions. Those groups should not automatically receive the same offer.
Purchase history can help identify customers who frequently use discount codes, buy mainly during sale periods, or repeatedly convert during events such as Black Friday and Cyber Monday. These customers are more likely to be discount-sensitive.
Other customers may purchase repeatedly without incentives, so giving them the same discount may reduce margin without meaningfully changing the outcome.
This distinction is important because a discount is useful only when it changes behavior. If a customer was already likely to purchase, the promotion simply costs margin.
Match the offer to the customer
First-time buyers are often reasonable candidates for an acquisition offer, especially when the business is willing to give up some initial margin to bring a new customer in.
How aggressive that offer should be still depends on the product economics and what usually happens after the first purchase. A product with strong repeat-purchase potential gives the business more flexibility than one that rarely leads to another order.
Repeat and full-price buyers should be treated differently, as they may not need the same acquisition discount. A relevant product recommendation, a new launch, or good timing may be enough to generate another purchase.
Discount-sensitive customers are where stronger promotions are more likely to do useful work. If their history shows that they usually buy during sales, an offer may materially improve the chance of conversion.
High-value customers also should not automatically receive the biggest discounts. A valuable customer who already buys frequently at full price may need less incentive, not more.
Use discounts later in abandonment flows
Cart and product abandonment are good examples of where brands often give discounts too early.
A customer who leaves a product behind has already shown some level of intent. The reason for abandonment does not always mean price is the reason they did not buy.
A better sequence is to start with the product itself.
Remind them what they were considering and give them a reason to buy. Give them time to complete the purchase without an incentive. If they still do not convert, an offer can appear later in the flow.
This becomes even more useful when the flow also considers the customer's previous behavior. A customer who usually buys at full price may not need a discount at all, whereas one who repeatedly waits for promotions may be a better candidate for an offer later in the sequence.
The objective is to preserve margin from customers who were likely to purchase anyway, while still using discounts where they can make a difference.
Bring product economics and customer behavior together
The strongest offer decisions come from combining both sides of the problem.
- The product tells you how much incentive you can afford to give.
- The customer tells you how much incentive you actually need to give.
| Product situation | Customer behavior | Likely offer decision |
|---|---|---|
| High margin + healthy stock | Discount-sensitive customer | Stronger targeted offer may make sense |
| High margin + healthy stock | Full-price buyer | Promote without a discount |
| Low margin + strong demand | Any customer | Little reason for a price discount |
| Strong repeat-purchase potential | First-time buyer | More aggressive acquisition offer may be justified |
| Limited stock + strong sales | Any customer | Avoid unnecessary promotion |
| Excess inventory + weak sales | Relevant discount-sensitive audience | Targeted promotion may help |
| Cart abandonment | Full-price repeat buyer | Reminder first, no immediate discount |
| Cart abandonment | Discount-sensitive buyer | Reserve the offer for later in the flow |
This framework is more useful than deciding on a sitewide promotion first and then sending it to everyone.
A better ecommerce offer is not necessarily the biggest discount.
It is the offer that fits the economics of the product, the behavior of the customer, and the commercial outcome you are trying to create.
Nexie is a retention marketing agent for e-commerce brands. It reads your customer data across engagement, recency, category interest and lifetime value together, surfaces the audiences worth campaigning to, and builds those campaigns for your team to review and approve, inside the guardrails and marketing policies you set. See how it works →