The campaign that looked like a success
The discount email went to the whole list. Sales jumped that week, and the campaign report looked excellent. But when finance looked closer, a large share of the orders came from regular customers who buy every month anyway. They got the discount on an order they were going to place regardless.
It keeps happening. Every promotion shows a spike, and every spike includes people you have paid to do what they would have done for free. Meanwhile some of the lapsed customers you actually wanted back ignored the offer, because it was not the right one for them.
Why discount reporting misleads
Most campaign reporting counts everyone who used the code as a success. It cannot tell the difference between a customer the discount persuaded and one who was coming anyway. The loyal customer who uses the code looks identical, in the report, to the lapsed one who came back because of it.
Choosing who to target is often guesswork too. Rules like "everyone who has not bought in ninety days" or "top spenders" feel sensible but are not based on who actually responds to offers. The top spenders may be precisely the people who do not need one.
Without a group of similar customers who did not receive the offer, there is simply no way to tell what the discount did. Most businesses have never held one back, because it feels like leaving sales on the table. In fact it is the only way to find out which sales the discount actually created.
What untargeted discounts cost
| Pattern | What it costs |
|---|---|
| Discounts to loyal buyers | Margin given away on sales you would have made anyway |
| Customers trained to wait | Regulars learn to hold off until the next code |
| Wrong offer to lapsed customers | The people you want back do not respond |
| Misleading campaign reports | Promotions look profitable when they are not |
| Brand perception | Constant discounting makes full price feel like a rip-off |
The customers-trained-to-wait effect is the one that builds up slowly. Once regulars expect a code, full-price sales shrink between campaigns and the business needs ever more promotions to hit the same numbers.
How we target offers at the customers they persuade
- We gather customer and order history from your e-commerce platform or CRM, such as Shopify, WooCommerce, Klaviyo, Mailchimp or HubSpot, along with past campaign records showing who received which offer.
- Where past campaigns were sent to everyone, we set up holdout groups in upcoming campaigns, a random slice of customers who do not get the offer, so there is a fair comparison to learn from.
- We build an uplift model that estimates, for each customer, how much more likely they are to buy with the offer than without it, rather than just how likely they are to buy.
- We sort customers into groups: those an offer persuades, those who buy anyway, those who will not buy either way, and those an offer might put off.
- We send the target list back into your email or ad platform, so the offer goes to the persuadable group and everyone else gets normal communication.
- Every campaign keeps a holdout group, so the true effect of each promotion is measured and the model keeps learning.
This needs some patience at the start if you have never run holdouts. The first campaigns with a control group are what make everything after them measurable.
What the marketing team gets
Campaign lists chosen by who the offer is likely to change, not who is easiest to reach. Reports that show the real extra sales a promotion created, measured against customers who did not get it. Loyal customers who stop receiving codes they did not need.
Finance and marketing also end up looking at the same number, which makes the conversation about promotions a lot shorter.
Over time you learn which kinds of offer work on which customers: free delivery for some, a percentage off for others, early access for the loyal ones who do not need a discount at all. That knowledge is often worth as much as the targeting itself.
Is this your situation?
- Discount campaigns go to your whole list or broad segments.
- Many discount orders come from regular customers.
- Customers seem to wait for the next code before buying.
- Campaign reports count every code use as a success.
- You have never held back a control group from a promotion.