The discount waste calculator: How to stop losing money on unnecessary offers
Discounts are a powerful tool in eCommerce, but are you giving them away to customers who would have happily paid full price? If so, it’s time to rethink your approach.
Retailers that rely on untargeted discounts risk losing millions in unnecessary promotion costs, eroding margins, and potentially undervaluing their brand.
Intelligent offers allow retailers to increase revenue at less cost. Sounds too good to be true? Let's find out.
Let's dive into:
- Why blanket promotions are hurting your bottom line
- How intelligent offer suppression works
- Simple steps to calculate wasted discount spending
- Real-world results from Radley London
- How to implement smarter discount strategies
The problem with blanket promotions
Why are we still giving everyone the same discounts?
Most retailers adopt blanket promotion strategies because they’re simple, quick to execute, and deliver immediate results. However, this one-size-fits-all approach doesn’t consider the varying motivations of your customers.
While some shoppers genuinely need an incentive to complete their purchase, a significant portion would’ve bought anyway.
The hidden cost of unnecessary discounts
Every untargeted discount represents lost revenue. Imagine offering 20% off to a shopper ready to pay full price—that’s 20% of margin gone with no business benefit, and this isn’t a rare occurrence.
When you multiply that across every transaction, the cost to your business becomes staggering, not to mention the damage to your brand equity when discounts become the expectation, not the exception.
How intelligent offer suppression works
Personalize promotions based on intent
Instead of offering discounts to every shopper, intelligent offer suppression uses behavioral data to identify who needs that extra push to convert.
Here’s how it works:
- Purchase intent signals: Behavioral data like time spent on a product page, cart abandonment history, or frequency of visits indicate whether a shopper is high—or low-intent.
- AI-powered analysis: Machine learning models analyze this data in real time to determine who will likely convert without a discount and who might require an incentive.
- Intelligent targeting: Offers are shown only to customers who genuinely need them, while at-risk buyers get tailored discounts that maximize conversion likelihood.
Better targeting, better results
Platforms like RevLifter use intelligent offer suppression to optimize promotions. Retailers using intelligent offers benefit from higher conversion rates, improved margins, and better brand perception.
"Effectively and profitably linking pricing and promotions together in this analytical method can increase revenue and profiles by three to five percentage points overall. In addition, those companies the efficiently implement this approach often achieve improved customer satisfaction and loyalty as well."
Pricing and promotions: The analytics opportunity - McKinsey
Calculating the cost of untargeted promotions
Are you curious how much you’re losing to untargeted discounts? Here’s a simple formula you can use to estimate your wasted spend:
Example calculation
- Incremental revenue from discounted orders = $500,000
- Percentage of customers who didn’t need discounts = 30%
- Average discount percentage = 25%
Wasted discount cost = $500,000 x 30% x 25% = $37,500 lost
Now imagine saving that $37,500 monthly or even weekly. Think about reinvesting that into other parts of your eCommerce strategy for greater ROI.
Intelligent offer suppression makes this possible.
Case study: How Radley London saved 8% in promotion costs
Radley London needed to increase conversions while maintaining their premium brand image. Their traditional discounting strategy wasn’t driving the level of growth they wanted and was eating into margins.
Using intelligent offer suppression, Radley London began targeting promotions to high-intent buyers only, suppressing offers for customers likely to purchase without an incentive.
The results
- 8% reduction in promotion costs
(Value of discount saved as a % of incremental revenue driven) - Revenue growth from increased full-price sales
- Improved brand equity by avoiding over-discounting
Radley London’s success demonstrates the tangible impact of optimized promotions, both financially and reputationally.
How to implement offer suppression
Step 1: Identify high vs. low-intent signals
Use website heatmaps, cart abandonment trackers, and buyer behavior models to identify intent.
Step 2: Test and measure incrementality
Run A/B tests with control groups to determine whether promotions genuinely increase conversions or if customers would have purchased without them.
Step 3: Use AI for real-time decision-making
Adopt platforms like RevLifter to automate real-time decisions about when to apply discounts. This technology ensures that only the right shoppers receive the right offers.
Step 4: Monitor and optimize
Track results and refine your strategy over time. To measure success, look at metrics like conversion rate, margin recovery, and offer engagement rates.
Addressing common objections
“Won’t we lose sales if fewer offers are shown?”
Not if they’re targeted correctly. High-intent buyers will still convert without discounts, and low-intent shoppers will receive incentives strategically to maximize ROI.
“How can we know which customers need discounts?”
Platforms like RevLifter make this process simple. They analyze behavioral signals to predict purchase probability with high accuracy.
“Isn’t this too complex to implement?”
Not at all. Many eCommerce platforms, like Shopify and Magento, integrate seamlessly with intelligent offer tools. You can start small and expand as you see results.
Getting started
If you’re ready to reduce wasteful discount spending and optimize your eCommerce promotions, here’s what to do next:
- Audit your current promotion strategy. Identify blanket discounts and estimate wasted spend using the formula provided.
- Define high- and low-intent customer behaviors that align with your business model.
- Evaluate tools like RevLifter to simplify implementation and improve performance.
- Build a business case for intelligent offer suppression by outlining potential cost savings and revenue growth.
Stop giving discounts to people who don’t need them
Rethinking how you use discounts can transform your eCommerce business. By suppressing offers for customers who don't need them, you can boost margins, enhance conversions, and protect your brand.
Don’t leave money on the table. Optimize every promotion and make every dollar count. Get started today by exploring platforms like RevLifter to take your discounts to the next level.
