4 Key Insights on How Global eCommerce Leaders Use Promotions

June 21, 2021
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Promotions are a highly effective way to increase conversions, but why and how they actually work has been a bit of a black box. Not many brands have a promotion strategy in place, one that will help them test and optimize its effectiveness and its effect on important business metrics like LTV and customer loyalty. 

To gain a better understanding of the market and the impact COVID had, we surveyed senior eCommerce executives in the US and EMEA. We came away with the following four key insights from the survey.

1. Promotions Dramatically Increased During Covid-19, Yet Without A Clear Strategy

COVID-19 has shaken up the eCommerce industry. Brands were forced to think of new ways to increase eCommerce revenue and increasing promotions was one way of doing so. We found that 67% increased promotions by more than 10% during Covid-19, and 72% increased existing discounts by 10% upwards.


Promotion Strategy Management Throughout Covid-19

On top of that, while the majority of brands have a promotion strategy in place, almost a quarter (24%) don’t know how effective the promotions they run are.


Most Effective Onsite & CRO Strategies to Increase eCommerce Sales

Don’t leave your promotion strategy unattended. The education gap can be easily addressed. To get you started, follow this blog post about how to build a promotion plan to drive growth. It covers the four steps for developing an optimized promotion strategy:

  • Why: Setting the strategic objectives of your promotion program
  • What: The sales promotions and incentives you’ll offer
  • Who: Which customers you’ll offer each promotion to
  • How: How you’ll display and communicate the promotion to the customers you’re planning on offering.

2. Beating The Competition To First Time Shoppers Is A Huge Driver

In our survey, we saw that one of the top drivers for eCommerce promotions was about attracting new visitors while overcoming the competition, and actually not about revenue goals. As shopping behaviors radically changed during the pandemic, brands were met with a whole new wave of first time e-commerce shoppers. According to McKinsey, new users drove an increase of 20% up to more than 50% in online purchasing across the globe, and the OECD predicts these patterns will stick around. 

 Drivers for Promotions eCommerce During COVID-19 Outbreak 

Intent-Based Promotions can be a huge help for targeting these shoppers, even for first-time visitors who don’t have any historical data. By using anonymous non PII data, Intent-Based Promotions can help convert audiences, boost margins, end redundant incentives, and more. It’s all based on data around behavior, website and product usage, and even the device they’re using!

3. Promotions Without Strategy Are Harming Margins, LTV And Brand Perception

66% of respondents stated improving brand perception as a top business goal. Yet, 96% report that promotions have a negative effect on their business metrics. The most affected areas are margins, customer lifetime value, and brand perception.

Does this mean that promotions are the wrong way to go? Not at all. It means that a strong business strategy is required to ensure promotions are aligned with the business KPIs.

Promotions Effect on Business Metrics During COVID-19 Outbreak


Negative Impact on Lifetime Value by Brand Perception


In addition, the promotions brands choose might need some rethinking. Discounts, for example, can hurt a brand’s perception and reputation and depends on the type of brand. Mid-luxury brands tend to be less affected compared to affordable and luxury brands. Here are 21 types of promotions to test and when to use each one.

4. The Most Effective Strategies For Promotions Look To Increase Customer Satisfaction And LTV

Which promotions are the most effective? Next purchases ranked #1 (43%), followed by discount (31%) and loyalty/rewards program (14%). This shows that successful types of promotions use a long-term strategy to extend customer LTV.

Most Effective Promotional Offers

However, 54% of our respondents use the same site-wide promotions for all visitors. Promotions are not one size fits all, which makes sense, because not all shoppers are alike. Different shoppers have different intents, needs, pain points and traits, based on their demography, psychography and behavior. Intent-based data can be used to create personalized campaigns in real-time, which will optimize campaigns and promotions to shoppers’ needs and their values and drive specific behavior. This will also ensure you increase profit margins and profitability. 

Promotions Execution

Promotion Strategies in 2021 and Beyond

The results of the survey uncovered the startling truth about promotions in the eCommerce world. While almost all brands use promotions as part of their marketing mix, it’s clear that they simply aren’t getting the results that they want and need. eCommerce brands need to see this as a call to action to put a strategic plan in place for the way they approach promotions in order to attract new shoppers and beat the competition. 

By setting objectives, crafting a mix of sales incentives and price discounts, personalizing promotions, and communicating them effectively, brands will be able to increase conversions, without sacrificing on other important business metrics like margins or brand equity.

Uncover all of the insights we found in our survey

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