Expert answer · 2 min read
How do I forecast revenue impact from discount campaigns?
The short answer
In depth
Forecasting Revenue Impact from Discount Campaigns
Revenue forecasting for discount campaigns requires separating two effects: the volume effect (more orders) and the margin effect (lower revenue per order). A forecast that accounts for both gives you a realistic picture of net revenue impact.
Forecast Model
Step 1: Establish baseline
Monthly visitors: 10,000
Baseline conversion rate: 2.5%
Baseline orders: 250
Average order value: $75
Baseline revenue: $18,750
Step 2: Model discount campaign impact
Exit-intent trigger rate: 30% of visitors (3,000 see offer)
Offer redemption rate: 20% (600 redeem)
Incremental orders (visitors who wouldn't have bought): 300 (50% of redeemers are incremental)
Discount depth: 12%
Incremental revenue: 300 x ($75 x 0.88) = $19,800
Discount cost: 600 x ($75 x 0.12) = $5,400
Net incremental revenue: $19,800 - $5,400 = $14,400
Campaign ROI: $14,400 / $5,400 = 2.7x
Key Forecast Assumptions to Validate
| Assumption | Conservative | Optimistic |
|---|---|---|
| % of redeemers who are truly incremental | 30-40% | 60-70% |
| Offer trigger rate (% seeing offer) | 20% | 40% |
| Redemption rate of offer viewers | 15% | 30% |
Growth Suite Forecast Accuracy
Growth Suite's behavioral targeting dramatically improves the % of redeemers who are truly incremental - typically 60-80% vs. 30-40% for untargeted campaigns. This means the forecast model produces more conservative, accurate projections and the actual results come closer to the optimistic scenario because targeting quality is higher.
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