How customer intent makes promotions work harder (while protecting your margins)

Promotions are the most direct lever you have to affect eCommerce performance. They've been around for over 150 years — the format has changed from metal tokens to paper coupons to digital codes, but the purpose hasn't. They're incentives designed to get people to buy, or buy more.

And the data proves they work. Promotions drive over half of revenue, nearly half of items sold, and more than half of all transactions. Discounted items even have a higher average price (£70 versus £56). When people feel they're getting a deal, they give themselves permission to spend more.

But there's a cost.

The promotion problem

62% of customers now wait for discounts before buying. We've trained them to expect deals. And BCG estimates that 30-40% of promotions are either inefficient or unprofitable.

That's margin walking out the door to people who would have bought anyway.

How promotions actually work

Every customer has a price they're willing to pay, and it varies from person to person. A promotion closes the gap between your selling price and their threshold — bringing more people into the "will buy" zone.

The original price anchors the item's perceived value, making the discount feel like a win. And the deal itself attracts bargain hunters who weren't even shopping with you in the first place.

So if promotions work by closing that price gap, we need to know two things:

Who actually has a gap to close?

What's the smallest offer that will close it?

The shift: from broad to precise

This is where understanding customer intent changes everything. Instead of showing the same offer to everyone, you can target visitors based on how likely they are to need an incentive.

Your visitors sit on a spectrum — from low to high likelihood of buying without help. By reading signals like traffic source, new versus returning, funnel stage, products browsed, location, and basket value, you can group visitors by intent.

The goal is precision. The right offer, to the right person, at the right moment.

What this looks like in practice

Radley ran exit campaigns targeting people about to leave at different funnel stages — when they copied a product name, or when they tried an invalid code. Each of these behaviours signals intent and price sensitivity.

The result? A 15% increase in conversion rate and a 28% increase in revenue per user.

But here's the smart part: by excluding visitors with a high predicted probability of buying anyway, they achieved the same uplift at 8% less cost. That's margin protection in action.

Rowan Homes used stretch & save campaigns to encourage people to spend a bit more to unlock a reward. Instead of discounting what's already in the basket, they incentivised additional spend — and increased revenue per user by 16%.

Nasty Gal and Club L both saw 15-16% increases in AOV by using targeted offers for seasonal sales, flash sales, and product drops. The right offer at the right moment shifts the stock you need to shift.

Finding the minimum effective incentive

Once you know who to target, the next question is what offer to show them. Testing different discount levels — 5%, 10%, or 15% — reveals which delivers the best balance of conversions, AOV, and incremental revenue.

You'd be surprised how often a smaller offer performs just as well as a bigger one. (Your finance team will appreciate that.)

The shift in thinking

From broad to precise

From reactive to strategic

From the same offer to everyone, to tailored by intent

Same lever. Better results.