# Case Study: The Channel Giving the Deepest Discounts Was the Most Profitable One | Crank

Source: https://wearecrank.com/case-studies/prestige-beauty-promotion-profitability-2018

Measured on profit per order rather than revenue, almost every assumption about which promotions were working turned out to be the wrong way round.

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![Prestige beauty case study: The Channel Giving the Deepest Discounts Was the Most Profitable One](/images/case-studies/prestige-beauty.png?dpl=dpl_2uJjggmfov9ibhArygujfRBb3pax)

Prestige Beauty — 2018 Diagnostic

# The Channel Giving the Deepest Discounts Was the Most Profitable One

Measured on profit per order rather than revenue, almost every assumption about which promotions were working turned out to be the wrong way round.

Challenge

A prestige beauty retailer with a 27 per cent growth target, judging its promotional activity on revenue — which cannot distinguish between a sale that made money and a sale that was bought with a discount deep enough to remove the margin.

Approach

Analyse promotions on profit per order rather than revenue share: separate coupon-driven activity from always-on campaigns, and hold discount depth against profit by device, by channel and by campaign.

Outcome

Discount depth predicted almost nothing. The channel taking 43 per cent of all discounts was also the most profitable per order. The device with the deepest discount had the lowest profit. And the campaign with the smallest discount fell furthest below the average profit per order.

01

## Three-quarters of it was not promotional at all

Seventy-five per cent of sales in the quarter came from non-promotional activity. That single figure reframes everything after it: promotions were not carrying the business, they were a minority of it — but they were absorbing a disproportionate share of attention because they are the easiest thing to see.

02

## The deepest discounter was the most profitable

The newsletter channel took the largest share of revenue at 32 per cent, and 43 per cent of all discounts came through it. On a revenue-and-discount view, that is the channel to rein in.

On profit per order it was the most profitable channel in the account, because customers arriving from it spent more per order. The discount was not eroding the margin; it was buying a larger basket.

03

## Where the discount genuinely was the problem

Mobile customers received the highest discount rate at 24 per cent, spent around £5 less per order, and produced the lowest profit per order of any device. Desktop received the lowest discount at 13 per cent and produced the highest profit.

Same promotions, same products, different device — and the discount was doing the opposite of what it did on the newsletter. This is why depth alone cannot be the measure.

04

## And the campaign comparison that settles it

The loyalty campaigns accounted for 91 per cent of promotional orders and 89 per cent of promotional revenue, and had a materially lower profit level. One product campaign carried a higher discount and was the most profitable of all. A flat 15 per cent off campaign carried a lower discount, did not lift order value at all, and produced £45 profit per order against a £59 average.

Bigger discount, more profit. Smaller discount, less profit. The variable that mattered was whether the promotion changed what people put in the basket, not how much came off the price.

05

## What this means for you

Discount depth does not predict profitability, in either direction. A deep discount that lifts basket size can be your best activity, and a shallow one that changes nothing can be your worst.

If you are judging promotions on revenue share and discount rate, you are measuring two things that are individually true and jointly useless. Profit per order is one calculation, and it reorders the whole list.

## What profit per order changed about the promotion story

75%

Of quarterly sales came from non-promotional activity

32% revenue/43% of discounts

The newsletter channel — and the most profitable per order

24%vs13%

Discount rate, mobile vs desktop — and mobile the least profitable

£45vs£59

Profit per order, the smallest-discount campaign vs the average

Drawn from Crank's digital diagnostic conducted in 2018 for this prestige beauty retailer. Client not named.

## Want to know what this looks like in your own account?

These findings came from asking straightforward questions before any budget moved. We're happy to do the same for yours.

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