ecom-promo-roi

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Calculate and analyze promotional ROI including incremental sales lift, margin impact, and promo type comparison. Use this skill when the user needs to evaluate whether a promotion was profitable, compare promotion types, simulate promo scenarios, or optimize promotional spending — even if they say 'was this sale worth it', 'which promo type works best', 'are we giving away too many discounts', or 'plan our next promotion'.

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Sourceasgard-ai-platform/skills

Added on2026-04-15

NPX Install

npx skill4agent add asgard-ai-platform/skills ecom-promo-roi

SKILL.md Content

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Promotion ROI Analysis

Framework

IRON LAW: Measure INCREMENTAL Sales, Not Total Sales During Promo

A promotion that generates $100K in revenue during a sale week looks great —
until you realize $80K would have happened anyway (baseline). The incremental
lift is only $20K. If the discount cost $25K in margin, the promo LOST money.

Promo ROI = (Incremental Revenue × Margin - Promo Cost) / Promo Cost

Key Metrics

Metric	Formula
Incremental Revenue	Promo period revenue - Baseline revenue (what would have happened without promo)
Promo Cost	Discount amount + marketing spend + operational cost
Promo ROI	(Incremental Gross Profit - Promo Cost) / Promo Cost
Cannibalization Rate	% of promo sales that would have occurred at full price
Pull-Forward Rate	% of promo sales that are just earlier purchases (customers would have bought next week anyway)

Promo Type Comparison

Type	Mechanism	Pros	Cons
% Discount	20% off everything	Simple, high traffic	Erodes brand, trains discount-waiting
$ Off	NT$200 off orders >NT$1000	Drives AOV up	Less exciting for low-AOV customers
BOGO	Buy one get one free	Moves inventory fast	50% margin hit, attracts deal-seekers
Gift with purchase	Free item with min spend	Protects price perception	Cost of gift, may not drive incremental
Flash sale	Time-limited deep discount	Urgency, high engagement	Operational stress, cannibalization
Loyalty points	Earn/redeem points	Builds retention, deferred cost	Complex to manage, redemption liability

Analysis Steps

Phase 1: Establish Baseline

What would revenue have been without the promo? (prior period, prior year same period, or control group)
Account for seasonality, day-of-week effects, and trend

Phase 2: Calculate Incremental Impact

Total promo revenue - baseline = incremental
Subtract cannibalization and pull-forward estimates
Calculate gross profit on incremental (not revenue)

Phase 3: Calculate Full Cost

Discount dollars given up
Marketing spend (ads, email, creative production)
Operational cost (warehouse overtime, customer service spike)

Phase 4: Compute ROI and Decide

ROI > 0: Promo was profitable
ROI < 0 but strategic (new customer acquisition, inventory clearance): May still be justified
ROI < 0 with no strategic rationale: Don't repeat

Output Format

markdown

# Promo ROI Report: {Promotion Name}

## Promo Summary
- Type: {discount type}
- Period: {dates}
- Offer: {details}

## Results
| Metric | Value |
|--------|-------|
| Total Revenue (promo period) | ${X} |
| Baseline Revenue (estimated) | ${X} |
| **Incremental Revenue** | **${X}** |
| Incremental Gross Profit | ${X} |
| Promo Cost (discount + marketing + ops) | ${X} |
| **Promo ROI** | **{X%}** |

## Profitability Assessment
{Profitable / Unprofitable — with context}

## Recommendation
{Repeat / Modify / Discontinue — with rationale}

Gotchas

Baseline estimation is the hardest part: The accuracy of your ROI depends on how well you estimate what would have happened without the promo. Use prior year same period as a starting point, adjust for trend.
Post-promo dip is real: Sales often drop BELOW baseline after a promotion (customers pulled purchases forward). Include the dip period in your analysis.
Discounts are addictive: Customers learn to wait for sales. Track the % of revenue sold at full price over time — if it's declining, you have a discount dependency problem.
New vs existing customer mix matters: A promo that acquires 500 new customers at negative ROI may be worth it if their LTV justifies the acquisition cost. Track separately.

References

For A/B testing promotional offers, see
```
references/promo-testing.md
```