
Offline B2C companies faced significant challenges during the pandemic, as dwindling foot traffic and intensified competition from delivery channels made it difficult to sustain sales. In such conditions, the range of tools available to boost revenue is limited. One widely used option is running promotions—temporary price discounts aimed at driving store traffic and increasing sales volume. Yet promotions can also erode margins, making it essential to determine whether they can effectively boost revenue without sacrificing profitability. Looxent recently partnered with a client in the offline retail sector to address precisely this issue.
Establishing a Rigorous Tracking Framework for Promotions
Each promotional event delivers varying results, so it’s critical to identify which ones truly add value. While promotions can attract customers and spur sales, many companies fail to monitor their full impact, often stopping at tracking incremental sales volume. This can be risky, as higher volume may come at the expense of profitability.
To address this, we developed a robust evaluation system that went beyond sales and revenue to also assess metrics like gross margin and contribution profit. We examined the impact on other products—whether promotions led to cannibalization (reduced sales of non-promoted items) or induced add-on purchases—and built a holistic framework for tracking promotional performance from multiple angles. This data-driven approach is foundational for refining promotional strategies over time.
Input-Output Simulations to Maximize Results
Once a performance tracking system is in place and historical data accumulates, the next step is identifying how to maximize outcomes. We conducted simulations of promotion inputs and outputs to explore how various factors—discount depth, number of products included, or target segments—affected results. Using ANOVA analysis, we uncovered meaningful trends such as the optimal discount point for maximizing sales or contribution margins, and the promotional mix that generated the strongest returns. The simulations offered concrete, data-backed guidance for structuring more effective promotions moving forward.
Validating Findings with Competitor Dynamics and Consumer Price Perceptions
After identifying promising promotional tactics through internal analysis and simulation, we validated these strategies by examining competitor promotions and researching consumer price perceptions. Utilizing Van Westendorp’s Price Sensitivity Meter, we confirmed whether the proposed promotional price points aligned with consumers’ perceived fair price ranges. This ensured that promotions weren’t set too high (limiting sales boosts) or too low (risking perceived quality concerns), and that the final promotional roadmap was both market-validated and customer-centric.
Enabling Data-Driven, Adaptable Promotions
Promotions are a critical lever for driving commercial success, yet they’re often challenging to adjust once launched. Even slight tweaks can yield significant shifts in performance. By taking a data-driven approach—tracking performance rigorously, identifying optimization opportunities through simulations, and validating strategies against market reality—companies can refine their promotions for maximum impact.
This project demonstrated the power of informed decision-making. Even seemingly straightforward discounts can benefit from a robust analytical framework to ensure that each promotion is backed by data, delivering stronger results and sustainable value.
Offline B2C companies faced significant challenges during the pandemic, as dwindling foot traffic and intensified competition from delivery channels made it difficult to sustain sales. In such conditions, the range of tools available to boost revenue is limited. One widely used option is running promotions—temporary price discounts aimed at driving store traffic and increasing sales volume. Yet promotions can also erode margins, making it essential to determine whether they can effectively boost revenue without sacrificing profitability. Looxent recently partnered with a client in the offline retail sector to address precisely this issue.
Establishing a Rigorous Tracking Framework for Promotions
Each promotional event delivers varying results, so it’s critical to identify which ones truly add value. While promotions can attract customers and spur sales, many companies fail to monitor their full impact, often stopping at tracking incremental sales volume. This can be risky, as higher volume may come at the expense of profitability.
To address this, we developed a robust evaluation system that went beyond sales and revenue to also assess metrics like gross margin and contribution profit. We examined the impact on other products—whether promotions led to cannibalization (reduced sales of non-promoted items) or induced add-on purchases—and built a holistic framework for tracking promotional performance from multiple angles. This data-driven approach is foundational for refining promotional strategies over time.
Input-Output Simulations to Maximize Results
Once a performance tracking system is in place and historical data accumulates, the next step is identifying how to maximize outcomes. We conducted simulations of promotion inputs and outputs to explore how various factors—discount depth, number of products included, or target segments—affected results. Using ANOVA analysis, we uncovered meaningful trends such as the optimal discount point for maximizing sales or contribution margins, and the promotional mix that generated the strongest returns. The simulations offered concrete, data-backed guidance for structuring more effective promotions moving forward.
Validating Findings with Competitor Dynamics and Consumer Price Perceptions
After identifying promising promotional tactics through internal analysis and simulation, we validated these strategies by examining competitor promotions and researching consumer price perceptions. Utilizing Van Westendorp’s Price Sensitivity Meter, we confirmed whether the proposed promotional price points aligned with consumers’ perceived fair price ranges. This ensured that promotions weren’t set too high (limiting sales boosts) or too low (risking perceived quality concerns), and that the final promotional roadmap was both market-validated and customer-centric.
Enabling Data-Driven, Adaptable Promotions
Promotions are a critical lever for driving commercial success, yet they’re often challenging to adjust once launched. Even slight tweaks can yield significant shifts in performance. By taking a data-driven approach—tracking performance rigorously, identifying optimization opportunities through simulations, and validating strategies against market reality—companies can refine their promotions for maximum impact.
This project demonstrated the power of informed decision-making. Even seemingly straightforward discounts can benefit from a robust analytical framework to ensure that each promotion is backed by data, delivering stronger results and sustainable value.