This One Metric Changed How Merchants Think About Discounts

You'll see the word "incrementality" showing up more in e-commerce conversations. Ad platforms have been measuring it for years. But for discount codes and promotions, it's been almost entirely absent from the Shopify ecosystem.

Here's what it means, why it matters, and how to start measuring it.

An incremental sale in one sentence

An incremental sale is one that would not have happened without your promotion.

That's it. When you send out a 15% off code and someone uses it, the question is: would that person have bought anyway, at full price, without the code?

If yes, the sale isn't incremental. You gave away 15% of margin for nothing.
If no, the sale is incremental. The promotion did its job.

Why redemption counts are misleading

Shopify's discount reports show you how many times a code was used. Email platforms show attributed revenue. These numbers feel actionable, but they answer the wrong question.

A code with 1,000 redemptions looks more successful than one with 200 redemptions. But what if the 1,000-redemption code has 5% incrementality (50 extra sales) while the 200-redemption code has 40% incrementality (80 extra sales)?

The "less successful" code by traditional metrics actually drove more extra revenue. This happens more often than you'd think.

How to measure it

The approach is the same one used by ad platforms: a controlled experiment.

The setup

1. Test group: Customers who receive the promotion (e.g., a 15% off code in their email)
2. Control group: Similar customers who don't receive the promotion (they see the same email without the code)

The measurement

Compare purchase rates between the two groups over the experiment period:

• Test group conversion rate: 4.1%
• Control group conversion rate: 3.2%
• Incremental lift: +0.9 percentage points

That 0.9pp lift is the promotion's real contribution. Applied to the test group size, it tells you exactly how many extra orders the promotion generated.

The metric: Cost Per Incremental Order (CPiO)

Once you can measure incrementality, one new metric becomes available, and it changes how you think about every promotion you run.

Total discount given / Number of incremental orders = CPiO

If you gave away $5,000 in discounts and generated 150 extra orders, your CPiO is $33.33.

Now compare that to your Customer Acquisition Cost. If your CAC from paid ads is $22, the promotion costs 50% more per customer than just running ads. If your CAC is $45, the promotion is a bargain.

CPiO turns vague questions about promotional ROI into a concrete comparison against your other acquisition channels.

Net Promotional Value

Incremental revenue earned - Total discount given = Net Promotional Value

This is the bottom line. If a promotion generated $12,000 in extra revenue and cost $5,000 in discounts, its Net Promotional Value is +$7,000. Worth running.

If it generated $3,000 in extra revenue and cost $5,000 in discounts, its Net Promotional Value is -$2,000. You paid $2,000 to run this promotion and got less back in genuinely new sales.

The refund factor

Here's something most discussions ignore: returns. A discounted order that gets returned isn't extra revenue. It's a logistics cost. And return rates on discounted orders are typically higher than full-price orders, particularly in fashion and beauty.

Any honest measurement needs to account for refunds. A promotion with 20% incrementality before returns might have 12% after accounting for a 25% return rate on discounted orders vs. 14% on full-price.

What "good" looks like

There's no universal benchmark. It depends on your margins, your CAC, and your business model. But here are useful reference points:

Incrementality Rate	What It Usually Means
30%+	Strong performer. This promotion is genuinely driving new sales.
15-30%	Moderate. Worth running if your margins support the CPiO.
5-15%	Marginal. Most of the discount spend goes to customers who'd buy anyway.
<5%	The promotion isn't driving extra sales. Consider pausing.

The key is comparing CPiO to your other acquisition costs. A 10% incrementality rate might be fine if the resulting CPiO is $5 and your CAC is $30. Context matters more than the percentage.

Getting started

Start with your historical data. What percentage of your revenue involves a discount code? What's the return rate on those orders vs. full-price?

Pick one code to test. Choose your most-used discount code, the one with the most at stake. Set up a controlled experiment.

Calculate your CPiO. Divide your total discount spend by the number of extra orders. Compare to your CAC.

Make one decision. Keep, modify, or pause a single promotion based on data. Then do it again.

Measuring incrementality isn't about eliminating discounts. It's about knowing which ones earn their keep.