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