Net revenue
This metric shows the net revenue that you earn from orders that include a particular coupon. The net revenue is a calculation of the price of the items sold after all discounts are applied. This can help determine which coupons are associated with the highest and lowest net revenue.
Percent discounted
This shows the share of gross revenue that is offset by discounts. For coupons that offer a percentage discount, this value is already known (for example, 10% off). Despite this, this measure provides insight and a method of comparison for coupons that are a fixed dollar discount.
Average net order value
This measure shows the average order value when a coupon is applied. You can analyze if orders with coupons consistently have a lower order value than orders without coupons.
Average order discount
This shows the average dollar value discounted from each order where coupons are applied. This displays the difference between the average net order value and average gross order value.
Distinct buyers
This metric displays the number of distinct buyers that use a certain coupon.
Average lifetime revenue
This metric helps evaluate the loyalty and average revenue generated by customers who use a certain coupon. When evaluating whether customers who use coupons are higher value than others, be sure to account for the number of distinct buyers in each category to ensure that you have a significant sample size.
Example
Now that you know what metrics to look at, look at an example involving three different coupons – 10% off, $20 off $100 or more, and $10 off.
| Coupon | # of orders | Gross revenue | Gross discounts from coupons | Net revenue | Percent discounted |
|---|---|---|---|---|---|
| 10% off | 79 | $19,757.02 | $1,975.70 | $17,781.32 | 10.00% |
| $20 off $100+ | 101 | $13,928.91 | $2,020.00 | $11,908.91 | 14.50% |
| $10 off | 201 | $14,542.35 | $2,010.00 | $12,532.35 | 13.82% |
| Coupon | Avg. net order value | Avg. order discount | Distinct buyers | Avg. lifetime revenue |
|---|---|---|---|---|
| 10% off | $225.08 | $25.01 | 79 | $361.50 |
| $20 off $100+ | $117.91 | $20.00 | 95 | $218.76 |
| $10 off | $62.35 | $10.00 | 199 | $84.27 |
What can you take away from this?
About 80 orders were placed with the “10% off” coupon, 100 orders with the “$20 off $100 or more” coupon, and 200 orders with the “$10 off” coupon. The number of orders associated with each coupon could vary based on several factors, including:
-
the length of time for which the coupons were offered.
-
the time of day/week/month/year the coupons were offered.
-
the season that the coupons were offered, depending on the business. For example:
-
The “10% off” coupon was offered during the summer months, but the business sells winter clothing.
-
the restrictions on the coupons. For example:
-
The “$10 off” coupon is only offered to new customers.
-
The “10% off” coupon is only offered to customers who purchase a winter coat in the same order.
-
the typical customer’s purchasing behavior.
While the gross discounts for all three coupons are similar (around $2,000), the number of orders for each coupon are different. Analyzing discounts on a per order basis helps explain the reasons for these contrasting numbers. The “10% off” coupon has the least number of orders, but an average order discount of about $25. Even though this coupon has a low number of orders, its high average discount value causes its gross discount amount to approach $2,000.
Gross and net revenue provide an overall idea of the full value of the orders associated with each coupon. However, this overall picture does not provide an understanding of the different behaviors related to each coupon. Once you look at a per order basis, you can see that the “10% off” coupon has a high average net order value, which in turn leads to its high net revenue.
On the other hand, the “10% off” coupon has a high average discount value ($25.01), but the lowest percent discounted. This makes sense when you account for its average net order value of $225.08. The “10% off” coupon has a small percent discount of a large average net order value, so the average order discount is a large amount.
Look at the distinct buyers and average lifetime revenue for each coupon. The “10% off” coupon has the same number of orders as distinct buyers. This could be a result of each customer being limited to one coupon. On the other hand, the “$20 off $100 or more” and “$10 off” coupons have fewer distinct buyers than number of orders, which implies that some customers used these coupons multiple times.
For average lifetime revenue, you can see that the average lifetime revenue for each coupon is greater than the respective average net order value. This implies that either customers made repeat purchases, and/or their order value was much higher than the average net order value.