How to Accurately Measure the ROI of In-Store Promotions
An in-store promotion ends and the product’s sales are up. Often, though, nobody can say for sure whether it brought in more than it cost.
That’s the question ROI answers, as long as you measure it properly: using the sales the promotion genuinely generated and its full cost.
Why Sales Volume and ROI Aren’t the Same Thing
Sales tell you how many units left the shelf. The return shows what the business actually keeps once the cost of the promotion is taken out. The two don’t necessarily move together: a promotion can significantly boost volume while cutting profit, because every unit sells for less and the promotion itself costs money.
Say a product sells for €10 and costs €7, leaving €3 profit per unit. At 100 units a week, that’s €300 profit. With a 20% discount, the price drops to €8 and the profit per unit to €1. To make the same €300, the business has to sell 300 units, tripling its sales, and that’s before staff and display materials are even factored in.
On top of that, simply comparing sales before and during the promotion paints a rosier picture than the reality. Some of that volume would have sold anyway. Some is cannibalised from the brand’s other products, and many shoppers simply stock up early on what they would have bought over the following weeks. Strip those out and the picture changes considerably: according to Oliver Wyman (2024), two-thirds of promotions generate no additional value.
So a rise in sales alone doesn’t tell you whether a promotion worked. That only becomes clear when you compare what it cost with the extra profit it brought in.
From Revenue to Real Profit
Working out the real profit takes four steps.
1. Set your baseline before the promotion
Your reference point is the product’s average weekly sales in the weeks before the promotion, with no other offers or holidays in between. Even more reliable is a comparison with similar stores that didn’t run the promotion over the same period (control stores), since this also strips out seasonal effects.
2. Isolate the genuinely incremental sales
From the uplift over baseline, subtract two things: volume cannibalised from the brand’s other products and the dip that follows, as shoppers work through what they bought early. That’s why it’s important to keep tracking sales for two to four weeks after the promotion ends.
3. Record the full cost
The discount is only part of the cost, and it already shows up in the lower profit per unit. On top of it come promoter fees, display materials, samples handed out and any fees the retailer charges for placement or visibility.
4. Calculate the ROI
The formula is: ROI = (incremental profit − promotion cost) / promotion cost.
Going back to the earlier example, say the promotion sold 400 units at €1 profit each, so €400. Without the promotion, the 100 units would have brought in €300, so the incremental profit is €100. If staff and materials cost €250, the ROI is (100 − 250) / 250 = −60%. Sales quadrupled, but the business actually lost money.
Conclusion
The most useful habit is deciding before launch what will count as success. For a product that already sells well, it’s reasonable to expect a positive ROI.
A sampling campaign for a new product, on the other hand, is judged by how many people tried it and how many went on to buy it again. That way, at the end of the campaign, you compare the result against a specific target, not against whatever would make it look successful.
INGROUP’s promotion teams record data from every point of sale daily through the RTI platform, so you have the figures you need for every promotion. Contact us to plan your next campaign.