Discounts Are Killing Your Margins? —Try This Instead

Hey there,

Welcome back to The Advantage, your go-to newsletter for turning emails into revenue machines.

This week, we’re tackling a big one: how to offer discounts without killing your margins. 

If you’re running an ecommerce store, you know the drill: You run a sale, slash prices, and watch the orders roll in. But when the dust settles, your profit margins have taken a hit—again.

So, you run another sale. Customers start expecting discounts. Every full-price email campaign flops, and soon, it feels like you have no choice but to keep discounting just to stay in the game.

If this sounds familiar, you’re caught in the Discount Trap.

The hard truth? Deep discounts aren’t a marketing strategy—they’re a crutch.

Yes, they drive short-term sales, but over time, they:
❌ Erode your profit margins
❌ Train customers to never pay full price
❌ Make your brand feel ‘cheap’ instead of premium
❌ Attract deal-hunters instead of loyal customers

But here’s the good news—you don’t have to sacrifice revenue to boost conversions. There’s a smarter way to offer incentives without killing your margins.

The Smarter Alternative: Cashback Rewards

What if you could offer a “discount” without actually reducing your revenue? That’s exactly what cashback incentives do.

✅ 50% of cashback rewards go unclaimed—meaning you keep more of your revenue while still offering a compelling deal.
✅ Customers who redeem cashback often use it on future purchases, increasing repeat sales.
✅ Instead of training customers to wait for the next sale, cashback makes them feel like they’re earning a reward.

Think of cashback as an investment in customer loyalty instead of a revenue loss.

Case Study: Why This Works

A fashion brand we worked with switched from 20% discounts to 20% cashback on their store. The results?

📈 Repeat purchase rate jumped 25%—customers came back instead of bouncing after a one-time deal.
💰 40% of cashback rewards went unclaimed, meaning a huge chunk of revenue was never actually discounted.
🛍 Customers spent more—many shoppers redeemed their cashback for gift cards, which led to bigger orders.

This simple switch protected their margins while still offering customers a deal they loved.

How to Use Cashback in Popups & Sale Campaigns

💡 Popups: Instead of offering an upfront 10% discount for new customers, test a "Get $10 Cashback on Your First Order" popup.

• Why? It boosts conversions while keeping more revenue in your pocket.

• Tools to try: Fondue, Rise.ai (both integrate with Shopify & Klaviyo).

💡 Email Sale Campaigns: Instead of a flat 20% off sitewide, test a “Buy Now, Earn Cashback for Your Next Order” campaign.

• Why? It incentivizes future purchases, building customer retention.

• You can offer a larger percentage offer.

• Example: "Buy today and get 15% of your order value back in store credit—redeemable on your next purchase!"

💡 VIP & Holiday Sales: Reward high-value customers with cashback instead of discounts.

• Example: "Exclusive VIP Perk: Spend $100, Get $15 Back in Store Credit."

• Why it works: Keeps margins healthy while still making VIP customers feel special.

The Best Cashback Apps for Ecommerce

These tools help you replace discounts with cashback seamlessly and have been tried and tested by us (no affiliation):

🔹 Fondue – Converts discounts into cashback, integrates with Shopify & Klaviyo, reduces discount abuse.
🔹 Rise.ai – Focuses on store credit and gift cards, great for increasing repeat purchases.

Want to Fix More Leaks in Your Email Strategy?

If discounts are hurting your profits, there are dozens of other tweaks you can make to boost your email revenue.

👉 Get a free email audit, and we’ll help you:
✅ Identify revenue-draining traps in your campaigns
✅ Implement smarter strategies like cashback & VIP rewards
✅ Optimize email flows to maximize repeat purchases