The Discount Death Spiral: Why Your Promo Calendar Is Killing Your E-Commerce Brand

If you run an e-commerce brand and your Klaviyo account leans heavily on discount-driven emails, this one's for you. And it might sting a little.

Klaviyo just dropped new research at their K:SYD 2026 conference (co-produced with Tracksuit and ProfitPeak) that looked at thousands of global brands and 176 Australian brands over 12 months. The headline finding? Low discounters - brands running 1 to 5 promotional events per year - grew at double the rate of deep discounters running 11 or more promos per year.

That's not a rounding error. That's a 19 percentage point margin gap. And the only meaningful difference between the two groups was how often they put things on sale.

Here's the uncomfortable part: the vast majority of those discounted orders went to returning customers. The same people who would have bought at full price anyway. Your hero products go out the door at a discount your best customers didn't need, while the slow-moving inventory stays on the shelf.

If that sounds like your brand, keep reading. We're going to break down why this happens, what you should do instead, and show you a real case study where we cut discounting and grew revenue by 24%.

80% of Brands Are Using 20% of Klaviyo's Power

Here's something we see constantly at Threadpoint: about 80% of the clients that come to us are using maybe 20% of what Klaviyo can actually do. And the programs they do have? They're heavily reliant on discounting. We're talking 60% or more of their email and SMS revenue coming from discount-driven sends.

Think about that for a second. If the majority of your retention marketing strategy revenue depends on giving away margin, you don't really have an email program. You have a coupon delivery system.

Klaviyo is a sophisticated CRM with segmentation, behavioral triggers, predictive analytics, conditional splits, and a dozen other tools that can drive revenue without ever touching a discount code. Most brands aren't using any of it. They're sending "20% OFF EVERYTHING" blasts to their entire list twice a week and wondering why their margins are shrinking.

The K:SYD data backs this up. James Hurman, co-founder of Tracksuit, calls it a "sugar high" - the dashboard looks great during the sale, but the brand equity, reference prices, and margins erode slowly in the numbers most marketers don't track closely enough. The gains show up in real time. The losses show up over quarters and years.

The Data Says You're Hurting Yourself

Let's get specific about what the research actually found, because the numbers are hard to argue with:

• Low discounters grew at 2x the rate of heavy discounters over the 12-month tracking period
• 19 percentage point margin gap between the two groups
• Most discounted orders went to returning customers who would have bought at full price
• Revenue drops sharply after a sale ends as the pipeline empties out

This isn't just one study in isolation, either. The data came from research co-produced by Klaviyo, Tracksuit, and ProfitPeak analyzing thousands of brands globally. Brian Kealey, Klaviyo's VP and managing director for Asia-Pacific, opened K:SYD with additional context: Australian shoppers now purchase across an average of 16 brands per year, basket sizes are falling even as purchase frequency rises, and Amazon, Temu, and Shein added close to a million new Australian customers last year.

In other words, your customers have more options than ever. Training them to expect discounts from you is the fastest way to make sure they shop around.

Why the Discount Should Always Come Last

Here's a framework that changed how we think about every email flow we build: the discount should only appear after every other objection has been addressed first.

When someone is considering your product, they have objections. Price is one of them, sure. But it's usually not the biggest one. Think about what's actually going through their head:

• "Will this actually work for me?" (Results objection)
• "I'm not sure about the size/fit." (Fit objection)
• "Has anyone else tried this and liked it?" (Social proof objection)
• "I've been burned by products like this before." (Trust objection)
• "Is this brand legit?" (Credibility objection)

And then, maybe at the end: "It's a little pricey." (Price objection)

Within any email series - whether it's an abandoned cart flow, a welcome series, or a browse abandonment sequence - the discount should be the last email. Not the first. Not the second. The last.

Why? Because if you show someone that your product will truly make their life easier or better in a meaningful way, they won't care nearly as much about the price. Nobody haggles over the cost of something they desperately want. They haggle over things they're on the fence about.

Your first emails should tackle the real objections. Show them results. Give them sizing guides. Share customer stories. Prove your product does what you say it does. By the time you get to email four or five in the series, the only people who haven't converted yet might genuinely need a small price nudge. But you'll be surprised how many convert before they ever see a discount.

What Replaces the Promo Calendar

If you pull back on discounting, what fills the gap? This is the part most brands struggle with because they've been running the same playbook for so long that they can't imagine what else to talk about.

The answer: replace the promo calendar with authentic conversation.

Here's what that actually looks like in practice:

Educational Newsletters

Instead of "FLASH SALE - 24 HOURS ONLY," send content that actually teaches your customer something. Write about topics related to your product category and link to blog posts. Become a resource, not a billboard.

Beta Programs and VIP Access

Let your best customers try new products before they're available to the public. This creates real urgency (scarcity, not manufactured discounting) and makes customers feel like insiders. People will pay full price for early access. They won't pay full price when they know a 20% off code is coming next Tuesday.

Category-Level Storytelling

This is the one that separates good email programs from great ones. It's one thing to say amino acids will "help you recover faster." It's another thing entirely to say "We see what leg day did to you again" and then write an email about leg day recovery where the amino acid supplement is a natural byproduct of that conversation.

See the difference? The first one is a product pitch. The second one shows the customer you get them. You understand their life. You're not just selling them something - you're having a conversation that happens to involve your product.

Real Urgency Without Discounts

Sales aren't the only way to create urgency. You can tease that a product may run out of stock soon (actual scarcity, not fake countdown timers). You can announce limited edition runs. You can offer bundles that are only available for a set period. You can use seasonal relevance - "summer's coming and you haven't stocked up on sunscreen" hits different than "15% OFF SUNSCREEN."

Here's the thing most brands don't realize about discounts and urgency: the vast majority of the time, all a sale really does is create a sense of urgency. And you can create urgency in a dozen other ways that don't destroy your margins. The times when a sale actually addresses a genuine price objection are less common than you think.

The Sale Hangover Is Real (And You're Probably Not Measuring It)

This is the part where brands fool themselves the most. You run a promotion. Revenue spikes. The dashboard looks incredible. Everyone high-fives. The sale "worked."

But did it?

Here's what we tell every client: study the revenue before, during, and after a promotion as a whole. Don't just look at the sale period in isolation.

What you'll usually find is a pattern that looks like this:

1. Pre-sale dip: Customers who know a sale is coming (because you've trained them to expect one) hold off on purchasing. Revenue dips in the days or weeks before the promotion.
2. Sale spike: Revenue pops during the promotional period. This is the number everyone celebrates.
3. Post-sale hangover: Revenue drops significantly after the sale ends. The pipeline is empty because you already pulled those sales forward.

When you zoom out and look at all three periods together, the total revenue is often barely different from what you would have generated without the sale at all. Except now you generated that revenue at reduced margins.

The K:SYD research confirms this pattern: "In the weeks after a sale ends, revenue falls sharply as the pipeline empties out. Brands are borrowing the revenue captured during the sale from the weeks that follow it, and at a lower margin, too."

Sure, if you need quick cash flow right now, a sale can help. But understand what you're actually doing - you're borrowing from next week's revenue and paying interest in the form of lost margin. That's a deliberate cash flow decision, not a growth strategy. And most brands running 11+ promotions a year aren't making a deliberate cash flow decision. They're addicted to the sugar high.

Real Results: Cutting Discounts, Growing Revenue

Theory is great. Data is better. But real results from a real brand? That's what actually changes minds.

We did exactly this with BrickHouse Nutrition. We pulled back on discounting, moved into better content, elevated the brand messaging, and launched new flows across the board. The strategy was simple: stop leading with coupons, start leading with value.

The result? Revenue in Klaviyo went up 92% while simultaneously reducing the amount of discounting.

But here's the Shopify data that really tells the story:

Look at these numbers:

• Gross sales: $12.66M (up 22%)
• Discounts: -$2.08M (down 13% - meaning we gave away less)
• Returns: -$272K (down 56% - people kept what they bought)
• Net sales: $10.31M (up 24%)
• Total sales: $10.66M (up 24%)

Revenue went up. Discounts went down. Returns dropped by more than half. That's not a coincidence.

When you stop training customers to wait for discounts and start having genuine conversations about why your product matters, three things happen: people buy at full price, they buy because they actually want the product (not because it's cheap), and they keep what they buy because the purchase was intentional, not impulsive.

The 56% drop in returns is the data point that should make every brand owner sit up straight. Discount-driven purchases have higher return rates because the customer bought on impulse, not conviction. When you sell on value instead of price, the customer who converts is a better customer - higher AOV, lower return rate, higher lifetime value.

Start Small: Move the Discount Back

If you're reading this and thinking "I can't just rip out all my discounts overnight," you're right. And nobody's asking you to.

Here's the simplest first step you can take today: move the discount in your abandonment series to at least the second email.

That's it. Don't overthink it. If your abandoned cart flow currently sends a "Here's 10% off to complete your order" email within the first hour, push that discount to email two or three. Make email one about the product. Address an objection. Show social proof. Tell them why this product is worth their money at full price.

Then watch what happens.

If you see that conversions don't drop significantly (and you probably will), you can start moving the discount even further back. Push it to email three. Then email four. Test removing it entirely from some segments.

Once you've proven to yourself that people will buy without the discount - and you will prove it, because the data supports it - you've unlocked something powerful: the ability to actually spend on acquisition without giving all that margin away on the back end.

From there, you can begin weaning off of campaign promotions with discounts too. Instead of running "20% off sitewide" every two weeks, try running one educational campaign, one social proof campaign, and one scarcity-based campaign for every discount campaign. Slowly shift the ratio.

The brands that are growing fastest right now - the ones the K:SYD data highlighted - aren't the ones with the best discount strategy. They're the ones who realized they don't need one.

Related: essential automated flows.

Frequently Asked Questions

Won't I lose revenue if I stop discounting?

Short term, maybe a small dip during the transition. But the K:SYD 2026 data shows that brands running fewer promotions grew at 2x the rate of heavy discounters over 12 months. The revenue you "lose" from not discounting is usually revenue you were going to get anyway - just at full margin. Study the before, during, and after of your promos as a whole, and you'll see the sale hangover eating your gains.

What if my competitors are all discounting heavily?

That's actually your advantage. If every brand in your space trains customers to shop on price, the brand that builds genuine relationships and sells on value stands out. You attract customers who buy because they believe in your product, not because they found the cheapest deal. Those customers have higher LTV, lower return rates, and are far less likely to jump ship when a competitor runs a 25% off sale.

How long does it take to see results from reducing discounts?

You'll see the first signal within 2 to 4 weeks of adjusting your abandonment flows. Conversion rates on those flows might dip slightly at first, but watch your margin per order and your return rate. Within 60 to 90 days of a broader strategy shift (campaigns included), you should see meaningful improvement in net revenue, margin, and customer quality metrics.

Should I never run a sale?

Sales aren't inherently bad. Running 1 to 5 strategic promotions per year (the "low discounter" bracket in the Klaviyo research) is perfectly fine. The problem is frequency and predictability. When customers know a sale is always coming, they wait. When a sale is rare and genuine, it creates real urgency. The key is making sure a sale is a deliberate cash flow decision, not your default revenue strategy.

What about Black Friday and Cyber Monday?

BFCM is the one time of year where customers are actively expecting deals across the market. You can still participate without going scorched earth on your margins. Consider offering bundles, early access for VIPs, or gift-with-purchase instead of blanket percentage discounts. And most importantly, don't let BFCM become the template for the other 50 weeks of the year.

My abandoned cart flow with a discount has a 15% conversion rate. Isn't that good?

It might be. But what's your conversion rate on the first email before the discount? If it's 10%, that means only 5% of your conversions actually needed the discount. You just gave away margin on the other 10% who would have converted anyway. Try moving the discount to email three and measure what actually changes.

Sources

• K:SYD 2026 Recap: Low Discounters Are Growing 2x Faster - Klaviyo Blog, May 20, 2026
• Unraveling the Impact of Pull Forward Promotions - Recast
• Ecommerce Discounting: The Premium Brand Playbook (With Data) - ROI.LIVE, April 2026
• James Hurman, Tracksuit & ProfitPeak Research - presented at K:SYD 2026, analyzing thousands of global brands and 176 Australian brands over 12 months

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