Promo depth measures how much of a brand’s gross demand gets given back to customers as discount: total discount dollars divided by gross pre-discount revenue over a defined period. The all-orders denominator matters — a quiet week of full-price selling dilutes the number the same way a heavy promo weekend inflates it. A brand running 20% off site-wide for half the period and full-price for the other half lands near 10% promo depth; a brand running 35% off on a third of orders lands closer to 12%. The second feels more aggressive on the calendar, but the first gives away more margin in aggregate. One number hides two levers: how deep the markdown is when discounting happens, and what share of demand gets discounted at all.
The reason promo depth matters more than most discount reads is denominator math. Because it is denominated against gross pre-discount revenue, every percentage point of depth comes off the contribution line before any other cost moves — no fulfillment efficiency, no media-buying skill, no creative test recovers dollars that left at checkout. Contribution margin and gross margin both inherit the hit. On a finance team’s close, the rolled-up dollar version of promo depth is the discount bar at the top of the gross-to-net waterfall. The CFO version of the planning question is sharper than the dashboard version: at what discount rate does the marginal incremental order destroy more contribution than it adds?
Promo depth is most useful read alongside a companion: discounted-order share, the share of orders that received any discount at all. The same depth number can come from “shallow and frequent” (a steady 15% off via email) or “deep and rare” (a 40% holiday flash on a sliver of demand), and the inventory, margin, and brand consequences differ. Depth alone is the average; the share tells you the shape of the calendar producing the average.
The cohort cut that operators most often skip is by acquisition source. Customers acquired during deep-promo windows — especially via paid channels — typically show lower repeat rates and lower AOV than full-price-acquired customers in the same period, which means deep-promo windows tend to pull in the worst-LTV cohort the brand has. Cohorting promo depth by paid vs. organic vs. email surfaces the gap; cohort analysis against the LTV read tells you whether the contribution margin compresses further on the back end. Effective CAC rises in parallel, because the contribution per acquired customer thins out before the customer ever places a second order.
The operating direction sits with merchandising, creative, and product calendar — not policy. Reducing depth via better full-price acquisition creative, selective full-price drops, and tighter merch decisions holds; declaring “we are going full price” rarely survives the next quarter that looks soft. The dashboards that matter pair depth with discounted-order share, read both by acquisition cohort, and surface the trade before close confirms it.