**Memo: Discounting, loyalty, referrals, and a correction — week 2**
**To:** Chloé Marchetti **From:** Sofie Nilsen **Date:** Fri, 2026-01-16

**1. Discounting: real cost is concentrated, and worsening.** Pulling discount + refund euros together by vertical (Report: *The real euro cost of discounting, by vertical*), Apparel, Beauty, Home & Living, and Sports & Outdoor all show discounted orders costing **17–42 percentage points more of gross merchandise value** than full-price orders in the same vertical (e.g. Apparel: 39.9% vs 21.8%; Beauty: 44.2% vs 2.6%). Food & Coffee and Pet Supplies show even bigger leakage (83–89%), but that's near-free subscription trial offers — a deliberate acquisition cost, not wasteful discounting; I'd treat it separately. At the code level, only **5 coupon templates** drive nearly all 2025 redemptions platform-wide, and **WELCOME10 alone cost €51,316 net** (€25,976 discount + €25,340 refunds, 28.5% refund rate on 724 uses) — confirming and quantifying Oliver's catch. Monthly trend shows leakage climbing from 10.9% (Feb) to 20.3% (Nov), tracking the refund creep the CEO/CFO teams flagged. **Confident.** Recommend tightening WELCOME10 specifically and flagging the four consumer verticals above to merchants.

**2. Loyalty: fix Apparel, leave Electronics/Home & Living alone, don't treat the program as one thing.** Combining Ingrid's cost numbers with retention by vertical: **Apparel holds ~85% of both the cost (€40,169 redeemed, 23.7% of member revenue) and the €354k outstanding points liability (€192k of it)**, yet shows **no retention lift** (58.5% vs 59.6% repeat rate, members vs non-members — Report: *Loyalty worth by vertical*). That's an expensive program delivering nothing there. Electronics (+27pp repeat-rate lift) and Home & Living (+13pp) cost far less and show a genuine benefit — leave those running. **Confident** on the Apparel verdict; I chased down last night's €0-revenue anomaly for three tiny verticals (Books, Food & Coffee, Pet Supplies) — it was a currency-conversion bug (exchange_rates has no EUR→EUR rate row, so a handful of all-EUR tenants summed to zero), worth only ~€5.8k, doesn't change the conclusion.

**3. Referrals: still the best lever, and reachable earlier than I thought.** Referrers order 1.5–2.4x more often than non-referrers in *every single vertical* (Report: *Referral reach and value by vertical*) — a robust, category-proof signal. On timing, 43% of referrers only refer after 6+ orders, but **41% refer within their first 1–3 orders** — so this isn't purely a "wait for power users" dynamic; there's room to prompt earlier in the lifecycle. Reach is still under 17% even in the best vertical. **Recommend:** test an earlier referral prompt (after order 2–3) as the growth lever, ahead of fixing loyalty.

**Correction to what I posted last week:** I said "only 1 in 7 orders trace to a marketing channel" — that was too narrow. It only counted orders tied to an active *paid campaign* (14%, Report: linkage reconciliation). The other ~75% of 2025 orders **do** carry a recorded touchpoint — organic_search (43%), direct (38%), social (12%), referral (9%) — just not a paid campaign. Both numbers are true for different questions: ~14% of orders can be credited to active paid marketing; ~75-83% have *some* known source. I'd retract the "1 in 7" framing as stated and replace it with this split.

**Open/not yet resolved:** whether the Food & Coffee/Pet "free trial" discounting actually pays back via later subscription revenue — I haven't traced that. Also unverified: whether referrers' order-frequency lift is causal or just selection (loyal customers naturally refer).

**Next steps:** (1) pilot capping WELCOME10 and earlier referral prompts; (2) trace trial-discount cohorts into subscription retention; (3) confirm the exchange_rates EUR→EUR gap doesn't affect other finance-facing reports.