Discount codes are obviously important for any store. They help close sales, and they reward your most loyal customers.

But they can also be a drag. Stale discount codes can find their way onto coupon sites, attracting deal-seekers who might be less engaged or involved in your brand. And discount codes could also languish in your store, eventually no longer reflecting the strategy you want.

You should be very careful about how and when you give discounts to your customers. Let’s talk about how to generate discount codes, how to provide discounts, and how to audit existing discount codes.

Overall best practices

First and foremost, discount codes should be unique per customer. That means that a customer should get a one-time-use code that is generated specifically for them. On Shopify, the best way to do this is by installing the Bulk Discounts app and generating batches of discount codes.

Generating discounts

Go into Bulk Discounts and create a CSV file of discount codes. Instead of creating a master list of discount codes that all of your apps use, you should create specific sub-lists for each app and intended customer behavior.

Since a lot of people may be touching this app, you’ll want the ability to automatically pay for new discount code generation, which is usually a single-digit dollar amount per batch. That switch is available in the settings for Bulk Discounts.

Next, create a spreadsheet of discount code prefixes, so you know what prefix corresponds to each customer behavior – and where each set of discount codes lives.

You’ll need someone to monitor the lists of discounts that you generate, in order to replenish any depleted list and create any new ones. Someone in your team should be explicitly assigned that responsibility.

Rewarding behaviors

Next, discount codes should be specific to a triggered behavior, such as a mailing list signup, registered interest in a new product, or an abandoned cart. Discount codes should not be sprayed to all of your customers.

If you’re trying to provide discount codes using a popover, email campaign, or other app that can’t handle bulk discount codes, you need to ditch it for one that does. Justuno works for popovers; Klaviyo works for email; Friendbuy works for tell-a-friend campaigns.

Automatically applying discounts

Finally, discount codes should be automatically applied to the current order after a call to action is tapped. That is more likely to encourage conversion – and it’s far more convenient for the customer, too. Automatic Discount is one app that should tackle this for you.

Audit your existing discounts

Finally, go into your list of orders. View all orders from the past 6 months, and then filter all orders by whether a discount code was used (which is possible by setting the discount amount to anything greater than $0.00) and whether there was a refund issued (you don’t want to include any cancelled orders). You now have a list of orders to export as a CSV.

Open up your spreadsheet and delete all columns except the following:

  • Discount code used
  • Final order value
  • Discounted amount

Then, create a second table that sums the latter two values by specific discount codes that are being used, and counts the number of orders that correspond to each code.

You now have a table that shows each discount code, how much has been discounted, how many orders were placed with each discount code, and the total order value. If you need to sum up a bunch of unique discount codes with a specific prefix (of, say, “Prefix”, you’ll want to use a SUMIF statement like SUMIF($DISCOUNT_CODE_COLUMN,"=Prefix*",$AMOUNT_DISCOUNTED_COLUMN).

Do you have any long-term discount codes? Great, figure out where they’re used on your store and replace them with unique, one-time-use discount codes.

Do you have any discount codes that appear to provide significantly high discounts? Great, A/B test them with a batch of discount codes that offers lower discounts, and try to chip away at the amount that you’re discounting.

The overall goal is to reduce the amount that you’re discounting, and to only provide discounts to loyal customers who go through your funnel – and not random people who see your checkout’s discount code field, go to a coupon site, and deal-seek.

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