Almost every Shopify business offers some type of discount code to their customers. And for a good reason!
They're a great way to increase sales, get more people to buy from your store, and increase your average order value.
In fact, 29% of customers purchase an item they didn’t intend to purchase if it’s heavily discounted.
Many Shopify store owners are hesitant to offer discount codes, fearing that it will eat into their profits. However, discount codes can actually be a powerful tool for boosting sales and increasing conversion rates. When used strategically, they can help drive traffic to your store, increase average order values, and generate repeat customers.
In this article, we've covered:
- What are discount codes?
- How your Shopify store can benefit from discount codes
- How to offer discount codes to increase your revenue
- 5 tips to make more Shopify sales using discount codes
- Discount codes FAQ
What are discount codes?
Discount codes are like a secret language between shoppers and retailers. They offer a way to save money on purchases, and they can be found just about anywhere.
In the past, customers needed to get them from newspapers, flyers, and even right from the product packaging. Now, it's even easier to give your customer a special treat: via e-mail, directly on your website, or via mobile push notifications.
But what exactly are discount codes?
Discount codes are simply certain phrases that can be entered at checkout to receive a discount on a purchase. They're typically provided by retailers as a way to encourage shoppers to buy more items or to promote new products. In fact, online shoppers who use coupon codes spend 24% more than those who don’t.
Customers usually get a percentage off their basket total; other perks, like free shipping or product samples, are also very enticing.
How your Shopify store can benefit from discount codes
By offering discount codes, you're giving customers yet another reason to choose your store over a competitor's.
Don't underestimate the power of a good deal. According to Statista, a whopping 89 per cent of millennial shoppers in the United States would try a new brand if they were offered a coupon or discount.
Discount codes can also help increase your average order value. If customers know they can get money off their purchase by using a promo code, they're likely to add a few extra items to their cart.
Discount codes are also an excellent way to measure the effectiveness of your marketing campaigns. By tracking how many people use a particular code, you can get an idea of how well your marketing efforts are performing, helping you to fine-tune your marketing strategy.
Lastly, they're an excellent way to reduce abandoned carts, especially if they're only available for a limited time. Setting a countdown timer for how long the discount code has left is great for encouraging customers to checkout right then and there.
How to offer discount codes to increase your Shopify revenue
Who doesn't want to make customers happy and increase revenue?
Besides being a great way to show your customers appreciation and loyalty, discount codes can directly increase your revenue and support repeat revenue.
There are a few things to keep in mind in order to avoid losing money.
- Be selective about when to use them. If you give too many discounts, people will start to expect them, and it may erode your profits. Instead, offer the promotional codes sparingly, making them feel like a special occasion. Overusing discount codes can also lead to a lower perceived value of your product.
- Make sure the discount is reasonable. It must be significant enough to be enticing but not so large that it eats into your profits. A discount of 10-15% is usually a good sweet spot, saving the higher discounts for key events like Shopify Black Friday Cyber Monday.
- Set a minimum spend amount. This will help ensure that customers are actually spending money, rather than just using the discount code to score free shipping or a small saving on their purchase.
- Consider excluding certain items from the discount if your margin is already tight. Do not forget to signpost any exclusions so your customer won't get frustrated.
- Limit the discount code to one per customer. That way, shoppers will feel compelled to make the most of it in one single purchase by buying more items. Not only does this increase revenue, but it also helps with the cost of packing, shipping and delivering.
Discount codes can be a great way to boost your Shopify or e-commerce mobile app, but it's essential to use them intelligently in order to protect your profits. By following these tips, you can offer discount codes without negatively impacting the business.
5 tips to make more Shopify sales using discount codes
When it comes to using discount codes, there are a few things you'll need to keep in mind. First and foremost, you'll need to make sure that your discount codes are easy to find. If customers can't locate them, they won't be able to take advantage of the discount. You should therefore promote your codes prominently on your Shopify mobile app and in your marketing materials.
- Make sure the discount code is easy to remember and enter. Releasing a new women’ swimwear collection? Code MERMAID would definitely work better than SBUKX10X-26V-X2Q-3NX-DLS (this is a real active promo code!!!). These long, complicated codes will only frustrate customers and increase the likelihood of them dropping out. We definitely don't want any abandoned carts anymore!
- Be strategic about when you release the discount code. For example, if you're trying to increase holiday sales, releasing the code in late November is likely to be more effective than releasing it on Christmas Eve.
- Create a box labelled "discount code" or "promo code" to be used during checkout. That's where your customer will input the code, and it should be super clear so that they go ahead with the purchase.
- Set an expiration date: so that customers feel the urgency to use it before it expires. Let the FOMOkick in.
- Ensure that the discount code is well-publicised: on your website, Shopify mobile app, and any marketing campaigns you're running. Keep in mind that discounts obtained via a smartphone or another mobile device influence 67 per cent of customers do their shopping, making them perfect for mobile push notifications.
Discount codes are a great way to incentivise customers to spend more on your Shopify store.
Obviously, there isn’t a magic formula for how to use promotional codes. The main key is to understand your customers and provide them with what they’re looking for. Take Zalando as an example. With a yearly revenue of €10.25 billion, the online retailer giant does A/B coupon testing, measuring and understanding what works locally and among a certain demographic, like age or gender.
But some parameters are considered best practice, as we’ve laid out above. Zalando bets on limited-time discount codes, for example, and limits the usage to one redemption per customer.
As with anything, it comes down to the strategy.
FAQ about using discount codes for Shopify stores
Does Shopify allow discount codes?
Yes. You can set a variety of discount options for your Shopify store through the 'Discount' section in the Shopify admin.
How do I add a discount code to my Shopify store?
Creating discount codes for your Shopify store is easy.
- Go to your Shopify admin page, and select ‘Discounts’.
- Click ‘Create discount code’
- Select ‘Discount code’
- Enter a name for the new code.
- Select code type (money off or percentage discount)
- Specify where your discount code is valid
- Enter any minimum requirements for using the discount
- Specify the audience
- Choose a start time
- Click ‘Save discount’
Why is my Shopify discount code not working?
There are multiple reasons why your Shopify discount code isn't working.
- Check the settings of the discount code: Make sure to check your discount code settings to make sure it’s still valid and applicable to the right products.
- Check the expiration date: If the date is past the expiration date of the discount code, it will no longer work on your Shopify store.
- Check the usage limit: If you set a usage limit for your discount code, it may have already hit that. If it’s past its usage limit, it will no longer work.
- Clear your browser cache: Sometimes browser cache and cookies can cause temporary issues.
- Check for conflicting apps or codes: If you have multiple codes running at the same time, make sure they can be used as the same time if you need them to.