Coupons or automatic discounts: which your customers will thank you for

Picture somebody at your checkout, card in hand, about to pay. Then they notice a box marked “discount code”.

They do not have one. But now they know one exists, and a code they do not have feels like money they are about to lose. So they open a new tab and go looking.

What happens next is rarely good for you. Either they find nothing and come back slightly deflated, or they do not come back at all, or they find a code on a voucher site that hands a share of your margin to somebody who contributed nothing to the sale. That box, sitting there empty, is one of the most expensive pieces of furniture in a lot of online shops.

Two ways to give somebody money off

A discount code is a string the customer has to have, and enter, to get the offer. It creates the box described above, and it puts the work on them.

An automatic discount applies itself. Spend forty pounds and the fifth item is free, or ten percent comes off a category for a week, and the basket simply shows it happening. There is no code, no box, and nothing to go looking for.

For an offer aimed at everybody, the automatic version wins almost every time. The customer gets the same money off, they get the small pleasure of seeing it applied without effort, and nobody is sent away mid-purchase to hunt for something.

When a code is genuinely the right tool

Codes are not the problem. Codes used for offers that should have been automatic are the problem. There are several jobs only a code can do.

Anything you need to measure separately. A code per campaign, per publication, or per partner tells you exactly where the orders came from, which is far more reliable than trying to infer it afterwards.

Anything you do not want everybody to have. A trade rate, a code for a local group, a rate for returning customers from a mailing list. The code is what makes it selective.

Goodwill, one customer at a time. When something has gone wrong, a code sent by hand is a graceful way to make it right, and it is unique to that person.

Winning somebody back. A code in an email to somebody who has not ordered for a year gives that email a reason to exist.

The pattern is that codes suit offers with a specific audience or a specific question attached. Automatic discounts suit offers you would happily shout about on the home page.

If you must have a code box

Sometimes you need one, because you are running the campaigns above. You can still reduce the damage.

Keep it collapsed behind a small link rather than sitting open as a field, so it is available to those who have a code and invisible to those who do not. Label it for what it is, so “got a code?” rather than a permanent reminder that discounts exist. And put it at the basket rather than at the payment step, so anybody who does wander off has not yet abandoned a half-finished checkout.

The neatest trick, if your platform supports it, is to accept the code in the link. Send people to your site with the code already in the URL, apply it silently, and show the discount in the basket without ever displaying a box. The customer with a code gets it applied automatically. The customer without one never learns there was anything to miss.

The habit you can accidentally train

The real risk with discounting is not any single offer. It is what a run of them teaches people.

If there is always something on, regular customers learn to wait. The full price stops being the price and becomes the opening position, and you have quietly converted a business that sells things into one that sells things on sale. Getting back from that is much harder than getting into it.

Two habits help. Make offers occasional and give them a reason, whether that is a season, a clearance, an anniversary, or a genuine overstock, because an offer with a reason does not imply the next one is coming. And be wary of the standing ten percent for signing up to a mailing list, which trains people to expect a discount before their first order and to feel foolish paying full price afterwards.

What to offer instead of money off

Discounting is the easiest lever and rarely the best one, because it comes straight out of margin.

Free delivery over a threshold is usually more persuasive than the same amount off the goods, partly because postage feels like a penalty rather than a price. That is a subject of its own later in this series, and worth doing deliberately rather than by instinct.

A gift with purchase can cost you less than a percentage and feels like more, particularly if it is something of yours that people would otherwise buy separately. An extended returns window costs nothing at all in most cases and removes hesitation. And genuine early access for people on your list is a reward that does not touch your prices.

Where to start

Look at whatever offer you are running now and ask whether the customer needs to type anything to get it. If not, and if it is meant for everybody, make it automatic and take the box away.

Then search for your own shop’s name followed by “discount code” and see what comes back. That will tell you, in about a minute, how much of a problem your code box currently is.

If you are weighing up how to run offers without giving away more margin than you meant to, get in touch and we will talk it through, or read more about how we set up and look after an online shop.