Coupon or No Coupon: What’s Your Ecommerce Discount Strategy?

We’ve all had that moment of jubilation when a coupon code magically appears while we’re browsing items on an ecommerce site. All it takes is a discount offer in a pop-up to convince us to move from passive browsers to active buyers.

In today’s ecommerce landscape, consumers are price obsessed. Your buyers all but expect an incentive to buy. The coupon code is no longer a nice surprise: it’s a given.

While it’s understandable that many brands automatically offer a discount amount in exchange for a new customer’s email address, this practice has unfortunately created a race to the bottom in pricing.

Although you may attract new traffic to your website and get a spike in one-time ecommerce sales, constant coupons are not a viable strategy for building a long-term, sustainable ecommerce business that attracts loyal customers. But there is a time and a place for coupon codes if used strategically as part of your pricing strategy.

If you do decide to offer discount codes to your buyers, they should be part of a thoughtful ecommerce discount strategy.

Earn the email address

For some online stores, snagging a customer’s email seems like a solid ecommerce marketing strategy on its own. Building your email list is often a brand’s number one priority, and so, marketers may think it’s worth giving up a discount for a limited time to increase sales.

Yet offering a discount code to every visitor to your ecommerce website is a slippery slope that cuts into your profit margins. You’re betting it all on a one-time purchase, and doing nothing to incentivize long-term customer loyalty. Do you really want to attract a customer base that shops only when there’s a sale involved?

Because repeat purchases and customer loyalty are so closely intertwined, you risk losing both if you encourage one-off purchases to get people in the door. Thankfully, there are other ways to earn a visitor’s email and add value to your brand without a discount.

Take it from ecommerce stores like Mizzen+Main that rarely, if ever, discount specific products. Save for a sale once a year, the menswear fashion brand sticks to hooking new customers with their high-quality products at full price. The anti-couponing message is clear: Mizzen+Main’s clothes don’t need discounts to convince customers that their purchase is worthwhile.

coupon form

No coupons here—unlike many ecommerce sites, Mizzen+Main purposely avoids one-off percentage discounts in exchange for users’ email addresses.

Instead, the company employs other incentives like free shipping on certain orders and a referral program to draw in repeat purchases.

The bottom line here? Don’t rely on any types of discounts to build your list. Yes, you want to create a customer experience that’s encouraging and friendly. But you also don’t want to discount your product right away. Instead, try offering different types of benefits like great content or a fun referral program instead.

Take a strategic approach to discounts

It might sound like we’re completely anti-coupons, but we really only shudder if they’re used carelessly. There are plenty of instances when discount codes can be useful for brands. It all depends on how you approach the discount pricing strategy.

While it’s true that coupons can lead to an increase in customer happiness, constant discounts can also have a diminishing effect. Think about it: a discount is essentially admitting that your product is worth less than the price you have on your site today. Do you really want your brand to cater to price-driven shoppers who don’t value your product?

One approach to effective discounts comes from the skincare and makeup online store Glossier. This beloved brand gives its customers free shipping if they buy a certain amount, but not on specific products. Crucially, this strategy doesn’t alter the perceived value of their products to shoppers. And what’s more, Glossier’s approach even encourages upselling, thanks to a nifty progress bar with customized suggestions for new products to try and earn free shipping.

There’s a lot to love about Glossier’s shopping cart strategy, from the gamification aspect of the progress bar to the friendly copy and personalized recommendations.

We also love when brands like Scentbird create special deals that reward new customers for making a second purchase. This discounting tactic proves that they’ve thought through how to earn a customer’s loyalty and repeat business long-term.

Even though “I pulled some strings” comes across as a bit salesy, we can’t argue with this approach to incentivizing the repeat purchase with a lower price. 

Whatever option you choose, pick an approach that shows confidence in the value of your product and its ability to satisfy your customers’ needs. Instead of price as your main competitive advantage, focus on discounting tactics that encourage repeat purchase rates. From there, customer loyalty will be more likely to follow suit.

Learn more about Repeat Purchase Rate

Try a loyalty program

Once you have a discount strategy in place that helps bolster customers’ faith in your product, take it a step further by creating a loyalty or rewards program.

While many of these programs essentially serve as a glorified coupon service, merely offering discounts for members who pay into them, the best ones take the opposite approach. Instead of giving a percentage discount to anyone who joins the program, only the best and most loyal customers are rewarded with special perks like events or seasonal discounts.

Companies like Inkbox are seeing increased engagement and loyalty thanks to these types of programs. By using exclusive benefits to pique their target customers’ interests, they can steer clear of reaching those customers through short-term solutions like coupons.

Again, including some kind of gamification element can work wonders by encouraging customers to reach the next level and unlock their rewards.

On their membership page, Inkbox lays out what benefits participants can expect to receive at each “chapter.” (Notice how there aren’t any discount codes in sight?)

Another tactic that Inkbox has wisely taken advantage of? Earning perks through social sharing, which helps to boost brand awareness and generates buzz around the program.

Of course, mapping out each reward level and the perks themselves requires tweaking your ecommerce marketing strategy, meticulous planning, and additional creative output. But when the end result leads to a more passionate customer base and a higher-value product, you know you’ve chosen a winning strategy.

If you use discounts strategically, you’ll get far more from your customers in the long term. Rather than attracting buyers just looking for low prices, you’ll snag customers who love your brand and are willing to pay full price for your specific products. And that makes for a very happy bottom line.

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