Setting Up Shopify Discounts: 5 Important Things You Should Know

Martin

Throughout the year, 93% of consumers use discount codes online, this is because incentives are a powerful marketing tool to increase sales and customer engagement. 

As a Shopify merchant, you can offer automatic or manual discounts to your customers at checkout. If done correctly, discounts can be an effective way to increase conversions and order value.

This article will provide tips on how to set up Shopify discounts without jeopardizing your margins. 

When to Use Shopify Discount Codes

As previously noted, Shopify promo codes may be an excellent marketing strategy to entice potential buyers and current clients to make (another) purchase and foster client loyalty.

But if you employ them recklessly, they might also be harmful to the success and stability of your company’s finances.

Examine your complete brand strategy before you start giving discounts. Which kind of discount is appropriate for your products or services?

If you need clarification on whether a discount is right for your business, consider these three questions:

1. What is the goal of the discount?

Are you trying to move old inventory, attract new customers, or increase the order value of each customer? Your answer will help you determine what type of discount to offer and how much you should mark down your products.

2. How will the discount impact your margins?

Be mindful of the effect that discounts have on your bottom line. If you’re not careful, you could end up selling at a loss. Use our profit margin calculator to see how different types of discounts will impact your margins.

3. Can you track the results of the discount?

If you can’t measure the results of your discount, then it’s difficult to know whether or not it was successful. Make sure that you set up Google Analytics tracking before you launch your discount so that you can measure the results.

Types Of Discounts

To understand more about how to set up your Shopify discounts properly, it is essential first to understand the available discounts.

The three main types of discounts on Shopify are percentage, fixed amount, and free shipping.

  • Percentage Discount: A percentage discount is a markdown on the original price of an item, expressed as a percent. For example, if you offer a 10% discount on an item that originally costs $100, the customer would pay $90.
  • Fixed Amount Discount: A fixed amount discount is a markdown on the original price of an item, expressed as a dollar value. For example, if you offer a $10 discount on an item that originally costs $100, the customer would pay $90.
  • Free Shipping Discount: A free shipping discount removes the shipping charges normally applied to an order. This type of discount is typically offered as an incentive to encourage customers to spend more money. For example, you might offer free shipping on orders over $100.

Now that we’ve gone over the different types of discounts, let’s take a look at how they can help you achieve your business goals.

Pre-launch Offers

If you’re looking to increase the order value of each customer, free shipping is typically the best option. Customers are more likely to add additional items to their cart if they know that they won’t have to pay for shipping.

You can also offer a percentage or fixed amount discount on the entire order as an incentive for customers to spend more money.

A percentage or fixed amount discount is typically the best option to attract new customers. You can offer a discount on specific products, collections, or the entire order.

Just make sure that the discount is significant enough to entice new customers to make a purchase.

Seasonal Offers

Holidays and seasonal events are a great time to offer discounts to your customers.

For example, you can offer a percentage or fixed amount discount on specific products that make great gifts. You can also provide free shipping on orders over a certain amount to encourage customers to spend more money.

Newsletter Subscription Deals

Reward your clients for engaging in a conversation with you on social media or subscribing to your email.

This can help you enhance brand recognition and conversions while also inspiring more people to participate. Giving influencers a discount coupon to share with their followers makes sense if you’re doing influencer marketing on social media.

Referral Offers

This scheme makes more than just purchases; they also help you enhance brand awareness and grow your customer base.

You can offer a percentage or fixed amount discount to customers for referring new customers to your store. 

Adding Shopify Discounts

Now that you understand the deals and discounts you can offer to your customers, it’s time to add them to your Shopify store.

This guide will take you through the process of setting up Shopify discounts so that you can start enticing customers and driving sales.

There are two types of discounts available in Shopify: automatic and manual. Automatic discounts are those that are applied automatically at checkout based on the rules you set up.

On the other hand, manual discounts require customers to enter a discount code at checkout to receive the discount.

Setting up your automatic discounts

Step #1: Log in to your Shopify admin and click Discounts

setup shopify discounts on shopify

Step #2: Click Create Discount

discount codes on shopify

Step #3: Select Automatic Discount

Step #4: You can create three different types of automatic discounts in Shopify:

  • Percentage discount: A percentage off the order’s total
  • Fixed amount discount: A fixed amount less than the order’s total
  • Free Shipping: Free shipping on the order
create automatic discounts on shopify

Step #5: Fill out all details (value, where it applies to, minimum requirements and active dates), and it’s done; your automatic discount will now be applied to the relevant orders!

5 Important Things You Should Know

Creating discounts is very straightforward, but you should always employ strategies that will be beneficial to your store. 

1. Multiple Discounts

As much as we love the native Shopify app, there are still limitations on some features, like the ability to create multiple discounts. However, this can be easily overcome by using the Shopify bulk discount app. This app allows you to create as many discounts as you want and also provides other features like automated discount emails and scheduling.

shopify discounts

This app also comes with a Flash Sale feature and Countdown Timer, which are great for running limited-time sales and promotions.

Setting up multiple discounts is great for stores that want to offer different deals for different products or product categories. For example, you could have a 10% discount on all t-shirts and a 20% discount on all shoes. This strategy can be used to increase the average order value of your store.

2. Discount Timing

The timing of your discounts is also important. If you want to generate a sense of urgency, then offering a discount for a limited time can be effective. This could be in the form of a flash sale or a countdown timer on your website.

Another strategy is to offer new customers a discount when they sign up for your newsletter. This helps to increase conversion rates and allows you to build a relationship with the customer.

3. Minimum Order Value

You will be asked to set a minimum order value when setting up your discount. This is the amount that needs to be spent in order for the discount to be applied. 

Adding a minimum order value is a great way to increase the average order value of your store. It also helps to ensure that customers are spending enough to make the discount worthwhile for you.

4. Quantity or Volume Discounts

Opposite to the minimum order value, you could also offer quantity or volume discounts. This is where the customer gets a discount for buying more than one of the same product. 

setup shopify discounts

For example, you could offer a 10% discount for every two products that are purchased. This is a great way to clear excess stock or encourage customers to buy in bulk.

You can use the Shopify Volume Discounts app to easily set up quantity discounts. It’s very customizable and also allows you to offer discounts based on the total weight of the order. Choose from Tiered Pricing, BOGO, or Mix and Match offer. This is a great way to encourage customers to buy more than one product.

5. Sales Channels

The final thing to consider is which sales channels you want to offer your discount on. By default, Shopify discounts can be applied to orders made through your online store, POS system, or mobile app. 

You can also choose to Offer a Discount Only in Your Online Store. This is useful if you have only available online products and don’t want to give customers the impression that they can get the same discount in-store. 

Why Do Discounts Matter?

Discounts are a powerful marketing tool that can be used to increase sales, encourage customer loyalty, and clear excess stock. In fact, a study found that discounts of between 10 and 20 percent resulted in a 7% gain in revenue and a 28% increase in unit sales.

Here are some of its benefits when executed correctly:

1. Helps to increase sales during slow periods

It is obvious, but discounts help increase sales and encourage customers to purchase during slow periods. This is especially beneficial for businesses that are new or seasonal.

2. Encourage customer loyalty

Customers who feel like they are getting a good deal are more likely to be loyal to your brand. Discounts can also help you build a relationship with your customers by incentivizing them to sign up for your newsletter or follow you on social media.

It will then increase your engagement rate and encourage customers to leave positive reviews. This is one of the reasons why there are loyal following for some stores. Stores take care of their customers by giving them value for money.

3. Clear excess stock

As much as we hate to admit it, sometimes businesses over-order products. This can lead to excess stock that is taking up valuable space in your store or warehouse.

Offering discounts on these items is a great way to clear them out and make room for new products.

Instead of sitting on excess stock, you can sell it at a discounted price and still make a profit. This is also an excellent opportunity to test out new products or product categories.

4. Increase average order value

Discounts can be used to encourage customers to spend more money in your store. You can do this by either setting a minimum order value for the discount or offering quantity discounts for buying multiple products.

5. Drive traffic to your store

If you advertise your discounts on social media or Google Ads, then you can also use them to drive traffic to your store. It is a great way to increase brand awareness and reach new customers.

6. Boosts your SEO

Discounts can also help to boost your SEO. Because Google considers the percentage of discounted orders when ranking your store in search results.

7. Improves customer satisfaction

Discounts can improve customer satisfaction by giving them a good deal on the products they purchase. This is especially important for expensive items where customers are more likely to compare shops.

8. Helps you to stand out from the competition

In a crowded market, discounts can help you to stand out from the competition. They are also a great way to differentiate your business from online giants like Amazon.

9. Gives you an insight into customer behavior

Discounts can also give you an insight into customer behavior. This is because you can track which products are being purchased with the discount and what time of year they are being purchased. Insights can be used to improve your marketing strategy and make better business decisions.

Conclusion

As you can see, you can offer many different types of discounts to your customers. By using the tips in this guide, you can create discounts that will help to increase sales and encourage customers to buy more from your store.

And finally, utilize apps from the Shopify app store to easily manage and create discounts for your store.

Although Shopify already offers a great discount feature, there are still some limitations. These apps will help you to overcome these limitations and give you more control over your discounts.