Use discount codes profitably

Discount codes, or voucher codes, or promo codes, are all the rage these days. But a lot of the discount codes that you see are clearly not helping the retailer to improve their revenue or their profit.

Many businesses tend to think of discount codes as just another way of attracting sales. The "cost" of the discount is treated the same as any other advertising cost so very little thought goes into it other than making sure it doesn't make an outright loss.

But say you offer a discount code for 10% of any order over £20. And this pulls in a few customers who use the discount code and get a 10% discount. Did that get you any extra sales? It's hard to say. There's a lot of people who would have already decided to buy from you, and then went looking for a discount code just to make it cheaper. With those customers, you lost money.

And what's your average order anyway?

If your average order is £30, you've just rewarded people for buying less than your average customer. Genius!

Make sure that your discount codes are actually bringing improvements to your bottom line. Don't just offer a discount code on your website because everyone else does. Offer a discount code that is designed to improve a specific aspect of your business. Using the above example, if your average order is for £30, then offer a discount giving 10% off any order over £40. That way, each new sale will be improving your average order value and the discount isn't big enough to over-compensate for it.


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