A sales promo code, also known as a promotional code, discount code, coupon code, or voucher code, is a series of letters, numbers, or both that gives consumers a discount or special offer on a product or service. Promo codes are typically applied at checkout on ecommerce sites and can help drive sales and increase brand awareness through special promotions.
What are the common types of sales promo codes?
There are several common types of sales promo codes:
Percentage-off promo codes
These promo codes offer a percentage discount off the total purchase price. For example, a 50% off promo code would cut the total cost of your purchase in half. Percentage promo codes tend to be the most popular and sought after.
Dollar amount promo codes
Rather than offering a percentage discount, these promo codes take a set dollar amount off the purchase price. A $10 off promo code would simply deduct $10 from the total cost of the order.
Free shipping promo codes
These promo codes offer free shipping, which can provide big savings on large or heavy items that come with high shipping costs. Free shipping promo codes often have a minimum order size to qualify.
Buy one, get one (BOGO) promo codes
BOGO promo codes let customers purchase one item at full price and then get a second matching item for free. BOGOs effectively give the customer 50% off both items.
First-time customer promo codes
These promo codes are specifically targeted toward first-time buyers from a particular store. They serve as an incentive for consumers to try out a new brand for the first time. Stores want to turn one-time shoppers into lifelong repeat customers.
Referral promo codes
Current customers can share these promo codes with their friends and family to encourage referrals. When the referee makes their first purchase, both they and the referrer receive a discount or other reward.
Why do companies offer sales promo codes?
There are several key reasons why brands and retailers use promo codes as part of their marketing strategies:
Drive sales
The primary reason for offering promo codes is to drive sales. The discounts provided by promo codes give customers extra incentive to make a purchase. Customers who may have been on the fence get pushed over the edge when they see they can save money with a promo code.
Increase basket size
Promo codes motivate shoppers to buy more in order to maximize the value of the code. Even after applying the promo code at checkout, customers often don’t want to “waste” the discount and continue shopping.
Liquidate inventory
Promo codes help brands and retailers clear out old, excess, or seasonal inventory to make room for new products. The discounts provide a strong push for customers to buy from their stock of unsold items.
Enhance brand awareness
Offering promo codes can help build brand visibility, especially for new or lesser known companies trying to break through in competitive markets. Consumers are always on the hunt for promo codes from all sorts of brands.
Attract new customers
Promo codes give customers a risk-free way to try out a new or unfamiliar brand for the first time. First-time customer promo codes are especially targeted at attracting new business.
Increase email list sign-ups
Brands often require visitors to sign up for an email newsletter or create an account in order to access promo codes. This helps brands build their email lists and customer databases.
Drive traffic to website
Promo codes are frequently used in conjunction with paid ads on search engines, social media, and other platforms. The promo code gives people added incentive to click through to the website via the ad.
How do companies distribute and market promo codes?
There are many creative ways brands maximize the visibility and usage of their promo codes:
Email newsletters
One of the most common methods is sending promo codes directly through email newsletters. Subscribers feel rewarded for their loyalty with exclusive subscriber-only discounts.
Social media posts
Promo codes are shared widely on brand social media channels like Facebook, Instagram, and Twitter to reach the broadest audience. Giveaways and contests often involve sharing or retweeting a post with a promo code.
Influencer marketing
Influencers with large followings are tapped to share special promo codes with their engaged audiences. Influencers allow brands to expose their promos to new potential customers.
Paid search ads
Search ads can provide a promo code on the displayed ad itself to incentivize clicks and traffic to the brand’s site. The promo code is seamlessly integrated into the click-through process.
Retargeting ads
Customers who visited but didn’t end up converting onsite are retargeted later with ads featuring a promo code or special offer as a second chance to complete the purchase.
Landing pages
Dedicated landing pages are often built around specific promo code campaigns as a centralized hub for all the details instead of sending people to the regular website or product pages.
Product packaging
Printing promo codes directly on product packaging helps brands push sales at brick-and-mortar retail stores. The codes target customers shopping in person.
In-store and POP displays
Promo codes are also routinely highlighted on in-store signage and point-of-purchase displays for shoppers to take advantage of during their visit.
Do sales promo codes actually work? What are the benefits?
Yes, when executed properly, promo codes have been proven to work very effectively. There are many potential benefits for brands:
Lift in conversion rates
Promo codes reduce friction in the buying process. Customers are more willing to complete checkout with a discount code applied. This lifts overall conversion rates.
Increased order values
Not only do promo codes increase conversions, but they encourage bigger basket sizes as customers try to maximize the value of the discount by purchasing more items.
New customer acquisition
Approximately one third of promo code redemptions come from new customers who have never shopped with the brand before. Promo codes help acquire new, high-quality leads.
Improved customer retention
Customers who engage with promo codes have higher long-term retention rates compared to non-promo shoppers. Promos establish reciprocity between the brand and customer.
Brand awareness and visibility
The wide reach of promo codes across many channels improves brand visibility and discovery. Customers engage with brands during the promo research and redemption processes.
Valuable customer data
Promo code redemption provides brands useful behavioral data on their customers, including insights on the most effective marketing channels, popular products, customer lifetime value and more.
What are some best practices for creating effective promo codes?
Follow these tips to develop successful promo codes that deliver results:
Make codes easy to remember
Avoid complicated codes with a random string of letters and numbers. Opt for simple codes customers can memorize and seamlessly apply at checkout.
Expire codes to create urgency
Expired codes encourage prompt action and avoids procrastination. Limited-time codes create excitement around flash sales and special events.
Give new customers extra discounts
New customers should get deeper discounts – at least 20% off or more – to win their first purchase and form positive brand associations.
Limit code usage
Only allow a promo code to be used once per customer or set a usage cap across all customers. This preserves the code’s exclusivity and prevents overuse.
Require email sign-up to access codes
Requiring an email or account creation to reveal a promo code helps build your customer database and email list.
Offer free shipping minimums
Reach higher order values by requiring a minimum spend to unlock free shipping with a promo code, such as spend $50 get free shipping.
Promote via multiple channels
Distribute codes across social media, email, influencers, paid ads and more. Reach customers however they engage with your brand.
Highlight promos visibly
Call attention to current promo codes across your website navigation, product pages, cart, checkout, account signup flows and email templates so customers always see them.
What are some common mistakes brands make with promo codes?
It’s important to avoid these promo code pitfalls:
Cluttering product pages
Plastering too many promo codes and offers on product pages distracts customers from buying. Keep product pages clean and focus on just one call-to-action.
Complicated redemption
Don’t hide or bury code redemption fields deep in the checkout flow. Make it seamless for customers to find and apply codes.
Overreliance on codes
Promo code fatigue sets in if customers are bombarded with discounts all the time. Make promos feel special and limit their frequency.
No expiration dates
Never-expiring codes lose their urgency and give customers no reason to act quickly before missing out on the deal.
Discounting the wrong items
Don’t offer promo codes on low-margin items or products with high demand. Discount your highest-margin items or bundles instead.
Not tracking ROI
Failing to properly track promo code performance and redemption metrics means missing out on customer insights and future optimization opportunities.
Security issues
Reused, predictable, or unencrypted codes are vulnerable to unauthorized use and coupon fraud. Ensure your codes remain secure.
Forgetting promo logistics
Poor planning around promo code stock limits, maximium discounts, and redemption caps can cause problems. Think through promo mechanics.
Conclusion
Sales promo codes remain one of the most popular and effective promotional marketing tactics. When thoughtfully created and distributed, promo codes provide tremendous value by driving conversions, increasing order values, attracting new customers, improving retention, building brand awareness, and supplying valuable data. Avoid common mistakes, follow best practices, and continuously test and optimize your promo codes to maximize results.