Coupon Marketing Strategy: Effective Ways To Offer Coupons

The right coupon campaign can attract customers, re-engage existing customers, and grow revenue. The wrong approach, however, can waste resources and damage your brand image. 

Discover the dos and don’ts of coupon marketing. Learn how to effectively use discounts, promo codes, and personalized offers to drive meaningful growth without risk. 

What is coupon marketing?

Coupon marketing is the distribution of special deals to customers to drive sales. The best coupon marketing campaigns are about more than just discounts. They’re data-driven strategies that help marketers gain insights into consumer behavior, refine customer targeting, and strengthen brand equity.

Marketers can distribute digital coupons or paper coupons that offer discounts, rebates, or free products with purchases. Coupons often also include specific terms of eligibility, such as date restrictions or minimum purchase amounts. 

Types of coupons

• Percentage discounts
• Fixed amount discounts
• Buy one, get one
• Multibuy
• Seasonal
• First purchase
• Financial rebates
• Referral offers

There are many ways to structure coupons depending on your business goals—whether you’re looking to increase average order value, attract new customers, or reward loyal customers. Here are several types of coupons:

Percentage discounts

Percentage discounts reduce the cost of a purchase by a specific rate, often between 5% and 20%. Since a percentage discount usually applies to an entire order, it incentivizes customers to buy more items to maximize their savings. This type of discount has broad appeal and is one of the most effective ways to boost sales. 

Use percentage discounts to welcome new customers with personalized coupon codes, clear out seasonal inventory, or create a sense of urgency to purchase during holidays or seasonal moments. 

Fixed amount discounts

Fixed amount coupons provide a set number of savings, such as $10 off a purchase of $100 or more. These deals often include spending minimums to protect a brand’s profit margin and encourage higher order values. Since the discount is capped, fixed amount discounts typically cost less to run than percentage discounts.

Luxury bedding brand Boll & Branch, for example, offers new customers a fixed discount of $25 off orders of $150 or more. With this approach, customers who spend $151 and customers who spend $1,000 both receive the same discount: $25. 

Buy one, get one

Buy one, get one discounts—commonly known as BOGO—provide a free item when customers place an order making them a popular choice for consumable products, like snacks, cleaning supplies, or wellness items. This type of promotion is most appropriate for products that consumers want to stock up on. A variety of BOGO apps can help you tailor your campaign to maximize conversions.

Multibuy

Multibuy discounts offer promotional pricing when consumers buy a specific number of products, such as $6.99 for a single item or $25 for four. If consumers don’t want to miss out on the bargain, this approach can help increase average order value and grow customer lifetime value (the total revenue you can expect from a customer throughout their relationship to your brand).

Multibuy coupon codes also help ecommerce stores move excess inventory efficiently. Similar to BOGO, this approach is best suited for consumable products or small items that shoppers purchase in multiples—such as socks or pantry staples. Expensive products or items rarely bought in bulk aren’t as suited to this approach. It doesn’t make sense to offer four toaster ovens for the price of three, for example. 

Seasonal

Seasonal coupons offer discounts during a specific time period, such as holidays, cultural events, or major shopping occasions like Black Friday Cyber Monday. Seasonal discounts can create a sense of urgency and help give your brand a competitive advantage during peak shopping times.

First purchase

First-purchase coupons support customer acquisition efforts. Businesses often use first-purchase discounts as a lead magnet by offering a promo code or personalized coupons in exchange for contact information, such as an email or phone number. This approach helps ecommerce businesses build their subscriber base while encouraging shoppers to convert quickly. Even if a customer doesn't complete a purchase immediately, they have started their customer journey once they submit their email. 

Financial rebates

Financial rebates offer money back after a customer completes a purchase. Obtaining the partial refund often requires submitting a form, either online or via mail. Rebates make product prices seem more appealing and can help motivate purchasing. This approach can preserve profit margins—while price-sensitive consumers will likely pursue the rebate, some shoppers may forget or lose interest. 

Referral offers

Referral coupons offer discounts or cash incentives to existing customers who recommend your company to other people. This type of coupon makes sense if you’re trying to grow your network of potential customers or build brand loyalty.

Jeremiah Curvers, the CEO and cofounder of mattress company Polysleep, chose this approach. “Big-ticket items like mattresses don't come with a high repeat purchase rate,” he says on an episode of the Shopify Masters podcast. With Polysleep’s referral marketing program, current customers receive a $25 to $50 gift card through an application called Tremendous for each activated referral that they share. This boosts sales while turning satisfied customers into brand advocates. 

Coupon marketing best practices 

• Set goals
• Segment your audience
• Consider discount apps
• Capture leads

A successful coupon marketing strategy attracts new customers, retains loyal customers, and maximizes customer lifetime value. Here are four proven ways to guide your coupon efforts:

Set goals

Before you create a coupon, define your marketing and performance goals. Since different types of coupons incentivize different consumer behavior, this will ensure your promotion aligns with your broader business goals. For example, a percentage discount on specific products can help you sell excess inventory, while first-purchase coupon codes could help you grow your audience and acquire new customers. 

Segment your audience

Customer segmentation allows you to target specific customer groups with personalized promotions. Customer segments can improve coupon redemption rates by ensuring that promotional messages reach the most relevant audience. It also helps keep promotional costs down, since it limits the overall number of discounts offered and allows your marketing teams to focus on specific groups. Popular strategies include segmenting based on consumer behavior, purchase history, and physical location.

Consider discount apps 

Coupon management software tools and discount apps, like Shopify’s automatic discounts functionality, can simplify the process of creating, implementing, and tracking coupon campaigns. These products automatically apply coupon codes to eligible purchases during the checkout process, eliminating the need for people to copy long codes and reducing the risk of consumer frustration. Discount apps also protect profits by blocking overlapping promotions, and they make it easier to track whether a campaign is meeting your goals. 

Capture leads

Coupon marketing isn’t just about driving sales; it’s also a powerful way to grow your audience. By offering discounts in exchange for contact information, you can turn one-time visitors into leads for your larger marketing strategy. For example, once you have a customer’s email or phone number, you can nurture them with follow-up campaigns, personalized coupons, and loyalty program invitations, while collecting valuable insights into consumer behavior and preferences. This helps turn short-term discounts into long-term customer relationships and repeat purchases. 

Common coupon marketing mistakes to avoid 

Here are common mistakes in coupon marketing campaigns and how to avoid them:

Neglecting profit margins 

If you purely focus on short-term sales, you miss out on understanding how a coupon campaign impacts your bottom line. For example, offering too many coupons at once or discounting too deeply can be a costly mistake. To boost sales without whittling away profit margins, set clear campaign goals and discount limits. Consider using tiered offers or minimum purchase requirements to encourage large orders without escalating discounts. 

Failing to track performance 

Coupon marketing offers people favorable pricing in return for revenue and valuable customer data. Without a way to track and analyze data, you risk missing key insights and losing opportunities to optimize future campaigns.

Tracking coupon performance will help you evaluate campaign success and gather information to refine your coupon marketing strategy. Redemption patterns can reveal the most effective discount style, products frequently purchased with discounts, and which customers respond favorably to which coupons. 

Overlooking design 

Your design can make or break your promotional offers. Creating a coupon that reflects your unique visual identity can help build credibility and reinforce brand recognition, while poor design can confuse customers, lower redemption rates, or cheapen your brand. Make sure that essential details, such as the discount offer, promo codes, and expiration date, are prominent, memorable, and easy to read.