How to Properly Use Coupons and Promo Codes as a Business Owner?

A Guide on Discount Coupons for Business Owners

Last updated - April 13, 2023

Consumers have had a long-standing love affair with coupons, promos, and other marketing tools that let them purchase something for less than the full price. A study conducted by the Center for Neuroeconomics Studies at Claremont Graduate University found that people who get promotional codes experienced higher levels of Oxytocin – the hormone associated with feelings of happiness. This powerful psychological impact, among many other reasons, has made coupons and promo codes a marketing staple for businesses.  

Continue reading to learn about the benefits of implementing a coupon and promo code strategy, its potential pitfalls, and tips for effectively using this strategy to boost your business.      

Benefits of Coupons and Promo Codes 

It may be a simple tool in your marketing toolbox, but when executed correctly, it can help your business generate leads, reduce customer acquisition costs, and drive sales. Below are other benefits of a carefully crafted coupon/promo code strategy.  

Allows you to Track Marketing Efforts

Benefits of Coupons and Promo Codes - Allows you to Track Marketing Efforts

Compared to other marketing tools, coupons and promo codes directly link specific campaigns to customer conversion. For example, when you assign a promo code to a video on YouTube, you know when that content is responsible for a sale. Conversely, while an online ad or an email link can drive customers to a landing page, it won’t always reflect the actual conversion rates.  

As a business owner, these platform-specific codes enable you to see which channels your customers are most active in and which types of content they consume, among other valuable marketing insights. Learn from experts at to see which percentage of your customers are actively looking for sales on your products.  

The great thing about a solid coupon and promo code strategy is that you can use them to complement any marketing objective, whether it’s driving traffic, introducing a new product, or retargeting inactive customers. In turn, this allows you to measure the ROI of specific campaigns, focusing resources on more effective ones. 

Appeals to Both New and Existing Customers 

Benefits of Coupons and Promo Codes - Appeals to Both New and Existing Customers

The simplicity of discount codes also comes with the flexibility to use them for all types of customers (even part of your customer retention program), depending on where they are in the buyer journey. For example, you can give new customers a coupon when they sign up for your email list. If you give them a USD$20 discount coupon, you can set a minimum order value to influence an increase in average spending.  

For this strategy, it’s best to have product recommendations based on what’s in their carts to help them reach the minimum order value. You can make these recommendations based on products they’ve clicked on, social media content they’ve engaged with, and other pertinent data. Once you get customers into the sales funnel, it’s easier to entice them to make a second purchase by sending them personalized emails, sale alerts, and other promotional notifications.  

An example of how you can use discount codes for existing customers is by giving them access to products before anyone else and asking for a product review in exchange for the promo code. When other consumers see positive reviews on a new product, it can serve as social proof of its quality.  

Encourages Brand Advocacy

Benefits of Coupons and Promo Codes - Encourages Brand Advocacy

Rewarding loyal customers opens room for creativity. For example, when customers spend a certain amount during low season, you can reward them with a coupon they can use for exclusive releases. Or if you’re offering a subscription service, you can reward subscribers that have been with you for a certain amount of time with a discount code for three free months that they can gift to family members.  

Rewarding loyal customers with exceptional customer experiences encourages them to recommend your business to others, effectively making them brand advocates. Remember, acquiring a new customer costs five times more than keeping an existing one. As such, it’s always worth investing in your current customers.  

Helps Move Inventory 

Benefits of Coupons and Promo Codes - Helps Move Inventory

You can use coupons and promo codes to offer discounts on older products. This allows you to move products you may not be able to otherwise. For example, you can give a promo code for a two-for-one deal that applies to products and old inventory you want to sell.   

Incentivizes Customers Aiding your Marketing Objectives 

The best coupon/promo code strategies are implemented in conjunction with other marketing campaigns. For example, you can offer discount codes that only apply to in-app purchases to encourage customers to use your new app. This can drive traffic to the promoted platform while letting customers see its benefits.  

You can also use discount codes for lead generation, asking customers to sign up for your email newsletter or subscribing to your YouTube channel in exchange for a promo code. As you can imagine, you can get creative in implementing this strategy, using it to aid any marketing objective you may have.  

Things to Consider When Using Coupons and Promo Codes 

While a sound coupon/promo code strategy offers several benefits to a business, it can’t focus solely on trying to compete on price alone. There will always be larger enterprises that can offer cheaper (and sometimes better) products and services similar to yours. So, engaging in a price war won’t work for small and medium enterprises (SMEs).  

Below are other things you must be wary of when implementing a coupon/promo code strategy. 

Customers may get into the habit of waiting for seasonal sales 

Offering coupons and promo codes too often can lead to customers developing the tendency to purchase only when promos and discount codes are offered. This can negatively impact your revenue stream, making creating an enticing yet calculated coupon/promo code strategy critical.  

For example, you can offer discount codes to customers on your email list for X amount of time without purchasing. Using different marketing analytics, you can apply this strategy to customers at various buyer journey stages.  

Affects your Products’ Perceived Value 

Perceived value refers to customers’ perception of a product or service compared to others on the market. Consumers tend to think that the more expensive a product is, the better it is. As such, offering discount codes too often can negatively impact your products’ perceived value, which makes having a solid strategy in place critical.  

For example, while you can offer discounts on more expensive products (like a gaming console), you can use this as an opportunity to upsell them with gaming accessories and other items at full price.   

It’s not a Standalone Strategy 

While using a coupon campaign as a standalone strategy can drive sales for a certain period, it’s not sustainable, as it will eventually cut your profit margins, ultimately leading to losses. Again, coupons and promo codes work best when used in conjunction with other marketing strategies. Instead of creating a plan for offering discount codes, review your marketing plan and see which areas discount codes can help.    

Final Words 

As you can see, coupons and promo codes can benefit your business in many ways. If you have yet to include a coupon campaign in your business strategy, conduct a marketing audit to see where it fits best.  

Further Reading


Please enter your comment!
Please enter your name here