Discounts, whether you like them or not, are a necessary part of eCommerce.
But how you use them, and more specifically, when you use them, can literally make or break your business.
You either train your customers to never shop at full price, or you use them strategically to drive LTV without killing your margins.
I’ll walk you through the three key touchpoints where discounts actually move the needle, five types of promos worth considering, and what to do instead of sitewide sales when you need to clear inventory.
Let’s jump right into it.
3 Touchpoints Where Your eCommerce Discount Strategy Has The Biggest Impact on LTV
1. Email Opt-In/First Purchase
This is the acquisition offer you run on your pop-up/site. The key here is to strike a balance between scalability and customer quality.
You want your first purchase offer to be compelling enough to land the sale, and scalable enough to attract the right type of customer (someone who’ll also happily shop at full price).
If you’re running a no incentive pop-up, you’re just wasting traffic you paid for. No one but your mom cares enough to want to “keep in touch” with your brand, or receive another newsletter.
Pro tip:
Framing your pop-up offer as a “mystery discount” can work well. But keep in mind, if you’re more of a premium brand, it might seem a bit tacky.
2. Second Purchase
Another touchpoint where a discount can drive meaningful lift is the second purchase.
I’ll give you an example.
The other day, I ordered a pair of shoes online. When the package arrived, I opened the box to find two things inside:
The shoes (duh).
And a handwritten thank you note from the founder, offering me a limited-time 20% discount off my next order.
I wasn’t planning on buying again. But the gesture caught me off guard, and the offer kinda seemed too good to pass up.
I didn’t end up buying anything else (because I didn’t see anything else I liked), but I was pretty damn close.
The point is, that’s what smart retention marketing is about.
I see a lot of brands make the mistake of offering an amazing deal on their first purchase, and then go crickets when it’s time to get the customer to come back.
Winning that 2nd purchase is your biggest opportunity to increase LTV.
3. At Risk
These are people who have bought from you recently, but are at risk of churning.
Say you sell a moisturizer with a product lifecycle of 50 days. A customer who purchased from you 55 days ago hasn’t re-ordered yet.
A compelling offer, automatically triggered at this exact touchpoint, can drive a meaningful incremental lift.
I recommend creating a separate segment for this group in your ESP, and re-target them with a plain text email series, while driving urgency around the discount.
5 Types of Promos To Consider For Your eCommerce Discount Strategy
1. 20%+ Discount
A 20% discount is compelling because it’s big enough and easy to understand. Just remember, the bigger the discount, the more bargain hunters and one-time buyers you’ll attract.
2. 10–15% Discount
A 10% discount is the most popular promo out there — but it only works if your audience can’t find a better deal elsewhere.
Anything less than 10% and you might as well attach a troll face to the email/ad.
3. Gift With Purchase
Gifts or freebies can work well when used strategically. For instance, telling new subscribers they’ll get a free gift on their 4th subscription month can be a great way to reduce 30-60-90-day subscription churn.
Just make sure to test this and see whether it actually drives an incremental lift in sales.
4. Spend More, Save More
This type of discount is mostly attractive to big spenders. For example, you can offer a “spend $100, get $20 off” type of deal to VIPs, or also potential VIPs (those who spent above your AOV on their first purchase).
I wouldn’t run these types of deals on a wide audience, simply because they take a second or two to process, and they’re not appealing to everyone.
5. BOGO
A lot of fashion brands (or brands that sell visual items) use the BOGO promo during holidays or gifting season. Customers feel like they’re getting more bang for their buck, because they get to treat themselves and also pick up a gift for someone else.
Just make sure your margins can support it. If you’re not walking away profitable on the front end, you need to be confident you can make it back on the backend.
When To Offer Discounts in eCommerce (And When To Avoid Sitewide Promos)
There will be times when you have to move inventory, and running a sitewide promo might seem compelling. The weeks/months after Black Friday is a prime example of this.
You have to remember, sitewide promos rarely attract the type of customers you want. These people simply won’t come back to buy, because they’re not comfortable with shopping at full price, or even close to it.
A better option is to create a separate landing page, with a separate pixel, and run ads around it. You can only set it live when you have to run a clearance sale — it’s like an ace up your sleeve.
Another way to minimize impact on new customer quality is to make the offer exclusive to email subscribers.
Final Tip: Auto-Apply Discounts
Try and make your discounts auto-applicable. This is a minor CRO tactic, but it can drive an impact. In most cases, it’s worth it.
And don’t make your customers check their inbox to redeem their welcome discount. That’s a sleazy tactic used by email marketers to prove ROI, but it’s not good for CX.
