Discount codes are a great way to drive new sales. They create a headline grabbing price and are instantly and easily shareable amongst your customers and prospective customers. However, over the past year there have been some horror stories coming from small companies that have been badly burned by codes they have shared through the likes of With the necessary planning a discount code should never become a financial burden. Here is how.


What are your objectives?
The first question to ask is what do you want to achieve with this promotion? For example, is it to increase units sold, revenue, customer numbers or awareness of your product/ brand? Once you have defined the objectives you can tailor your code accordingly and measure performance. For example, if the aim is to increase the number of followers you have on Facebook, revenue is a secondary concern and your key metric is follower data.


Calculate the LTV of a customer
Although your primary objective may not necessarily be financial, you never want to sell a product or service at loss so great you actually can’t afford it. A strongly discounted product may not be profitable on its own or for the first billing period, but if you know the average basket size and life time value of a customer you can calculate how long a customer will need to stay with you to become profitable. If this fits in with your budgets, then this is an acceptable amount.


Make it worth people’s time
A great discount code is ideally both appealing enough for someone to buy the product and to then share it with other people.


Put limits on the code’s use
Making a discount code time limited or limited in the number o uses has two benefits. Firstly is give customers a sense of urgency to use it before it expires, and secondly it prevents any code running out of control and coming back after the promotion has ended. E.g. “Offer ends 15th August” or “Only 2,000 codes available”.


Water tight Terms and conditions
Spend time researching other website’s promotional terms and conditions and pick out points you haven’t thought of. If there is a gap in your T&Cs at least one person will find it, and they may exploit it e.g. not specifying an expiry date or who does and doesn’t qualify.


Cross-sell and up-sell
Once you have converted a new customer, what supporting products and services do you have that they can buy? Segment out these customers and target them with specific marketing communications based around the product they bought using the discount code.