Hey everyone, Scott Austin here. And for this week's podcast, I got some people in to talk about discount codes, which are really important topic that a lot of Shopify store owners don't understand really well. So we're bringing in Kara from Segundo and Becky from Caddis Light to talk about the industry standards and the best practices. So, Kara, let's start with you.

Can you introduce yourself, please?

So I'm Cameron, I work at Signal Software and we make marketing software for Shopify merchants. And I'm specifically the product owner for Bulk Discount Code Bot, which is an app for generating unique discount codes.

And Becky from Caddis Life, can you use off, please?

Sure. I'm Becky Chambers, I am the VP of Performance marketing over at caddis. And caddis makes eyewear. So reading glasses, sunglasses, prescription glasses. But beyond that, we really aspire to have people feel great about the age that they are as they get older and be really proud of of that, as opposed to have any negative connotations with it.

I felt like you were talking to me, as you said, as people get older, but I'm just going to skip over that. Okay. So why don't we start off with you, Carrie? So, Juno has done some research with all the data that you have because you talked to thousands of Shopify store, you get to aggregate data. Why don't you start off with, you know, telling people a little bit about what kind of data you were collecting and what what are some of the things you've seen from that?

Yeah. Yeah. So we're so both discount code bot. What we did in our recent report is we analyzed 162,000 discount sets created by 12,000 Shopify merchants. And what we wanted to learn was just what are the main things people are using unique discount codes for? And a goal in doing that was to understand what are large brands doing that smaller brands can learn from what our large brands are missing out on.

There are a number of interesting findings I can dive right into some of them if you want.

Before we dive in, let's do one definition. You said unique discount codes. Can you describe unique discount codes and non unique discount codes.

Yes. So a unique discount code is like I think people often think of direct mail when they think of this. It's a one time use code that has some random set of characters at the end of it. So it'll be like welcome x, y, Z123. And so it's unique to each person who receives the code. Which is great because it prevents coupons from being shared on coupon sharing sites because it's only valid for you.

And then something that's even cooler about it than that, to me, is that it makes it easier to do strategic, targeted discounts so you can offer someone a discount that's not valid for someone else, and you can really experiment with what works. So that's a unique discount code. And then a non-unique one would be like welcomed funny. So that's just the same for everybody.

Which ever been in there. It finds puts in and uses. So you basically are giving everybody 20% off for the rest of your business, and.

You're training them to wait for that 20 to go looking for that 20% and get it.

Off. Yeah. Well and then I got those Chrome extensions. Now that just drop it in automatically for you if you want, which are the bane of every e-commerce store's existence. So yeah, let's go ahead. Now that people understand the difference between those two, go ahead and, you know, bring up some of the highlights that you took from all the data that you guys have analyzed.

So one of the things we're looking at is top use cases. One of them is seasonal promotions, which is not just Black Friday but seasonal promotions all year round. And then after that, we saw marketing life as a really important one. 12% of merchants create marketing lifecycle unique discount codes. So that would be like welcome emails. Post purchase went back and then the other two use cases to call out right off of the bat as affiliate program, unique discount codes and also student discount codes, which we found were surprisingly popular in Europe.

So those are some of the some of the initial findings.

How do people have unique discount codes for affiliate and student? I know how to do it for the marketing email side of things. How do they do it in those scenarios?

It tends to be the same. So you're going to generate your you'll create your unique discount code set wherever you're doing it. And then you'll export them and upload them to a platform. So it could be a platform for students. Often we see like union days or student beans. And then on the affiliate side, sometimes it can get very interesting where they're like traditional affiliate programs like you have an influencer on social media or something like that.

But then we also see, and this is more just from supplementing with with customer calls, that folks will use affiliate programs as part of retail. So if you are selling your product in a physical store, then you're going to use affiliate codes, unique discount codes for people who are working in that store.

Okay, okay. That makes sense. So go ahead and then let's give us some more findings. If you would.

So what do you guys think is the top discount percentage off that's offered across those discount sets?

Well I already read your report this morning, so I'm not going to answer.

You may have read it to oh I don't know. I didn't read it. I'm really curious though. So the top one is 20% off, which is interesting. And people often guessed that something that gets a little funnier. Did you go close enough to see the second most popular one?

I don't remember the second. You had 100% in there, which I thought was quite interesting.

The second most popular one is actually 10%, which most people, when I give that really fun pop quiz question, they'll guess like 15%. If 20% was the top one, but 10% is more common than 15.

And now that's in the codes that people give out. Did you look at the codes that get redeemed and was there a difference in uptake there? Like I would assume the 20% would get used more than the 10%, but I'm not sure.

It's a great question. So we we didn't have redemption data in the report. We only have what was offered. I have seen some interesting thing talking to our customers. Becky, I don't know if you'd have thoughts on like is funny percent always going to be used more than 10%. I mean, in the testing we've done, yes. And the math checks out because obviously you want to look at the margin loss as well as the code redemption.

But for us, yeah, 20%, I think it just has a higher perceived value. I think some people just think 10% is more or less taxed. So 20% just feels a little harder, you know.

And it can just lift Becky. You guys are manufacturing your own eyewear, right?

Correct. Yes.

Yeah. So the challenge that I see is for those unfortunate resellers who don't have that 20% margin to give away where manufacturers do, which means you can, you know, look like you're, you know, have more rich programs than the resellers out there. But, you know, that's just the problem of being a reseller, I guess.

Yeah. Yeah. One thing that was also interesting in the report is that I get why, which includes things like gift with purchase, is six times more popular with larger brands than smaller brands. And just in customer calls. I actually had a joint customer call us back in. Another customer for that customer was talking a lot about gift with purchase and how in cases where you don't want to give that 20% margin and have any excess inventory gift with purchase can be a really good way to boost average order value without needing to give up as much.

Are you guys doing that at Catus life? Becky. The gift with purchase.

We've played with it a little bit. Frankly, it's been more of a challenge for us because, you know, beyond our eyewear, we have you know, cases and accessories. And so the perceived value of, okay, buy $110 pair of readers and then get a $15 case for free isn't super compelling. So we do tend to do better with dollar off.

It's just a question of being as strategic and targeted as we can.

I would say for you guys, we're glasses and I'm just guessing here, right. Glasses is an infrequent purchase decision. So I'm going to do a lot of research. And then I make that purchase. I'm not going to stick around and repurchase every three months kind of thing. So it's a more considered purchase and I'm more price sensitive. Probably because it's a bigger expenditure than a 5 or $15 purchases.

And I say that because with my clients, a lot of our marketing programs, we do buy X, get Y, right? And that's my favorite one to do for a whole bunch of reasons. The biggest one increasing the AOV. Right. And I have a lot of clients. You have a free shipping threshold, so we make the buy amount higher than the free shipping.

So we get to say get free shipping and get this free thing also. And we find that's a huge driver. But you know, a lot of my clients, you know, for example, I have one who sells crackers, right. And you know, people buy crackers all the time. So, you know, they see the benefit of that. And it's not a one time purchase where, you know, I'm sure people buy repeat glasses, just not as frequently, I think.

And the point there is, I find that you really have to think about your business. Every best practice you listen to. Totally great for the person saying it, but you've got to go. Does that make sense for my business and and test those things out.

Agreed. And I will say with us, it's really interesting because the things we do have going for us in terms of frequency and where we do see it, and you are correct that it is a high consideration purchase is color because particularly with a lot of our female shoppers, if it's a reading glass, they want, you know, colors to match different outfits and then people's eyes change, right?

People's eyes often get worse, or they have cataract surgery and their eyes get better. So there are some instances in events where we see, you know, amazing repeat purchase rates. But to your point, it's different than crackers. Absolutely. Yeah.

So what else did you find in your in your data there?

One of the biggest takeaways for me is it's really interesting to see how large brands are doing these strategic discounts because they work well and they have at least one person who has some mindspace to it, and then it feels like smaller brands often are not doing them, even though there's some really low hanging fruit. So to me, especially thinking about smaller merchants who may be listening, I would think about like those marketing life cycle use cases, making sure that welcome post-purchase and win back.

Those are really common and larger merchants that you're doing those. So I would say that's a key thing. And then on the flip side, any larger merchants who are listening that there are other parts of the marketing life cycle that we were really surprised to see. Even larger merchants are not using all that much. So cart abandonment browns abandonment, these are pretty rare for us to see relative to the scale of the number of discount sets.

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In your eyeglass situation Becky, what sort of do you call them? Marketing lifecycle care like the are you doing a post purchase? Are you doing a restock or whatever you want to call that? And I'm curious to see, like how long do you wait before you send them one out? It's not probably, I assume the traditional 30 days, but.

That's one of the biggest challenges, right? Because defining when somebody is lapsed, it's very snowflake, right? I mean, we have people that buy, like I said, they want every color. They have to have it. And then we have people that will buy once a year when they get more FSA or HSA dollars, that kind of thing. So it really depends.

We tend to hit people around 125 days and then again at a year. Obviously, if somebody has recently purchased, they're excited. Something we see in our reviews all the time is that they're getting a lot of compliments. So we want to take advantage of that energy to try to get out a second purchase. People might want a different color, they might want it in sun and that sort of thing.

But beyond that, in the life cycle, I mean, I'm feeling somewhat proud of us for checking a lot of the boxes that were just mentioned, but also, as you know, premium lifestyle brand. It's really important to us to present our discounts as something additive or in the case of a new customer, you know, a welcome into the club kind of a cracking open up the door to them to let them try our product.

So there's times where we will target people in a really specific way. If there's a color we think they would like, or we want to get them into new categories such as prescription or sun. So, you know, there are times, you know, with Black Friday coming up, you will go to our site and you will see a code that works for everybody all over the site, like their seasonal expectations and sometimes that has to happen.

But where we can, we try to be very targeted using what we know about a customer and where she is in the life cycle, to give her something that feels a little bit more high touch, if that makes sense.

It does, it does. And something you said early on, and I want to highlight that I think is a great best practice, as you said, that you target 125 days after purchase and then one year, right? Yeah. And a lot of people in their restock email, they do the first one, but always do that second. And we even do third and fourth sometimes depending on on what the brand is, because you just gotta keep reminding people that you exist, right?

Do you have a philosophy at catus where you're going to give coupon codes to certain people in certain situations, but someone else in that same situation does not get a coupon code. And the example I'm thinking of right here is in your abandoned car. For a lot of my brands, what we do is we set up an abandoned cart that if you've never placed an order before, we give you a coupon code.

If you place an order before, we don't give you a coupon code, because we don't want to train you to just abandon the cart every time. Do you ever do those types of things?

Yeah, we do exactly the same thing. You know, with Black Friday coming up like we will have a message and those existing customer abandonment flows reminding them that we have this offer that applies to everybody. But outside of that, we do exactly as you mentioned, in terms of just using it and repeating it again so that somebody who hasn't purchased will, we'll take the plunge.

How many marketing campaigns are you doing throughout the year that are calendar based? Like, you know, I don't know when National Eyewear Day is, but our National Eye Health Day. But I'm sure you're targeting those types of things. Or are you doing frequent campaigns along those nature, or is it more the customer's life cycle?

Yeah, that's a really good question. I mean, the answer is both. We we definitely try to be present during major selling events like Black Friday or Boxing Day or July 4th, Memorial Day, stuff like that, when the customer is expecting it. And those can also be opportunities for us to rightsize our inventory, if any of that needs to be to happen.

But then at other times we like to be more targeted. And I'm not as rigorous with it now because the results were so strong. But with dynamic one time use codes. We also were in the practice for quite a while of holding out control so we can be really confident about when we did, you know, do a win back campaign because I have this set up as flows, but we'll also just do it twice a year and just sweep back to everybody who meets that criteria and often hit them with direct mail, as well as a postcard of direct mail being super advantageous because often I'll target people specifically who are not engaging with email

or have unsubscribed altogether. So, you know, we we do play by kind of the rules of being an online retailer in terms of timing those larger promotions. But we do kind of like under the hood things throughout the year for certain types of customers for which we want to drive incremental behavior. I was just going to add in our in our report with 162,000 discounts that we did see, the number one was seasonal promotions.

So things tied to Memorial Day and all the different holidays and things like that. But then we saw the marketing lifecycles and affiliate programs high up there too. But that definitely is number one for us. And I think there's a misconception that it's only on the really big holidays to do things. It's it's also year round. There's different events happening.

Yeah. What I have found with, with my brands is, for example, I know that December 17th is National Maple Sirup Day because for one of my clients who has maple sirup as their ingredients, we're doing a campaign for National Maple Sirup Day, and there's Vegan Day, and we literally have the whole calendar of National days, which there is every single day of the year.

There's 5 or 6 different things you could say at for there's a chocolate chip day, there's a peanut butter day, there's whatever you can think of. There's a day for it. Or if not, you can invent one. I have one client. They sell, substrate for reptiles. And Steve Irwin's birthday. The crocodile Hunter is their biggest holiday of the year.

They give their one time of year 20% off discount is on Steven's birthday. And their number one day. And it's in like, February, I think, kind of thing. We've had great success creating our own count. We don't do the Memorial Day that's inclined to do the Steven's birthday. The first campaign we ever did with Memorial Day completely, utterly failed.

Right. And we realize, you know, if you own snakes and reptiles and all these things on Memorial Day, you're cooking hot dogs. They're family, all right? You're not trying to do a sale and buy coconut substrate. But on see, it was worth that. You're more than willing to put your credit card down. So we found that being in tuned not to the Uber holiday calendar that everybody else is doing, but having your own gives you authenticity and is a really great place to to drive traffic.

So that's why we're doing all these marketing campaigns. That's the buy X get. Why spend $75 and get a free whatever that is kind of thing. And we're always testing. Let's try a $50 price point. Let's try $75 price point. Let's try $100 price point. Let's make the gift 50% of the value of what, you know, all those kind of things to try to play and learn.

Have you, what have you played with Becky in your testing out of stuff with your brand and what's worked and what things haven't worked for you?

I would say what's worked is it's generally easier for us to get somebody to do more of what they're already doing than to adopt, like a net new behavior. So it's easier to get them. They're already on the site to throw one more thing in the cart. We just last weekend since, like everyone, we're kind of inching our Black Friday stuff up early.

In early we did a buy one, get 150% off.

It's Black Fall now I know.

I know, I know, it's crazy. I remember, yeah, when it used to when when people started on Thanksgiving that was a big deal. So anyway you know that's that's relatively low lift people. You know I just started wearing reading glasses and it's like I need them in the kitchen. I need them at my desk. I need them on my bedside table.

Like you just need a lot. So that works pretty well. Or if somebody already bought a color or style and you're inviting them to buy more, that works pretty well. It's harder to get somebody to do something new. And that includes making that first purchase, which I'm sure you both are well aware of. Like getting somebody from 0 to 1 is the hardest thing.

Getting somebody who's bought ten pairs to buy 11 is not that hard. I set up some flows. About a year ago. We were really trying to grow our son business, so basically if somebody purchased a given frame and prescription or as a reading glass, I would then say, hey, you know, we make this. And son, it just didn't do well.

And I don't know if it's because people didn't associate our brand with son or if they just had a very specific use case in mind, or if they had a preferred brand already for that category, but that one was just harder to push them into something completely kind of a different category.

Yep. Another problem that I just realized is the buy x get y. One of the things that makes it so hard is if you have a, you know, you can do a discount that says spend $100, get a free whatever. But then you have to give them that free whatever, and you have to customize your cart to do that.

And we end up doing that for all of our clients. We have a whole bunch of standard tools and we, you know, like tomorrow we're doing Veterans Day for a knife manufacturer. And the Veteran's Day promo today is November 10th. For those who don't understand, Veteran's Day, November 11th is Veterans Day, and the promo is buy a knife and get your service engraved on your knife.

So U.S. Army, US Air Force, US Navy, that kind of thing. And we had to build a little custom selector for every knife in the cart. Select your service if you want to add that kind of thing, but it's just more work for the brands to build that. The discount idea is great, but then you have to carry it through into the shopping experience and make it quick and intuitive and easy for customers.

Instead of say, go here and add this and then go there and add this, doing it automatically. It's a bunch of custom work.

It's a good point because if you make it too hard, nobody's going to do it.

Yeah, well, I think if you make it hard at all, right, I think that any time people will go, What are you talking about? They leave. The easiest decision for them to make is to not engage with you. So you have to do everything you can to keep them engaging with you. So, Kara, you know, we're talking specifics over here.

Can you drop us back into the industry standard data and give us another data point or findings that you guys had? And then maybe we'll we'll talk about how that works and execution amongst, you know, the brands that we've been working with.

I have some things I think we could learn from Becky also, I could call out for there. But one thing that is interesting for us that kind of prompted a new, new area that we've been working on is when brands are doing strategic discounts and creating a number of discounts that are strategic and maybe also a number of discounts that are those blanket discounts.

Something we hear, especially from our larger customers, is it can be hard to understand at a glance what's currently live, what's accidentally been live for three months and then there that that leaked here or went here. And so this wasn't in the report, but just customer conversations and stuff. We've recently been working on this new discount risk on it, which makes it easy for you to see.

It's included on a free trial, all of your discounts at a glance. What's expired, what accidentally doesn't have a match, shipping free shipping threshold? Do you have any 100% off discounts which we can come back to from the report? Those are coming from like the executive team. They'll give 100% off discounts to friends, things like that. Another thing in there, not exactly the report.

But it'll make sense. How does that resonate with you, Becky? How do you at your brand, which is fairly large from what it looks like to me, how do you manage all the chaos of all these coupon codes?

Oh my gosh, not easily. I will say, you know, because we, you know, we certainly have our one size fits all codes and then we have a ton of one time use codes. Some are generated through the bulk discount generator app within Shopify, some generated through Klaviyo, some generated through our loyalty program that we have with loyalty.

Lion. So I have the fun job every month of basically exporting all of the code uses from Shopify, and then manually coding them so that I can roll them up and present to our board. Okay, these are the codes that are being used. This is the net revenue. This is the cost of the discount. And then this is the efficiency.

So for us efficiency means the net revenue over the cost of the code. And obviously we're looking for, you know, the most efficient use possible, which we do see with our loyalty program. Quite often because a lot of times people might have, you know, ten bucks and points, you know, if that pushes that into a purchase, I am thrilled all day long to take that revenue.

And they're happy to do so. Our reporting and kind of making sure we have our arms around what's out there, you know, making sure something hasn't leaked or isn't being used fraudulently. It's really important for us to just keep tabs on that and know how we're doing.

I had no idea when I asked that question, that your answer would have been so complex that you're actually monthly exporting all this stuff, munging together these spreadsheets, and rolling up the data for insights. That's just an amazing amount of work.

I mean, if somebody has a better idea, I like want them to track me down because I would love to know it. It's just I haven't been able to find it. I mean, even with ChatGPT, I would have to train it so much on what all the codes mean anyway. So it is a sizable chunk of work for sure.

Absolutely, absolutely. Well, this has been a fantastic discussion. I thank you both for for joining me today. Becky. If people want to get in touch with you, how can they reach out and find you?

My email is Becky at Caddis life.com. That's the best way.

Excellent care. How can they find you.

Same thing carrots Laguna SDG uno.com.

And I will include in the show notes a link to the report that you were referencing. So people can go in and see the more detailed evaluation. And these are all Shopify stores that are in that that data set correct?

Yes. All Shopify stores, 12,000 of them.

Excellent, excellent. Thank you, ladies for your time today.

Thank you. This was fun. Thank you.