The Essential Guide to Automatic Discounts
In this article, we will cover the benefits and threats of cart promotions. We will talk about how to design your promotional strategy, how to choose your campaign goals, and how to target and personalize promotions. You will also learn how to design the promotion placements on both website and mobile and how to track and optimize your campaigns in the long run. Last but not least, we will give you some inspiration for your next automatically applied promotion.
Table of contents:
- What is an automatic discount?
- When to choose automatic promotions over coupon discounts?
- Benefits of automatic discounts
- Potential downsides of auto-applied promotions
- Setting a goal for your campaign
- Which incentives to use?
- How much of a discount to offer?
- How to use targeting in automatic discounts?
- What limits to use in your marketing strategy?
- How to personalize your cart promotions?
- How to use promotion psychology to improve your strategy?
- Where to advertise your auto-applied promotions?
- How to design your messaging?
- How to design your website and mobile app UI to accommodate promotions?
- How to manage automatic discounts?
- How to measure ROI?
- How to optimize your strategy?
- Automatic discounts inspirations
What is an automatic discount?
Automatic discounts (also cart promotions and auto-applied promotions) are promotions (discounts & special offers) that are automatically applied to the customer’s order if it meets the conditions, without the need for any coupon codes. Cart promotions are often called automatic discounts or simply promotions.
When to choose automatic promotions over coupon discounts?
Generally, there are two types of promotions you can run, based on the way the promotion is applied to the order – coupon or automatic discounts. Automatic discounts are more commonly used for site-wide or publicly available promotions. Auto-applied discounts are easier for customers, as they do not need to find, remember and apply the coupon code. It can increase the promotion usage and reach.
On the other hand, automatic discounts are more difficult to track than coupons as there is no coupon (identifier) attached to the completed orders. Running publicly available promotions may also burn your budget, unless you target them at specific audiences, orders or products. We recommend cart promotions if you want to make your promotions easy to apply and increase their reach. We still recommend using various restrictions and narrow targeting for the best results.
Benefits of automatic discounts
Increase your revenue
Discounting can help you generate more revenue by bringing in more customers, boosting average basket value of the existing customers or increasing repeat purchases. For example, you can launch flash sales or other time-bound promotions to boost your revenue in the low season.
Sell out your stock
You can discount slow-moving items, old collections or products you want to discontinue. Some companies create an “outlet” for their older product versions that they sell cheaper.
For example, Bellroy has an “outlet” tab on their website where they offer older product designs cheaper.
Grow your customer base
Promotions are a great way to bring in new customers, especially if you are introducing a new product or opening your brand to a new audience. Automatic discounts require no effort to apply and can be a more effective strategy to get new customers to purchase from you than coupons.
For example, Rent The Runway runs a 20% discount for new customers for their first order.
Beat the competition
Running promotions can help you compete, even if you have to keep MRRPs (minimum recommended retail prices). You can keep your MRRPs and run occasional promotions to make your offers competitive, without risking legal issues or lower brand perception (as compared to simply lowering your prices).
Potential downsides of automatic discounts
Be careful with running promotions too often or offering excessive discounts. Offering publicly available discounts too often can lead to customers abusing your promotions and waiting until you launch a discount to make their usual purchases. It can also lead to more one-time buyers and less loyal clients overall. Offering high discount levels can damage your brand image. To avoid those risks, you should target promotions more narrowly, run public or site-wide promotions rarely and do not excessively discount, definitely not below your bottom line.
Automatic discounts are more difficult to track and protect from abuse than unique coupons (that are more difficult to hack and easier to track on 1:1 level).
Offering publicly available discounts instead of personalized coupons can be less effective as it does not make customers feel special. If you offer personalized coupons, customers feel that you appreciate them and give them something special. A 20% off site-wide promotion lacks personal touch.
Setting a goal for your automatic discounts
Every good campaign starts with defining the ultimate goal. Here is a list of marketing goals that can help you with planning your next auto-applied promotion:
New customer acquisition
You can offer an automatic discount to boost new customer acquisition. You can do it by, for example, targeting only new customers with the discount (only customers who have never purchased from you before can use the discount) or by launching the discount in a new location (only NY-based customers can use your discount).
Boosting sales in a low season or for specific product
Some products or services are seasonal or their sales drop slightly in specific seasons. You can discount those products specifically in that low season. If you experience low seasons on all of your products (for example, if you sell ice cream, your low season may be winter), you can also offer general promotion on all your inventory in that season. If you have slow-moving items, discontinued or close to expiry date products, you can discount these products to get rid of that stock faster.
Re-engaging inactive customers
You can activate your dormant customers by sending them a limited-time offer. This is a little bit more tricky with automatic promotions than with discount coupons as you will need to provide a link that would apply the promotion or run it only for logged-in customers to validate whether they qualify for that offer. On the other hand, automatic discounts are easier to use than coupons for customers so it may be worth the extra time spent on setting the promotion up.
For example, Hello Fresh runs a back-to-school promotion offering 6 free meals for resubscribing customers.
Increasing the basket value
You can motivate your customers to add more items to their basket to get the desired discount or free shipping. The best way to do it is to display how much is missing to a specific deal or all available promotions straight in their basket. If you auto-apply a promotion, do not forget to display it in the basket and at the checkout.
Selling more on special dates
Many companies offer public, site-wide discounts on national holidays when customers tend to shop more (like before Christmas, on Black Friday, Cyber Monday, Easter etc.). Automatic promotions are usually a preferred promotion type on such events as they are easier to use than coupons and can bring in more sales, especially from new customers.
Read our blog post on 8 ways to increase sales with seasonal promotions to find some inspirations.
For example, Snap Kitchen ran a Black Friday sale offering 25% off all products.
Decreasing the shopping cart abandonment
You can send emails, push notifications or other types of communication after the customer abandons their basket, offering a time-limited special offer if they complete their purchase within that time limit. Again, you will need to either request the customer to log into their account to use the offer or provide them with a link that applies the offer to their order automatically to ensure the promotion validity.
If the customer has not realized they were eligible for a promotion while shopping, they may realize it and have a nice surprise at the checkout, which in turn can help you decrease cart abandonment.
If you want more inspiration, you can find real-life examples of abandoned cart promotions in our blog post.
For example, Shinesty offers a $10 discount on the abandoned cart order.
Getting your customers to download your app
There are many benefits to your customers having your app on their phones. This will later help you notify your customers about deals in real-time, use geolocation for your offers, and keep your brand top of their minds. You can motivate customers to download your app by offering a discount gratifying the download or a permanent discount on all orders done via mobile app (for example, 1% off on all orders done via mobile app).
Which incentives to use for your automatic discounts?
There are various incentives you can offer to your customers in your auto-applied promotions. We recommend researching and testing which incentives perform best for specific customer segments and a specific campaign goal.
Free product or service
You can add a free product or service to the order automatically for qualifying customers. You can either require the customers to add it to their basket and then discount it or add a free item automatically to each order. For example, you could run a promotion in which every customer in July will get a summer tote bag free of charge if their order value is above $30. It will be automatically added to the order.
For example, Vanity Planet offers a free tote bag with all qualifying purchases during the Labor Day long weekend.
Free upgrade of a product or service
For example, a free upgrade of software or a better product version free of charge.
You can offer free shipping, for example, on all orders in a specific timeframe or on all orders above a certain value permanently, depending on your sales goal. You can also offer free shipping to the loyalty club members or VIP customers only to make them feel special. You can offer discounted shipping as well.
For example, Pomelo Fashion offers free shipping on all orders above $49.
Burger King offers delivery for $1 if the order is placed on the BK app or website, for orders above $5 value.
For example, a $10 discount on orders above $100.
For example, Postmates, a food delivery company, ran a promotion offering $7 off the whole order.
For example, a 10% discount on all orders.
Casper offers a discount on selected product categories, for example sheets.
You can offer a promotion with tiers based, for example, on the order value.
For example, Athletic Brewing Co offers a tiered percentage off promotion based on the total order value.
Fixed price promotion
You can offer a new, fixed price for a product or products from a certain category.
For example, Affliction Clothing has a sale every Thursday, offering a chosen T-shirt for a fixed price of $30.
BOGO (buy one get one) promotion
For example, buy a one-month gym pass and get another month of subscription for free. You can offer other multiple discounts, like buy 2 get 3 or buy 10 get 2 or buy 2 get 10% off each. This is a great promotion strategy to sell out your stock faster, get rid of slow-moving goods or simply increase the average order size.
Besides offering BOGO promotions, you can also offer other types of product bundles. You could offer complementary products sold together as a pack on a special price or products from the same product line sold as a bundle with a discount, as compared to their regular prices. Product bundles can take different forms and use percentage or amount discounts or a new, fixed price for the bundle. It all depends on your sales goals. If you want to learn more about product bundling, read our blog post.
For example, Chubbies Shorts offers a $10 off if you buy 2 pairs of lined sports shorts.
McDonalds runs a bundle promotion in the US, buy any Crispy Chicken sandwich and get free Medium Fries.
How much of a discount to offer in your automatic promotions?
Try to find the minimum discount level that will increase the purchase rates enough to meet your goals. We do not recommend going below your bottom line as selling below profits is damaging your brand image, revenue and, in some countries, is considered illegal.
How to use targeting in automatic discounts?
We recommend starting with collecting customer data and then creating customer segments. You can then target automatic disocunts at specific segments. You should find the factor that differentiates the customer preferences and shopping behaviours that can be easily identified in your CRM and segment the customers by these factors:
- Age-based segments.
- Family situation & marital status segments.
- Occupation-based segments – for example, employed, self-employed, on maternity leave, on unemployment, industry sector they are working in, position.
- Location-based segments – for example, based on a postal code, city, state or exact geolocation.
- Segments based on the revenue per customer – for example, revenue per month or year.
- Segments based on favorite categories – for example, all customers who have children will be offered a 10% off discount on child category items.
- Segments based on customer activity – for example, new customers, customers who have purchased from you at least 3 times last year, customers who have subscribed to your newsletter.
Other than targeting promotions at specific customer segments, you can also limit your promotions to specific orders, for example containing specific products, having a minimum order value etc.
For example, H&M offers a cart discount to their loyalty program members only.
Thredup runs a special auto-applied promotion only for the signed-in customers.
Which limits to use in your automatic discounts marketing strategy?
To protect your marketing budget and optimize your campaigns’ ROI, you should limit your promotions. You should keep in mind your target market and goal of the campaign to define which limits to use. Here are some ideas of the limitations you could implement in your automatic promotion campaigns:
Number of redemptions per customer
Define how many times a customer can use your promotion. Most often this is limited to once in a campaign or once per day per customer.
Total discount per customer
Define how big of a discount a customer can get in that promotional campaign, for example a maximum of $200 discount per person. You can also define a maximum order value that can be discounted, for example $1000 per person.
Time frame of the campaign
Define in which time frame the promotion should be valid. You can limit it to specific days, make it repetitive (imagine happy hours every Monday) or set it to be valid for a specific time after delivery (for example, 3 days for a birthday campaign of 20% off on a customer's birthday).
For example, Dunkin’ Donuts runs a promotion where they give a free donut with any drink ordered every Wednesday.
You should select the customers or customer segments eligible for the discount.
Discounted & excluded products
You can select which products and product categories should be discounted and which should be excluded from getting a discount.
For example, One Kings Lane runs a 20% off auto-applied promotion on selected product categories.
Order value & volume
You can define the minimum order volume and value that qualifies for the discount.
Where can the discount be used
You can define your automatic promotion validity, for example make it valid only in your online store or only on your mobile app. You can also define the location where the promotion can be used, for example only in the US.
Eligible payment methods
You can define whether all payment methods are accepted for getting this discount or only some payment methods are accepted. For example, you could exclude cash on delivery from the promotion.
Which discounts and offers can be combined? What is the discount hierarchy?
Campaign overall limits
You can limit the whole campaign budget for example by defining the maximum total discounted value.
How to personalize automatic discounts?
Promotion personalization revolves around four key areas:
- Customizing promotions based on audience and individual customers.
- Personalization driven by special occasions, festivals and holidays.
- Personalizing the incentive itself (material rewards in a loyalty program or a discount on customer's favourite products).
- Customizing the channel via which the incentive is delivered.
Personalization starts with collecting customer data and analysing it so we recommend getting a CDP or CRM in place and collecting the data first. Then, you can use that data to personalize your auto-applied promotions using your promotion management software.
How to use promotion psychology to design your promotional strategy?
Do not forget that automatic promotions play a lot with the customer psychology. We recommend familiarizing yourself with marketing psychology basics and using them to your advantage when designing your auto-applied promotions.
Where to advertise your automatic discounts?
There are many channels you can use to promote your auto-applied promotions. You should investigate where your customers spend the most time and then try those channels. Of course, the preferences will depend on the customer segment so you should use different channels for different customer segments.
Emails & newsletters
You can inform your customers about your promotions via email. This is a great communication tool for personalized promotions or targeted promotions that are not available to the general public. Instead of just sending emails to all customers you can also send the discount information exclusively to the newsletter subscribers to promote your newsletter subscriptions. Some companies inform newsletter subscribers about upcoming promotions before the information becomes publicly available.
Social media can be a great tool for promotion marketing. You can reach your current followers by posting organically on your feed or in your stories or use social media for acquisition campaigns and place the promotion information in paid ads. There are various social media channels you can use to advertise your automatic discounts.
If you have any business partners you could offer special discounts for their customers. They could then promote your offer on their websites, social media, and other organic channels. To verify the promotion validity, you could ask the customers to give you their unique identifier from the partner website or some other number that proves they are actually a client of your partner. This is what, for example, booking.com did with WizzAir, requesting the WizzAir customers to add their customer number to their booking to get the partner discount.
SMS & push notifications
Similarly to emails, SMS are a great way to inform chosen customers about a promotion they are eligible to receive, if the promotion is not publicly available. You can also use push notifications to inform users about existing or upcoming auto-applied promotions.
Sales-specific landing pages
You can create a landing page for all the promotions and sales you are publicly running at the moment. You can list there products that are eligible for that discount, if the discount is not available for all items, for example.
Website or mobile app banners
You can place your promotion ad on website banners, for example on the main page or a category page or even on the product page.
You should inform customers about the previous and current price to visualize the discount they are getting. This should be done across all pages, product page, category page, main page, basket and checkout page views as well, to make your customers aware of the discount they are getting. If your automatic promotion has a time limit, you can also add it next to the product price, to create a sense of urgency.
Website or mobile app top ribbon & footer
You can inform your customers on the automatic discount on the website top ribbon. It is a very visible place throughout the website, great for promoting publicly available promotions. You can place your auto-applied promotion information in the website footer. It is quite common for the newsletter subscription incentives. You can also add a link to the promotion terms and conditions there.
You can add available promotions to the basket view, this way you can encourage customers to increase their basket value or add specific products to their basket to qualify for these promotions last minute.
Customer cockpits (digital wallets)
You can offer customer cockpits for logged in customers that display all their rewards and incentives, for example cart promotions, loyalty points, gift card balance, offers, discount vouchers, together with their conditions and validity dates. This will increase the use of your promotions and make it easier for your customers to navigate them.
You can promote your automatic promotion using paid ads, for example leading to your homepage and in the description marking the promotion and its timeline. You can use Google Ads, social media ads, retargeting or any paid ads you would like.
Website and mobile pop-ups are a very visible placement to use for your discount promotion. They may be considered intrusive but they are an effective way of communicating the promotion.
Physical banners & leaflets
If you want to gain some offline visibility, there are plenty of options. From billboards, road-side banners, banners on airports, prints on tramways or buses to posters hanging in venues, there is a lot to choose from. You can include the information about your automatic promotions in your leaflets or newspapers, if you issue any. For example, if you send a monthly newspaper or a magazine, you can include the promotion conditions there.
Television, radio, cinema and Netflix, HBO, Hulu etc. There are plenty of ways to advertise your automatic promotion in mass media. You can include your automatic promotions in newspapers. This is a common practice especially around special sales days like Black Friday or Cyber Monday when multiple companies add the information about the promotions they are planning to run on that day(s).
You can place information about your automatic discounts in your physical stores, on any POS materials (banners, leaflets etc.). You can add the information about the promotion (crossed out old price, new price or the discount amount in $ or %) to the labels or price tags, either in-store or online. Make sure the promotion conditions are visible, too.
For example Pomelo Fashion displays the old price crossed out next to the new price and shows the amount of savings in %.
Whatever channels you decide to use, keep in mind that people strive for genuinely omnichannel experience these days. It means they want a seamless journey when changing from online to offline mode. You should ensure the same promotion is valid across all channels and that the visuals and the validation of the promotion experience are the same.
How to design your promotion messaging?
You should ensure that the automatic promotion conditions are easy to understand and simple. They should be either contained in your promotion messages or in terms and conditions (that should be clearly linked to in the promotion messages). The promotion slogans should be catchy and clearly stating the amount of savings or the incentives offered. You should not overload your website or mobile app with promotional banners, otherwise your customers may be overwhelmed. Make sure the most important promotion is more visible than other deals.
How to design your website and mobile app UI to accommodate automatic discounts?
We have collected promotions UI best practices together with examples from top brands in a separate blog post. It is a long read but if you need to design your website and mobile app to accommodate cart-level promotions, we highly recommend it. It contains a set of best practices that you can also pass to your UX/UI designers as a requirement.
How to measure your auto-applied promotion ROI?
There are a couple of measurements you should implement to measure the success of your promotions.
Redemption is, in other words, an application of your promotion to a specific order. Each redemption should be tracked and include the following details:
- Whether it was successful or failed.
- Customer who redeemed the promotion.
- Date and time.
- Promotion campaign, and redemption channel.
- Order details (cart contents, delivery method etc.).
Customer detailed view
It is very insightful to have a 360-degree customer overview. You should be able to see all purchase history, redeemed promotions and valid promotions per customer.
To see how your channels are performing, you should be able to access distribution reports with open rates (OR) and click-through rates (CTR).
You should be able to see the campaign details at a glance, including the number of redemptions and the timeframe of the campaign. It would be also helpful to see the average basket value and volume from all purchases in this campaign. You should also be able to track changes made to the campaigns (especially important if multiple people can access the promotion management software).
How to optimize your strategy?
There are a couple of ways to optimize your promotion strategy. Most of them are based on trial and error and require you to measure the results, so implementing tracking is the base for it. There are two main approaches to optimizing promotion campaigns:
Launching smaller campaign experiments
Doing a test run with smaller segments can help you determine which strategies are the most effective. This can also help to keep you from offering a discount that is too big and cuts into your profits. In the beginning, you could run small campaigns with diversified parameters, such as discount value and type, and duration. You must be patient and aware that it will take some time and numerous experiments to figure out what works best for your business.
This one is more complicated as it requires a dedicated software that would show different campaigns to different people in a randomized manner. On the other hand, the results are more straightforward and obtained in a more reliable way than if you were just launching small experiments. If you have or can pay for a software that allows you to A/B test your campaigns, we believe this is the best way to optimize your campaigns.
You can find more inspirations for automatic discounts, together with best practices and tips in our Inspirations Library.
A great promotional strategy requires a comprehensive promotion management system that can be connected with various data sources and distribution channels. It should also enable launching personalized and easily manageable promotions at scale.
The promotion management software is the base for launching effective promotion campaigns. You should start with planning your requirements, finding the right software and then launching and optimizing your campaigns. We hope this guide helps you go through all the phases from planning to implementation of your next successful automatic promotion.
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