What are Promotional Codes and How Do They Work

What are Promotional Codes and How Do They Work

Promotional codes or promo codes are popular online sales promotion tools, often part of an overall marketing plan. They consist of alphabets, numbers, or both and enable discounts in online sales.

A promo code is usually related to a particular product. However, it may also apply to the full order value.

How Do They Work

It is a kind of incentive for potential buyers to shop targeted products or services. It may work as a %-age or a fixed value or even for free delivery or packing.

Sometimes promo codes may be a part of some campaign to increase sales during holidays or festivals. These codes are also popularly called discounts or coupon codes.

Why Do They Work

Now we know – what are promotional codes? How do they work? Etc. But I am keen to understand why do they work at all. Well, it is a win-win situation. Both parties get to benefit from this tool.

A customer gets a discounted price, and the e-commerce store gets more sales and income. It has an equal impact on first-timers and old buyers.

These discounts directly affect customers’ buying behavior. Physically winning a promo code is more pleasant than even receiving a gift. Promo codes increase the level of a mood hormone called Oxytocin, indicating a better sense of happiness.

Hence, it is best to introduce a promo code strategy to promote business online. You can target potential customers’ minds with this simple tool irrespective of how you monetize your blog.

Monitor the Effectiveness of Sales Promotion

You can easily track the effectiveness of marketing efforts. e.g., you can find out which area is increasing the footfalls or converting the maximum number of consumers. E-Commerce stores usually associate promo codes to their ads to track and measure the effort.

Always create unique promo codes representing respective social media platforms, e.g., FreeFB2020, FreeTW2020, etc. As different codes may give the same rebate, you don’t need to create various discounts for each ad campaign.

You can quickly quantify the effectiveness of your advertising. A code linked to an advertisement becomes a tracking variable. Let’s say a potential customer clicked your ad but did not add the product to the shopping cart or reach the check out page.

You can still capture such customers’ details to calculate return on investment in that specific platform or ad. The customer always leaves a trail by clicking the promo code ad for you to check anytime.

How to Use Promo Codes

Link these codes to the minimum order value. The code works only on crossing that threshold limit. e.g., the promo code gives 20% off on a minimum amount of $100.

The customer gets the discount only on reaching that amount. If the criteria fail, the code does not work. I hope you understood what promotional codes are and how to use them.

They allow you to customize the required conditions. For instance, to exclude a brand or a category of product.

Can We Use Multiple Promo Codes

It depends upon your strategy and website interface. The basic idea is to make profits, whatever the combination is.

Multiple codes may indirectly encourage the buyer to increase the cart value.

Types of Promo Codes

1) Open

These codes are vital to attract potential buyers and to entice old buyers to become repeat buyers. They are available to the public at large, and anyone can use it.

2) Private

These codes work only for a particular set of buyers, e.g., loyal buyers, first-timers. These codes are handy for attracting new buyers to your business.

3) Restricted

These are one-time codes meant for an individual buyer. You can apply them for complaint settlements or link them with a buyer’s life event or purchase habits.

Do not restrict yourself to only one of these types. It is better to use a combination. You can attract customers from diverse backgrounds.


What are promotional codes and how do they work? It all depends on how you plan your marketing activities and what you want to achieve from your promotional campaigns.

A well-thought-out campaign must include promotional codes to attract new buyers and attract old customers simultaneously. Read our extensive guide on the 63 coupon statistics you need to know.