Discount management: The types and what to automate

In the late 1880s, Asa Candler, the businessman who grew Coca-Cola into a company, was handing out thousands of coupons for a free glass of the drink, long before anyone called it an acquisition campaign. By the Great Depression, coupons were taking off in households that counted every cent. Today, the habit is anything but fading; a SimplyCodes survey found that 54% of US online shoppers had increased their use of coupon codes over the past year, with 74% of them pointing to inflation and the cost of living. If that is the reason behind coupon usage, then they are almost never disappearing owing to the nature of the economy.

This is a long perennial run for one pricing tactic, and it suggests discount and coupon management deserves to be treated as a discipline of its own rather than a button someone presses at the end of a quarter. Here, we look at why discounts survive market changes, where they pay off, and how to automate and choose software for them.

How discounts survived every market change

Many tactics disappeared with time as the medium of sale changed. But price is the one lever a customer understands in a few seconds, which is probably why discounts outlasted newspaper inserts and the move to digital "everything." In a tight market, buyers hunt for savings, and in a strong one businesses want to grow faster, so a well-framed offer balances the need on both sides.

It is a double-edged sword, though. In a CouponFollow survey, 44% of consumers said they had stopped buying from a favorite brand once the discounts disappeared, and 80% admitted to delaying purchases while waiting for a sale. Both come from coupon platforms, so one can read them with a pinch of salt, but the pattern will sound familiar to anyone who has watched sign-ups dry up the day a promotion ended.

So the useful questions are, which discount to offer and to whom, since "whether discounts work" was settled way back in the timeline.

What types of discounts and coupons can you offer?

Percentage or flat amount

Percentage discounts catch the eye and scale with the price, which suits promotions, while flat amounts keep the margin math clear and work well for goodwill credits. Operationally, they should be easy to implement, as well — any billing system today is built to handle these.

One time, limited cycles, or forever 

When it comes to subscriptions, the engagement is longer and repeated. Thus, you need to figure out a lot more before slapping any discount on the price. One example is having to decide how many cycles a discount lasts. Twenty percent off the first invoice and twenty percent off for the first year can serve you very differently.

Open codes or customer-specific deals 

A public code anyone can enter at checkout suits campaigns, while a negotiated discount for a high-value account belongs with the salesperson and stays on that one subscription. This is where the operations to implement these coupons spike. You decide eligibility rules, approval flows, and expiration dates, so the offer reaches the exact audience you had in mind.

Where can discounts and coupons help?

Collections 

Discounts are not the first thing people associate with collections, yet an early-payment term, such as 2% off when the invoice is settled within 10 days, has long been a way of pulling cash forward. If you plan to implement such a discount scheme, run the math against what an extra month of waiting costs you. It's a bit complex to arrive at, but would be worth the effort.

Brand familiarity 

Candler's free glass worked because it put the product right into someone's hand. B2B audiences are no different. A first-cycle discount does the same for software, letting people get comfortable before the full price arrives, and referral codes add a bonus, since each one tells you where the familiarity came from.

Preventing revenue erosion caused by discounts with automation

A code with no expiration date has a way of outliving the campaign and, occasionally, the product it was meant for. It causes damage, because customers keep trying old codes and someone will eventually honor one. And there are multiple potential slip ups that could end up eating into your revenue numbers.

That's why you have to automate almost everything that follows your decision to give a discount. Once the rules are set, there is little reason for anyone to apply or retire a discount by hand, as the manual steps only become a gateway to revenue leakage. The following list notes the conditions that a business usually think through, which also doubles up as your software feature checklist.

• Applying the right amount, including in the customer's billing currency

• Enforcing redemption limits, eligibility, and expiration dates

• Carrying the discount through renewals for the cycles you chose

• Generating many unique codes against one rule

• Setting up guardrails for sanctioning certain discounts

• Recording each redemption against its invoice, so reports reflect discounted revenue

How does Zoho Billing handle discounts and coupons? 

If invoices and subscriptions are processed in one place, it is better to have the discount logic in the same place too. Zoho Billing lets you offer flat or percentage coupons, cap redemptions, and tie each coupon to only the relevant plans and add-ons, with redemption types for the first invoice, a limited number of cycles, or for the whole lifecycle of the subscription.

Negotiated deals take a separate route: A salesperson applies a discount directly on one subscription with no code involved, and since coupons and discounts cannot be combined on a subscription, the stacking gap closes itself. For rule-based control, such as customer eligibility and redemption limits, advanced coupons are available on select plans.

To talk through your own offers, you can book a conversation with our experts and bring your most complex promotion along to see how Zoho Billing handles it.