Blanket discounts are the fastest way to buy revenue and the fastest way to destroy profit. They train customers to wait, they compress your margin, and they make your best customers feel like suckers for paying full price yesterday.

The smarter play is dynamic incentives: different value, for different customers, at different moments. Not “20% off for everyone.” More like “free shipping for high-intent browsers,” “bundle savings for repeat buyers,” and “a targeted code only for customers who actually need a nudge.”

Shopify has gotten better at supporting customer targeting for discounts, and Shopify Functions lets brands build custom discount logic when native settings are not enough. Shopify Changelog+3Shopify Help Center+3Shopify+3

Below is the Convert Via approach to segmented offers that protect margin while still converting.

1) The core truth: not every customer deserves the same discount

Most ecommerce stores are discounting like it’s 2018. One promo, sitewide, blast it everywhere. That is how you end up with:

• Returning customers who only buy on promo

• Margin compression you never recover

• “Promo addicted” cohorts that are expensive to retain

• AOV that looks good but contribution margin that looks tragic

Dynamic incentives work because they match the offer to the customer’s value and intent.

Convert Via POV: The goal is not to discount less. The goal is to discount smarter.

2) Start with an offer ladder (so you are not improvising under pressure)

Your offer ladder is the ordered set of “value levers” you’re willing to pull, from least expensive to most expensive.

A simple, margin-safe offer ladder

Tier 1: $0 margin cost

• Early access

• VIP-only products or colorways

• Points multipliers (loyalty)

• Content-based value (guides, routines, gift finder, styling)

Tier 2: Low margin cost

• Free shipping threshold

• Gift with purchase (GWP) with a controlled COGS item

• Bundle pricing (discount is spread across multiple items)

• Store credit bonus (especially for exchanges)

Tier 3: Controlled discounting

• 5% to 10% for high-intent, price-sensitive shoppers

• Dynamic coupon blocks in email based on segment

• Cart-level discount caps

Tier 4: Last resort

• Higher % off only for true “about to churn” customers

• Time-boxed, tightly segmented, with suppression rules

Convert Via POV: If your first move is “20% off,” you have no room left to negotiate with reality.

3) Define your customer value tiers (this is where the magic stops being vibes)

You cannot do dynamic incentives without a clear definition of “customer value.” These are the tiers we typically build:

Core value tiers we use

• VIP / high LTV: frequent purchasers, high AOV, high predicted lifetime value

• Repeat buyers: 2+ purchases, good AOV, likely to buy again with the right next-step offer

• New customers: first purchase, unknown discount sensitivity, high learning value

• Deal-driven: only buys on promo, high discount usage, lower margin tolerance

• At-risk / win-back: long time since last purchase, declining engagement, higher churn likelihood

• High-intent non-buyer: strong browse or cart behavior, no purchase yet

Klaviyo’s predictive analytics can help classify customers using signals like predicted next order and churn risk. Klaviyo Help Center+1

Convert Via POV: Your best customers should not be bribed. They should be rewarded in ways that protect margin.

4) Match incentives to tiers (segmented offers that actually work)

Here’s a clean mapping that brands can implement fast:

VIP / high LTV

Goal: protect margin, increase frequency, make them feel like insiders
Best incentives:

• early access

• exclusive bundles

• points multipliers

• free shipping always (or lower threshold)

• GWP with controlled COGS

Avoid: large % discounts. You are paying people who would have bought anyway.

Repeat buyers

Goal: push purchase #3 and #4 with relevance
Best incentives:

• “complete the set” bundles

• category-specific perks (free shipping on X category)

• small discount only when basket is below target AOV
  
  

New customers

Goal: reduce first-purchase friction without setting a promo expectation
Best incentives:

• free shipping threshold

• small welcome offer (or gift)

• value framing and education content

Deal-driven

Goal: keep them profitable or stop chasing them
Best incentives:

• bundles with controlled discounts

• store credit instead of % off

• suppression if they only respond to steep promos

At-risk / win-back

Goal: bring them back, but do it surgically
Best incentives:

• personalized product recommendations

• escalating ladder: value first, incentive later

• dynamic code only if needed

High-intent non-buyer

Goal: convert without nuking margin
Best incentives:

• free shipping

• cart bundle offer

• limited-time small code if cart abandon repeats

Convert Via POV: Most brands over-discount high intent traffic. High intent often needs clarity, not a bigger coupon.

5) How to implement dynamic incentives in Shopify (without a Frankenstein checkout)

Option A: Use Shopify’s native discount targeting

Shopify allows you to set discount eligibility for “specific customer segments” and “specific customers,” and it documents segment limits for automatic discounts vs discount codes. Shopify Help Center

Practical notes:

• Automatic discounts can be targeted, but have tighter segment limits

• Discount codes can be targeted to more segments, but require code entry unless you auto-apply via UX patterns

Option B: Use Shopify Functions for advanced logic (the real power move)

If you need logic like “cap the discount at $X,” “only discount specific line items,” or “apply based on order metafields,” Shopify Functions is the path. Shopify’s tutorial for building a Discounts Allocator Function shows how custom allocation logic can be built and capped via metafields. Shopify

Also, Shopify Scripts are on a deprecation path and Shopify is pushing merchants toward Functions for discounts, shipping, and payments. Shopify Changelog+1

Convert Via POV: Native discounts get you 60% of the way. Functions get you the last 40% where margin protection lives.

6) How to execute in Klaviyo: dynamic blocks, unique coupons, and tiered logic

Klaviyo supports static and unique coupon codes, including generating unique codes for certain ecommerce platforms and inserting them into email or SMS. Klaviyo Help Center+1

How we set this up in practice

• Create segments for value tiers (VIP, repeat, at-risk, deal-driven)

• Build one campaign template with dynamic blocks:

  • VIP sees early access and bundles

  • Repeat sees “complete the set” and shipping threshold

  • At-risk sees personalized recs, then a code only if needed

• Use unique coupons for higher-risk segments (prevents code sharing)

• Add suppression rules so discount-heavy cohorts do not get every promo
  
  
  

Convert Via POV: Klaviyo should not be a megaphone. It should be a decision engine.

7) On-site offer delivery: where tools can help without turning into app soup

The on-site layer is where you convert “interest” into “basket math.”

Examples of tools that support controlled value delivery

• Rebuy can power personalized bundles and post-purchase offers, including dynamic discount controls in post-purchase experiences. Rebuy Engine+1

• Nosto supports personalization capabilities and offers dynamic bundle discount functionality for Shopify (documentation notes this may require Shopify Plus for certain features). Nosto+1

Convert Via POV: The point is not more tools. The point is consistent logic across email, ads, and onsite.

8) Guardrails that prevent “dynamic discounting” from becoming chaos

Dynamic incentives can still ruin you if you do not set rules.

Non-negotiable guardrails

• Discount caps by order value or margin

• Minimum AOV thresholds for any % off

• Frequency caps (no one should get a code every week)

• Suppression rules for chronic coupon users

• Clear attribution rules (so you know what actually drove the sale)

Shopify’s dynamic pricing overview is a good reminder that “pricing flexibility” can be powerful, but it has to be controlled, not random. Shopify

Convert Via POV: Incentives should be earned, not sprayed.

9) What we measure to prove it worked (and protect profit)

Revenue will go up when you discount. That is not proof of strategy. This is what matters:

KPIs we track

• Contribution margin by segment

• Discount rate by segment (who is getting what)

• AOV and units per transaction by tier

• Conversion rate lift on high-intent non-buyers (with minimal discounting)

• Repeat purchase rate and time to second order

• Offer leakage (codes used outside intended segments)

Convert Via POV: The win is not “more orders.” The win is “more profit per customer.”

How Convert Via helps

This is exactly the kind of work where strategy and implementation have to hold hands.

• Offer ladder and promo architecture (what you will offer, to who, and when)

• Segmentation strategy in Klaviyo (value tiers and discount sensitivity)

• Klaviyo dynamic content and coupon systems (unique code governance)

• Shopify discount targeting setup and checkout logic

• Shopify Functions roadmap for advanced discount rules Shopify+1

• On-site personalization and bundling integration (Rebuy, Nosto)

• Reporting that ties incentives to margin and LTV

If you want dynamic incentives without margin suicide, you need one source of truth for offer logic, not five different teams improvising promos.

Blog tags:

• Dynamic Discounting

• Margin Protection

• Segmented Offers

• Offer Strategy

• Ecommerce Promotions

• Shopify Discounts

• Shopify Functions

• Klaviyo

• Email Personalization

• Customer Segmentation

• Retention Marketing

• Conversion Rate Optimization (CRO)

• Customer Lifetime Value (LTV)

• Offer Strategies