Do First-Order Discounts Hurt Repeat Purchases?
A first-order discount code doesn't make a customer less likely to buy again. We tracked 187,156 first-time customers across 13 DTC brands. At 10 of the 13, customers whose first order used a code came back at the same rate as full-price customers (within 5%) or higher. At the median brand, they were 13% more likely to place a second order within 180 days.
The belief that discount buyers are disloyal mostly comes from a bad comparison. At consumable brands, the full-price group includes subscribers whose reorders happen automatically. At the three consumable brands where we could identify subscribers, taking them out closed the gap.
There is a real cost, though, and it shows up on the second order. Discount-first customers who came back used a code again 42% of the time at the median brand, compared with 17% for customers who paid full price the first time. That held at all 13 brands.
This builds on our repeat purchase rate benchmarks, which found that 18.8% of DTC customers buy a second time. Here we split that question by how the first order was paid for.
Do First-Order Discounts Hurt Repeat Purchases?
No. Here's the summary, with subscription customers removed so auto-renewals don't count as repeat purchases:
| Measure | 180 days | 365 days |
|---|---|---|
| Brands measured | 13 | 12 |
| Discount-first customers repeat more | 7 brands | 7 brands |
| About the same (within 5%) | 3 brands | 2 brands |
| Discount-first customers repeat less | 3 brands | 3 brands |
| Median ratio (code ÷ full price) | 1.13 | 1.13 |
| Second order used a code (median brand) | 42% vs 17% | 39% vs 18% |
A ratio of 1.13 means that if 10% of full-price customers came back, 11.3% of discount-first customers did. One brand had too few discount-first customers to measure at 365 days, so that column covers 12.
Why Discount Buyers Look Worse Than They Are: Subscriptions
When we first ran the numbers with every customer included, discount-first customers looked clearly worse at the consumable brands. One CPG brand showed 26.4% of discount-first customers coming back within 180 days, against 40.6% of full-price customers. That's a ratio of 0.65, and it's the kind of number that gets a welcome offer killed.
Then we looked at who the full-price customers were. Many had started a subscription, and their second order was a scheduled renewal, not a decision to come back. At that brand, 68% of the subscribers had paid full price on their first order, so they piled into the full-price group and pushed its repeat rate up.
We removed every customer who had a subscription order in the window, on either side, and reran it:
| Brand | All customers | Subscribers removed |
|---|---|---|
| CPG B | 26.4% vs 40.6% (0.65) | 19.7% vs 20.4% (0.97) |
| CPG A | 24.7% vs 29.0% (0.85) | 23.0% vs 23.0% (1.00) |
| Skincare | 24.1% vs 29.0% (0.83) | 23.0% vs 23.5% (0.98) |
180-day repeat rate, discount-first vs full-price first order. Ratio in parentheses.
The discount-first numbers move a little. The full-price numbers drop by half at CPG B, because that's where the subscribers were. Once you compare one-time buyers with one-time buyers, the gap is gone at all three brands.
If you sell consumables and your dashboard says discount buyers retain worse, check this before you change your offer. Compare non-subscribers with non-subscribers.
Discount-First Repeat Rate by Brand
Here's every brand, 180 days after the first order, subscribers removed. The ratio is the discount-first repeat rate divided by the full-price repeat rate. Above 1.0 means discount-first customers came back more.
Discount-First vs Full-Price Repeat Rate, 180 Days · 13 Brands · 187,156 First-Time Customers
| Brand | Code first: customers | Code first: repeat | Full price: customers | Full price: repeat | Ratio |
|---|---|---|---|---|---|
| Health & wellness | 5,046 | 9.8% | 21,171 | 4.7% | 2.09 |
| Jewelry | 153 | 10.5% | 119 | 5.9% | 1.78 |
| Home & gifts | 883 | 10.8% | 9,046 | 6.4% | 1.69 |
| Outdoor goods | 10,648 | 21.1% | 43,570 | 13.4% | 1.58 |
| Apparel B | 111 | 18.0% | 2,175 | 11.6% | 1.56 |
| Fashion | 9,308 | 13.9% | 15,516 | 11.6% | 1.20 |
| Apparel A | 10,728 | 15.0% | 26,078 | 13.2% | 1.13 |
| CPG A | 522 | 23.0% | 1,069 | 23.0% | 1.00 |
| Skincare | 287 | 23.0% | 378 | 23.5% | 0.98 |
| CPG B | 3,523 | 19.7% | 1,949 | 20.4% | 0.97 |
| Home decor | 369 | 9.5% | 1,715 | 11.1% | 0.86 |
| Personal care* | 10,190 | 36.4% | 11,635 | 46.8% | 0.78 |
| Consumables | 183 | 17.5% | 784 | 27.6% | 0.63 |
*We couldn't identify this brand's subscription orders in the data, so its subscribers weren't removed. Its full-price group still includes them, which is the same effect that made the CPG and skincare brands look worse before we removed subscribers.
Two patterns stand out.
Products people browse: discount-first customers come back more
At 7 of the 8 brands selling apparel, jewelry, gear and home goods, discount-first customers repeated more, by 13% to 109%. Home decor was the exception. Two of the seven (jewelry and Apparel B) had fewer than 160 discount-first customers, so the pattern rests mainly on the other five. In these categories the second purchase is mostly a new decision, not a refill. One read: a customer who responded to an offer once is the kind of customer who responds to the next one.
There's a likely second factor we didn't isolate. A first-order code usually comes from a sign-up form, so the customer is on your email list before they buy. A full-price buyer often never subscribed. Part of this gap is probably email doing its job, which is a better argument for a good welcome flow than for any particular discount size.
Products people restock: about the same
At the three consumable brands where we could remove subscribers, the ratio landed between 0.97 and 1.00. When the product runs out, people come back for the product. How they paid the first time doesn't change much.
The three brands below 1.0
The personal care brand is the subscription problem again, with subscribers we couldn't remove. The home decor and consumables brands had 369 and 183 discount-first customers. At the consumables brand the gap is real: 32 discount-first customers came back where the full-price rate would predict about 50. Neither fits the patterns above and we're not going to explain them away. Treat them as the honest exceptions.
At 365 days the picture holds. Discount-first customers repeated as much or more at 9 of 12 brands, and the median ratio stayed at 1.13. The same three brands sit below 0.95.
The Real Cost of a First-Order Discount: Code Reuse
Discount-first customers come back. They just expect a code when they do.
Among customers who placed a second order within 180 days, discount-first customers used a code on that second order 42% of the time at the median brand. Full-price customers who came back used one 17% of the time. Discount-first customers reused codes more at all 13 brands, with no exceptions.
| Brand | Code on 2nd order: code first | Code on 2nd order: full price |
|---|---|---|
| Personal care | 8.9% | 4.4% |
| Outdoor goods | 35.1% | 12.5% |
| Apparel A | 44.0% | 18.1% |
| Fashion | 61.9% | 31.6% |
| Health & wellness | 22.2% | 7.8% |
| CPG B | 59.1% | 41.1% |
| Home & gifts | 27.4% | 15.6% |
| CPG A | 42.5% | 25.2% |
| Apparel B | 75.0% | 16.7% |
| Consumables | 25.0% | 3.2% |
| Home decor | 17.1% | 12.6% |
| Skincare | 66.7% | 25.8% |
| Jewelry | 50.0% | 28.6% |
Sorted by number of repeat customers, largest first. The Apparel B and jewelry rows rest on 20 and 16 discount-first repeat customers, and the jewelry row on only 7 full-price repeat customers, so read them as direction only.
The level varies a lot by brand, because some brands run promotions far more often than others. The direction doesn't vary at all. At the median brand, discount-first customers were about twice as likely to use a code on order two.
So the question isn't whether to offer a first-order discount. It's how much margin you give up on the second order, and whether you're handing out codes that customer would have bought without. Our discount margin calculator shows how much extra volume a given discount needs to break even.
Want to know whether your discount-first customers come back, and whether subscriptions are skewing the comparison? We run this split on your store's orders.
What to Do With This
1. Keep the first-order offer.
The data gives no reason to cut it for fear of attracting one-time bargain hunters. At most brands, discount-first customers came back at the same rate or better.
2. Judge it against the right comparison group.
If you have subscriptions, take subscribers out before comparing discount and full-price customers. Otherwise you're comparing people who chose to come back with people whose renewal came back for them.
3. Make order two pay full price where you can.
This is where the money is. Build a segment of customers whose first order used a code and look at what your post-purchase flow sends them. If every reminder carries another code, you're training the 42%. Try leading with the product they bought, a free shipping threshold, or a gift with purchase, and save the percentage-off code for customers who haven't come back by the point they usually would.
4. Get discount-first customers onto your list and keep them there.
A large part of why discount-first customers come back is likely that they signed up to get the code. Make sure the people who buy at full price get asked too. A pop-up that asks a question is one way to get the sign-up without leading with a discount. Our popup conversion rate data shows what sign-up forms convert at depending on who sees them.
If you run a first-order discount, the number to track is the repeat rate of non-subscribers, split by how the first order was paid for. You can check your own with the repeat purchase rate calculator.
First-Order Discount FAQ
Do first-order discounts hurt customer loyalty?
Not in our data. Across 13 DTC brands and 187,156 first-time customers, discount-first customers repeated at the same rate (within 5%) or higher at 10 brands within 180 days. The median brand saw them repeat 13% more often than full-price customers.
Why do discount customers seem to have a lower repeat purchase rate?
Usually because the full-price group includes subscribers. Most subscribers pay full price on their first order, and their renewals count as repeat purchases. At one CPG brand, removing subscribers moved the ratio from 0.65 to 0.97.
Do customers who use a discount code keep using codes?
Yes. At the median brand, 42% of discount-first customers who placed a second order used a code again, compared with 17% of full-price customers. That was true at all 13 brands we measured.
Is a first-order discount worth it?
For repeat purchases, yes: it doesn't make customers less likely to come back. The cost to watch is margin on the second order, since discount-first customers are about twice as likely to use a code again.
Want this run on your own customers?
Free 30-min audit. We'll split your repeat rate by first-order discount, check whether subscriptions are skewing it, and show where codes are costing you margin on the second order.
Methodology
- Data: Shopify orders from 13 DTC brands we manage, pulled from Klaviyo order events since January 2023. Brands are identified by vertical only.
- First order: a customer's earliest order on any platform the brand has used, so customers from an older store aren't counted as new. Only first orders placed on Shopify are included, since that's where the discount code field is reliable.
- History: a first order only counts if the brand has at least a year of order history before it.
- Discount-first: the first order carried at least one discount code. Automatic discounts with no code count as full price.
- Repeat: another order more than 24 hours after the first, within 180 or 365 days. Orders placed minutes apart (split orders and upsells) don't count.
- Excluded: $0 orders, orders later refunded or cancelled, Amazon orders synced into Shopify, and any customer with a subscription order in the window.
- Sample: 187,156 first-time customers at 180 days and about 131,000 at 365 days. A brand is reported only if it had at least 100 customers in each group.
- Reporting: per-brand results and medians. We don't lead with a pooled average, because two large brands would dominate it.
- Not controlled for: email list membership, discount size, or acquisition channel. Discount-first customers may differ in those ways too.
