Chances are you’ve heard the phrase “promo code” before, especially if you’re in the world of online marketing (or even online buying). But, when it comes down to actually defining what a promo code is and how it works, fewer of us are able to come up with more than just a few vague words.

Technically, promo, or promotional or coupon, codes are “alphanumeric strings” (or, in other words, a combination of numbers and letters) that are provided by online retailers to their customers in order to boost sales. The use of a promo code is often tied into a broader, more complex marketing strategy, one that relies on promotions in order to gain more traction and get more eyes on a particular page.

Depending on how a promo code is set up, it can be used to discount an entire order (without limit in a shopping cart) or they can be confined to just one product. Setting up a promo code also requires that you select between a percentage discount and a dollar discount. And, depending on your marketing strategy, some promo codes also come with another unique offer, such as free shipping. By setting the requirements for your promo code, you ensure that you’re offering the discount you want. For example, if you set the code so that only purchases over $100 receive the 20% off discount you promised, you can be confident that the offer won’t be given until the shopping cart reaches that $100 mark. Over the years, promo codes have become fairly advanced, allowing you to set unique and custom requirements (excluding particular brands and products from being counted in total shopping cart amounts, etc.) and making them even more useful when they come to marketing purposes.

Promotional codes prove to be effective time and time again because they give potential customers a reason why when it comes to making a purchase. And, when the code carries a time limit before it expires, the reason why only becomes more urgent and more compelling.

In order to make the most out of using promotional or coupon codes, it’s important that you have a way to track their effectiveness. If you don’t know how a certain promotion is performing, then you have no way of knowing if and when it should be replicated. And, if you’re paying money for your promo code to be seen (like in the form of paid ads), then it’s even more important that you’re tracking your code’s performance. One of the best way to track your codes is by slightly changing them from platform to platform. While the discount will be the same, you’ll be able to tell which of your purchases are coming from which ad set. And, if the purchase is made after an ad was seen, you’ll still be able to track your ROI.

Once you get started with promo codes, you’ll see just how simple they are to set up and customize. And, if you’ve done your homework, you’ll be impressed with just how effective they can be at boosting your online store’s revenue.