Shopify Store Credit: The Psychology Behind Why It Works Better Than Discount Codes

As a Shopify merchant, you've probably offered discount codes to customers. But have you considered Shopify store credit instead? The psychology behind store credit reveals why it's often more effective at driving repeat purchases and building customer loyalty.

Shopify Store Credit Feels Like Real Money

When customers receive Shopify store credit, they perceive it differently than a discount code. Store credit has a tangible, monetary value that feels like "found money" in their account. This triggers what behavioral economists call the endowment effect—people value things more highly once they own them.

A $50 Shopify store credit feels like $50 in their pocket, while a 20% off code feels abstract and conditional. Customers are more likely to remember and use store credit because it has a specific dollar amount attached to it. For Shopify stores, this means higher conversion rates and better customer retention.

The Sunk Cost Fallacy Works in Your Favor

Once customers have store credit in their account, they feel compelled to use it. This is related to the sunk cost fallacy—people don't want to "waste" money they already have. A discount code can be forgotten or ignored, but store credit sits in their account as a reminder of value they haven't yet claimed.

This psychological pressure increases the likelihood that customers will return to your store to spend their credit, often spending more than the credit amount to maximize their purchase.

Higher Redemption Rates

Studies show that store credit has significantly higher redemption rates than discount codes. While discount codes might see 10–20% redemption rates, store credit typically sees 60–80% redemption. That's a massive difference, and it comes down to how customers interact with each option.

Think about it from a customer's perspective. When you send them a discount code, it's just text in an email. They might save it, but they might also forget about it entirely. Store credit, on the other hand, sits right there in their account balance. Every time they log in, they see it. It's a constant reminder that they have money waiting to be spent.

Here's why store credit performs so much better:

• Perceived value: Store credit feels more valuable
• Account integration: It's stored in their account, not a code to remember
• Urgency: Customers don't want to "lose" money they already have
• Flexibility: Store credit can be used on anything, not just specific items

The flexibility aspect is particularly powerful. With a discount code, customers might wait for the perfect item to go on sale. But with store credit, they can use it whenever they find something they like—no restrictions, no expiration anxiety (if you set reasonable terms).

Building Long-Term Customer Relationships

Store credit creates a psychological connection between the customer and your brand that goes beyond a simple transaction. They have a balance in their account, which means they have a reason to return. This ongoing relationship is more valuable than a one-time discount that might be used and forgotten.

I've seen this play out time and again with merchants using store credit. When a customer has credit sitting in their account, they become more engaged with your brand. They're not just a one-time buyer anymore—they're someone with a stake in your store.

When customers have store credit, they're more likely to:

• Check your store for new products
• Sign up for email notifications
• Follow your brand on social media
• Make additional purchases beyond their credit amount

That last point is crucial. When customers come back to use their store credit, they rarely spend exactly the credit amount. They'll often add items to their cart, spending more than the credit value. This is because they're already committed to making a purchase—the credit removes the initial friction of deciding whether to buy.

When to Use Shopify Store Credit

Shopify store credit is particularly effective for:

• Refund requests: Offer store credit as an alternative to full refunds
• Customer service issues: Compensate customers with credit instead of discounts
• Loyalty rewards: Reward repeat customers with account credit
• Abandoned cart recovery: Offer credit to bring customers back

Making Shopify Store Credit Work for Your Store

To maximize the psychological impact of Shopify store credit, make sure it's:

• Easy to see: Display credit balance prominently in customer accounts
• Simple to use: Apply automatically at checkout
• Flexible: Allow partial use and combination with other offers
• Transparent: Show expiration dates and terms clearly