Shopify App Developer Takes on Coupon Leaks

Interviewing Dennis Hegstad about his Shopify apps is becoming a habit. He first appeared on this podcast in late 2020 to discuss LiveRecover, his SMS-based cart-recovery program. In early 2022 he returned, having sold LiveRecover and acquired OrderBump, a Shopify app to drive upsells.

He’s back. He’s now building Vigilance, an app for monitoring and blocking coupon code injections.

In our recent conversation, he and I addressed the financial harm of leaked coupon codes and Vigilant’s solution for preventing their use. The audio of that entire conversation is embedded below. The transcript is condensed and edited for clarity.

Eric Bandholz: What are you building now?

Dennis Hegstad: It’s my third Shopify app, called Vigilance. It tracks and prevents coupon code leaks. We can tell the cost of the leak and where that money went, such as Honey, Capital One Shopping, or Piggy. We can block those companies from injecting the codes at your checkout. We’re one of the first providers of checkout injection data and protection.

We can’t stop leaks, but we can stop codes from being injected at the checkout. Some brands, however, don’t mind if the codes are injected because they want the sales and are only paying, say, a 10% commission.

Regardless, we give them the data to monitor and keep that 10% if they choose.

Bandholz: You mentioned Honey. How does it interact with your app?

Hegstad: Let’s say you have Honey installed on your browser, and you go to Louis Vuitton’s ecommerce site. Louis Vuitton doesn’t offer discount codes. Honey will say no deals are found for that merchant.

But if you go to Fashion Nova’s site, Honey may offer 12 codes because that brand does deep discounting — 40% off for everybody, more or less. So you’ll get 10 or 12 codes, and Honey will say we found the best deal for you, and it’s 40% off. In reality, Honey just went through 12 codes that are all 40% off.

Cycling through Honey’s codes at checkout can take time, which frustrates shoppers. The abandonment rate at checkout goes down when Honey is blocked. Some brands, like Louis Vuitton, have no codes. For those checkouts, Honey will say that codes are not available.

Merchants using our app can generate the same message — there are no codes — at checkout.

Bandholz: So, with Vigilance there’s no reason for consumers to leave the checkout and seek coupon codes.

Hegstad: That’s right. We track checkout events around the discount. We can tell a brand if an order had an injected coupon from a specific extension. We can also tell if a coupon code was copied and pasted — usually from a social media post or a coupon directory. Shoppers who find coupon codes via Google searches and then copy and paste them typically have a higher purchase intent than someone who passively allowed Honey to apply the code.

We can provide specific events to determine which codes are injected, copied and pasted, or typed. Typing a code would infer that they had read it, especially if it’s simple, such as Beard15 or similar.

Bandholz: What’s the pricing to merchants for using Vigilance?

Hegstad: Our base plan is $199 a month for up to 5,000 orders. A merchant with 5,000 monthly orders and a $40 average ticket is doing $200,000 in monthly revenue or $2.5 million per year. That’s the very bottom of Shopify Plus.

Most of our target merchants are larger, with 10,000 monthly orders at least. For those customers, we charge $350 per month, which saves them upwards of $3,000 each month via injection blocking alone.

A brand that markets heavily with influencers and affiliates and allows injections is losing thousands a month. One code leak could result in overpaying by 900% if it’s 1,000 orders.

Bandholz: Let’s discuss finances. You’ve raised outside capital for Vigilance.

Hegstad: We raised $250,000 from operators in the Shopify and direct-to-consumer ecosystem. Those investors do not actively advise or work for us.

I entirely funded my previous two apps, OrderBump and LiveRecover. With Vigilance, I had industry friends wanting to invest. To me, it wasn’t about the money as much as the association with professional colleagues. We settled on a valuation that made sense for everyone. If we hit our goals, we should have a significant outcome with capital returns to all investors.

Bandholz: Where can listeners connect with you and learn more about Vigilance?

Hegstad: I’m on Twitter, @dennishegstad. Listeners can get Vigilance in the Shopify App Store or Vigilance.io.