First we create a segment:
Shopify Home
--> Customers
------> to create a segment ... apply a filter
-------------> (code) customer tags CONTAIN '_____'
(We use this for 'local' and 'fancyfave' - so those are their tags.)
--------------> 'apply filter'
--------------> 'save segment'
Next we create a discount for that segment:
--------------> 'Use segment'
--------------> 'Give Discount'