- By: Ricky Hayes February 10, 2021
Nine Highly-Effective Ways To Increase The Average Order Value Of Your Ecommerce Store
The ultimate goal of every online seller is to make money. No matter what you’re selling, you want your buyers to buy more from you.
One of the ways you can make more money from individual transactions is by increasing your average order value (AOV). In other words, you can increase the profit of an ecommerce business by increasing the amount of money your buyers spend on each order.
The average order value of an ecommerce store also helps store owners gain insights into their marketing campaigns. It also helps them identify their customer’s buying preferences and measure the viability of their pricing strategies.
In this post, we’re going to share nine tips to increase the average order value of your ecommerce store.
What Is Average Order Value And How It Works?
Average order value, also known as AOV, is a crucial ecommerce metric that measures the average amount of money a buyer spends on each transaction.
You can calculate AOV using a formula:
AOV = Store’s Total Revenue/Total Number of Orders Taken
Let’s suppose your total revenue for January is $30,000, and you had 1000 sales during that month. So your AOV for January is $30.
According to experts, increasing your AOV can be more profitable for an ecommerce business than getting more sales and customers.
Why Is It Important?
Since there is a hefty cost associated with each transaction, improving your AOV is an effective way to drive profits and sales. You don’t have to make any costly marketing effort either as customers are already buying from your store.
The more your existing buyers will spend on each order, the better your average order value will be.
Cost-Effective Marketing Returns
Ecommerce marketing isn’t cheap. Let’s say your average marketing cost per $50 order is $20, which means you aren’t earning much on each order when you deduct the product cost and taxes.
Increasing average order value Shopify enables you to have better returns against your marketing spend. That is why it’s crucial for ecommerce store owners to have a comprehensive AOV strategy in place before they create a marketing budget for their business.
Sell More Of The Products You Have
If you have just moved your brick and mortar store online and you have your inventory, you can sell more of the products you have by increasing your AOV.
Helps You Evaluate Your Overall Marketing Efforts
Knowing your AOV is essential for every online seller. Why? Because it helps you evaluate the overall progress of your marketing efforts and pricing strategy.
Also, AOV helps sellers set goals and strategies that they can follow to increase their return on investment and profit margins.
All in all, increasing traffic costs business plenty of money while improving AOV doesn’t cost you a penny (and you can have better ROI and an opportunity to create a loyal customer base for your e-store).
Now that you know what AOV is and why it is essential for your ecommerce business, it is time we should look at some of the ways to increase the average order value of your ecommerce store.
Nine Highly-Effective Ways To Increase The Average Order Value Of Your Ecommerce Store
1. Offer Free Delivery Incentive
One of the easiest ways to increase the average order value is to offer a free delivery incentive. Let’s suppose the delivery costs you $3 on average, and you notice that the customers spend around $30 on your website, then you can offer free delivery on all orders over $40.
Now take a simple example here. Let’s suppose a customer adds any product worth $32 to their cart. You can display a message ‘Spend $8 more and get free shipping’ to encourage your customer to spend more on his current order. He gets free shipping while you get an increase in your AOV. It is a win-win.
A case study by PredictiveIntent’s highlights that the upselling techniques on ecommerce perform 20% better than cross-selling strategies.
However, if done right, both upselling and cross-selling strategies can help an online seller increase the average order value of their ecommerce store.
You can allow your visitors to give their order the ultimate finishing touch by adding a few little extras. Let’s suppose you run an online gift shop. You can try upselling gift bags and baskets at checkout time to increase your AOV.
Offering relevant and value-driven upselling and cross-selling offers not only saves user’s time and money but also impacts your average order value.
3. Offer Discounts, Gift Cards, And Bundle Deals
While it may sound repetitive, giving discounts improves your average order value. Make sure to add a minimum spend when you offer discounts, though. For example, “Get 30% off when you spend $500 and more”.
Similarly, providing customers with value-added bundle deals can also impact your AOV. Bundle deals not only improve your AOV, but your customers will also appreciate the idea of having everything in a single bundle.
You can offer a 10% discount on the purchase of one product worth $50, add a 10% more discount when a buyer spends $20, add 5% more discount + free delivery when a customer spends $100 and more.
Another easy yet effective tip to increase your average order value is to give your customers gift cards. If your retail price is $50 or higher, you can offer a $10 gift card to your buyers that they can redeem on their next purchase. Gift card strategy, however, only works wonders for businesses that sell high-ticket items.
4. Start A Customer Loyalty Program
Did you know 40% of your store’s revenue comes from repeat customers?
Many studies prove that repeat customers are more likely to purchase from your store than people who’re visiting your site for the first time.
By having a customer loyalty program, you’ll increase your average order value and also get a chance to build long-lasting relationships.
Apart from that, having a customer loyalty program also helps online businesses identify their VIP customers that they can target in their future campaigns (without investing hefty money on marketing campaigns).
5. Have A Flexible Return And Refund Policy
Customers are more likely to trust stores that offer a flexible return and refund policy. If you don’t have perishable goods or hygiene products, you can offer an easy return and refund policy that gives your website visitors a reason to buy.
Make sure you offer a perfect mix of flexible returns, discounts, and other value-added offers that encourage your customers to add more products to their carts.
6. Introduce Time-Sensitive Offers
Another proven tip to increase average order value is by introducing time-sensitive offers. For example, you can offer a discount on any specific product or seasonal collection.
While this tactic may not directly influence your AOV, it surely boosts conversions. Set an end date to your offer and make sure it is compelling enough to inspire visitors to take the desired action.
You can also offer a free delivery offer to customers who purchase products in a particular period. How about adding a $5 gift card if a buyer purchases within the next 3 hours? The possibilities are endless.
7. Host A Contest
Customer engagement is key to a successful AOV strategy.
Many businesses, especially restaurants and takeaways, host a contest to drive their audience’s attention.
You can also run a contest where buyers get a chance to win prizes when they make repeat purchases.
Also, there are many ecommerce apps that you can use to design and run a campaign.
8. Target Customers Based On Their Browsing History
When you target customers based on their browsing history and buying preferences, you’ll increase your average order value.
Ecommerce business owners can specifically benefit from this strategy during the holiday season when sales volume is high.
You can also engage your live chat support team to collect data containing information about your customer’s buying preferences. You can use that information when the buyer revisits your store.
9. A/B Test Your Marketing Campaigns
Not all ecommerce businesses are created alike. Things that work for one business will not necessarily work for the other.
Also, there are hundreds of ways an online business can increase its AOV. Split testing is one of the best ways to check the viability of any strategy.
There are different things that you can test within a particular category. With hundreds of possibilities for increasing your AOV, you must build a methodical array of A/B tests that enable you to collect enough data to optimize your strategies.
Gamification strategies can also be used to increase the average order value of your ecommerce store.
The ongoing McDonald’s Monopoly Campaign UK is one of its examples. The customer has to find the monopoly piece from their meal to win an instant prize. Also, they can gather property sets to win other expensive giveaways.
McDonald’s includes more pieces in their larger meals to attract customers to spend more on their larger meals. By using this gamification technique, McDonald’s will achieve two goals – First, they’ll increase their average order value. Second, they’ll increase their chances of having repeat sales.
So you see, by implementing the right gamification techniques and leveraging the price framing approaches, any business can make additional spending look more profitable and lucrative to its buyers.
Leverage Price Anchoring Tactics
Another effective psychological tactic that you can use to improve your average order value is price anchoring.
There are several ways you can use this strategy for your benefit. For example, you can show your high-ticket items first. It’s the human psyche that when customers see high prices first, the other products seem reasonable to them.
Another psychological price anchoring tactic is surrounding your high-priced items with low-priced products. How does it work? When a customer sees the first high-priced product, they think it’s expensive. When they see the second product, they still believe the price is high. But when they see the third product having the same price tag as the first one, they feel it’s quite reasonable.
Display Trust Seals And Customer Reviews
Businesses that display trust seals and Q/A certificates build more trust than businesses that don’t display such information. Customers prefer buying from brands that are reliable and trustworthy.
Having safe and secure payment options, money-back guarantees, and other methods that ensure buyers about the credibility of your brand also contribute to increasing the average order value for your e-business.
There you have it – Nine Highly-Effective Ways to Increase the Average Order Value of Your ecommerce Store.
Give some of these strategies a try and let us know how successfully you have improved the AOV of your ecommerce store.