6 Simple Steps To Increase Your AOV AND What That Means…

Post by 
Stuart Musgrave
December 19, 2018

What is AOV?

Average order value (AOV) tracks the average dollar amount spent each time a customer places an order on a website or mobile app. To calculate your company’s average order value, simply divide total revenue by the number of orders.

Total Revenue / Number of Orders 

Let’s look at an example. Let’s say an online clothing retailer sells a number of clothing options and accessories. The retailer sells three shirts priced at $15, $20, and $30. After some number-crunching, the retailer has determined that the organization’s AOV is approximately $21. This means that not only are customers buying multiple items but that the cheaper items make up the majority of sales.

AOV is a key performance indicator that online businesses measure to understand their customers’ purchasing habits. Like other key metrics, AOV can be tracked for any time period, but most companies monitor the moving monthly average.

Now I know what it is why does AOV matter?

Knowing your company’s average order value helps you evaluate your overall online marketing efforts and pricing strategy by giving you the metrics needed to measure the long-term value of individual customers.

As a benchmark of customer behavior, the AOV helps you set goals and strategies and evaluate how well those strategies are working.

Who wouldn’t want people spending more money with them, especially as this is a fast and inexpensive way to increase cashflow and as we all know cashflow is king. 

However, arguments can be made for focusing on increasing your traffic instead of increasing your AOV. It all depends on the type of store you have and how far along the ecomm journey you are. In this post we are going to focus on doing more with less. Ie, Getting your existing customers spending more. If they are already spending $50 with you wouldn’t it be great if we could increase that $100. In other words, when you have them, there, in your hands, you should do everything you can to get them to spend more. Because increasing your average order value (AOV) means you can increase your profits—without having to pay to attract a bunch of new customers.

Add In an Upsell, 
Upselling is convincing a customer to upgrade the product they were originally planning on buying. For instance, if a customer comes in to buy the cheapest lawnmower in your store, upselling would be convincing them that buying a more expensive (but better quality) lawnmower is in their best interest. If upselling wasn’t already part of your marketing strategy, it needs to be if you want to maximize your online store’s sale potential. Examples include recommending a newer model or higher quantity of a product the customer already added to cart. As many marketers know, upselling can increase consumer spending by recommending a product that is more expensive than the one they have previously bought or are currently considering to buy.

A good upselling strategy lets them know the features and benefits of a product in a slightly higher price range, consider offering a deluxe or pro version of your product. Sell the customer on the features and benefits of the newer/better model, and you will have a happy customer who feels good about spending more on your products.

On the checkout page add one click upsell by Ezra Firestone  

Tie Them Up In A Bundle

People want to buy products related to what they are already purchasing from you, so why not make it easier. increasing your AOV could be as simple as installing a simple plugin for your shopping cart. 

On your check out pages why not show them bundled offers. Bundles are about providing the user with a bargain for multiple complementary products and to increase the amount spent in one order. Put together bundles with complementary products, like a screen protector to go with the phone case. Or batteries with the christmas toys. 

Create a Sampler of the options you offer so people can try and choose their favorites for a repeat purchase. Flavors, colors, sizes, scents, patterns, you name it.

If your product is an introductory product why not sell it in a Starter bundle with all the accessories they need to get started. (Think Camera, Lens, Tripod, Mic) Remind them they need a memory card to go with their camera – and a cleaning kit, too.

Don’t forget slow moving items, this is a great way to get rid of unwanted stock whilst adding value to your customer and by bundling your products you increase AOV and can provide a cost saving to the customer.

Take the concept further: Allow a user to personalise their bundles. For example have a mix and match option providing the user with the ability to choose and select exactly what they want.

Free Shipping For Orders Above X Value

For most retailers, free delivery can be quite a difficult challenge financially. Setting free delivery over a certain threshold can solve this problem.

The best rule to follow when setting your minimum order value eligible for free shipping is: average order value + 15% or 20%. 

Combine this with relevant upsells and cross sells that help take the users basket to the free delivery amount and you will see an increase in your AVO.

If you already have free shipping for orders above a certain threshold why not look into offering free next day delivery for orders X and above, to really drive sales.

In both cases, it’s a good idea to have a prompt saying “spend X more and get free shipping”. UPS found out that 69% of online shoppers have bought more than intended because they didn’t want to pay for shipping. Crazy, right?

<iframe src='http://www.criticalcommons.org/Members/JJWooten/clips/super-troopers-free-hot-dog/embed_view?width=350' frameborder='0' width='350' height='250' allowfullscreen></iframe>

Take the concept further:

By packaging free delivery as a product (for example get “free delivery for 1 year only $14.95”). 

Amazon are the kings of this. Many people thought Jeff Bezos made a mistake with Amazon Prime, but what but what a billionaire knows that the average person doesn’t is that even billionaires get annoyed with shipping fees after their 4th or 5th purchase. So he cleverly removed this hurdle from people repeat purchasing. By  offering a yearly shipping fee it increases the likelihood of repeat purchases throughout the year and moves retail sales from a single purchase to an incentivised income stream, as users want to make the most of their free delivery.

Cross Sell Like A Pro 

Ever had an amazing in-store experience, you went in looking for just a dress or a shirt and you left with a whole outfit to match. You ended up getting the shoes that went so well and the tie that brought out your eyes and the belt that brought the whole outfit together. Well having a good cross sell and upsell strategy should be like this experience, you aren’t upset at the store clerk for having sold you, you are appreciative that they took the time to understand your needs and made valuable suggestions to add to what you were already after. 

This is what a good upsell and cross sell experience should deliver and targeting the relevant cross sells and upsells is imperative when making it a success. With Christmas coming up why not offer gift wraps or bags centred around your niche. Have a pug related store, why not offer Christmas Cheer Pug Bags with your products. By staying relevant you save the user time when looking for a gift bag. But no need to get heavy handed with the sell sell sell, you just want to give them a gentle nudge in the right direction. It can be accessories for the dress they just got, or coffee filters with that bag of ground coffee. Offer things they might be forgetting or some of your slower moving items. 

Although these are simple techniques, they can be quite effective, pick a few products that go well together and offer them in a “Customers also bought”/ “Complete the look”/ “use it with” section. Cross-selling is not only an opportunity to increase your average order value but also a way to improve the customer experience. Suggesting products that pair well with a customer’s previous purchase can be helpful and is often appreciated

Did you know that Amazon generates 35% of its revenue through its recommendation engine?

Offer Free Gift With Minimum Spend 

This is another way to incentivize a higher AOV. It’s unique, because it appeals to us on a deep level, Free Gifts. Who doesn’t love something free even if we have to spend more to get it.  Customers want value for money. And a free gift increases the perceived value of the total order. Remember the old TV commercials where they sell you a set of steak knives to go with your new food processor. You want the gift to appealing enough that the customer sees value in the offer and is willing to spend the extra amount. The best examples of this are cosmetics and fragrances gifting sampler or travel size products with a minimum spend. These gifts are also a perfect opportunity to introduce customers to new product/variant offerings.

You can also provide free gifts on top of other promotions. Which makes the deal super appealing.

Splice and Dice - Segment Your Audience

Launch some smart loyalty programs. Segment marketing campaigns into low, medium and high AOV. Once customers have been segmented accordingly, the company can then fine-tune its marketing strategies and craft the perfect message for each customer group. This will help you identify your “best” customers and offer them what is needed to get them to come back and buy even more. You could start a cash back or discount program, or even a referral program which are particularly powerful and help get the word out. Generic loyalty programs are already fantastic for boosting your AOV. 

Most businesses see an AOV increase of 13.71% from their loyalty program customers. A rewards system helps you form a relationship with customers. Thus, encouraging them to return and spend more.

Tier-based loyalty programs add extra exclusivity and encourage an even greater spend. Everybody wants to be a VIP, think about airline reward programs, everyone wants that priority boarding or lounge access. 

The easiest way to do this for your business would be to offer bronze, silver and gold status to loyalty program customers. The key to a great loyalty program is providing customers with valuable incentives. Doing so guarantees an increase in average order value because it gamifies the shopping experience, inviting customers to move up to the next level.

Its also a great idea to A/B test any attempts you make to increase your AOV. Having things moving in the right direction is great, but knowing why is even better. 

Monitoring and analyzing AOV is crucial for your business. It not only improves performance and increase sales, it can also aid businesses in making important marketing and sales decisions, which will improve your customers experience while improving your bottom line.

Increasing your average order value is vital for revenue growth. Take it slow, You can increase your average order value in the long run only by adding extra value for your customers. Pick at least one that appeals to you and put it into practice. 

Many shopping cart systems have plugins and add-ons to include these features during the shopping process. If you want to know more or need a hand implementing, reach out and get our professional ecommerce team involved. 

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