Do you worry your e-commerce site is leaving money on the table and want to learn how to get it back? If so, you're in the right place!
You might be surprised how much untapped potential lies in boosting your Average Order Value (AOV). A higher AOV translates directly to increased revenue and profitability without necessarily spending more on acquiring new customers.
Today, we'll explore what AOV is and why it's crucial for success. We will also equip you with seven actionable strategies to increase it.
Let's dive in!
Article Shortcuts:
- 6 Actionable Strategies to Increase AOV
- Best Practices for Maintaining and Growing AOV
- Frequently Asked Questions (FAQs) about Boosting AOV
What is Average Order Value (AOV)?
Average Order Value (AOV) is a key metric revealing how much each customer spends, on average, per order in your online store. It considers all purchases, from small to large, to give you a holistic view of spending habits.
Understanding your AOV helps you improve marketing, identify sales opportunities, and get valuable insights into customer behavior. You can use these insights to optimize everything from product pages to email campaigns.
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How to Calculate Average Order Value (AOV) with Examples
Figuring out the average amount people spend on your site is easier than you think. Here's the formula:
Source: Made by Author
Following this formula, if your online store made $10,000 in sales to 200 people, the average value of each purchase is $50.
You can apply this strategy to specific products, times (like quarterly), and even to specific sales departments to improve your conversion rate and AOV.
6 Actionable Strategies to Increase AOV
Now that you have a clear understanding of Average Order Value (AOV), it's time for us to dive in and talk about how you can improve the average amount people spend on your site.
1. Offer Free Shipping to Encourage Larger Orders
If you're like most people, you know the appeal of free shipping. People are more likely to spend more if it means they won't have to pay extra costs.
The best way to do this for your e-commerce store is by setting a minimum purchase threshold for free shipping. This seemingly simple strategy will encourage customers to add extra items to their carts.
Implementing this is very easy. Start by identifying a spending amount that's slightly above your current AOV and offer free shipping for purchases that go over that amount.
For example, if your AOV is $50, you could offer free shipping to folks who spend $65 or more. Since most won't want to pay the extra costs and get nothing in return, they're more likely to hit $65 in their shopping cart before they check out.
Here’s how Macy’s does it on their website:
Source: Macy's
You can see that you get free shipping if you spend over $25 on your order. This is the type of messaging you want to highlight on your e-commerce site so people are compelled to add to their cart.
2. Bundle Products for a Higher Per-Order Value
Next, let's talk about how putting your products together can actually improve your average order value.
The way this works is pretty simple. You take a couple of products on your site that go together and bundle them at a slightly discounted price. Here's a great example that shows how this can be done.
Source: Wholesale Suite
As you can see, the complete package of tools here is set at a lower price than if they were purchased individually. This inspires customers to get the complete package and, in the process, increase their average order value.
Think carefully about the e-commerce products in your store that complement one another. How can you put them together in a way that will be valuable and compelling to your customers? Figuring this out is the key to improving AOV through bundling.
3. Upsell and Cross-Sell Relevant Products
Another way to improve your AOV is by upselling and cross-selling to your customers at the right time. These strategies involve offering shoppers additional value for a little bit more money.
For upselling, you'll want to give users an option to buy a better version of the product they're already looking at. Software companies do this well, as you can see below:
Source: sugarcalendar
If someone is considering buying the basic version of this tool, highlighting that the pro plan is the most popular can be a subtle upsell that may encourage people to check out the more expensive version of the tool.
They highlight the benefit of the upsell by showing all of the features users get if they choose the more expensive version compared to the basic.
Cross-selling, on the other hand, is all about getting people to buy things that complement their order. This is very similar to bundling, except the products in a cross-sell are usually smaller ticket items. For instance, a shoe company might offer its customers a matching pair of laces or a cleaning solution.
4. Launch a Loyalty Program with Spending Rewards
Customer loyalty programs can help you improve your AOV and build rapport with your audience. Put plainly, this means rewarding customers who shop with you multiple times.
The type of rewards you give will vary depending on your niche and how you want to run your customer loyalty program. These are the three most common types:
- Points-based systems: Customers earn loyalty points for every purchase. They can then take these points and redeem them for discounts, free products, or other perks.
- Tiered programs: Customers unlock increasingly valuable rewards as they climb through different spending tiers, motivating them to spend more to reach the next level.
- VIP programs: Offer exclusive benefits to your top-spending customers, such as personalized service, early access to new products, or invitations to special events.
Here's an example of a points-based system from the clothing company DXL:
Source: DXL
5. Use Limited-Time Deals to Create Urgency
Creating a sense of urgency can be a powerful motivator for customers to make a purchase. For context, research shows that 60% of people have purchased due to the fear of missing out. They usually clicked buy within 24 hours of seeing the deal.
Limited-time offers, such as flash sales or special discounts with an expiration date, encourage immediate action and can lead to larger orders. Highlight the time-sensitive nature of the offer throughout your site and marketing materials.
Use countdown timers or phrases like "limited quantities available" to create a sense of scarcity and further incentivize purchases. Here's a great example of what this could look like:
Source: Optinmonster
It's very important to be strategic with the duration and frequency of your limited-time offers to avoid devaluing your products or creating "deal fatigue" among your customers. When done correctly, this can be a highly effective way to boost your AOV and drive sales.
6. Offer Personalized Product Recommendations
Did you know that 80% of people are more likely to accept an offer if it's personalized around their goals and pain points? This statistic highlights why it's essential to think about your audience when presenting offers, but it's also a great way to improve your AOV.
Luckily, this is easier than ever before. You can use data from feedback forms and customer browsing history to show personalized offers that resonate with their needs.
You can do this by suggesting products they've added to their cart, showing retargeting ads, and customizing your sales funnels around each subscriber's preferences.
Below is a great example:
Source: Really Good Emails
There are other opportunities to personalize if you're in tune with your audience and what they expect from your brand.
Best Practices for Maintaining and Growing AOV
Boosting your AOV is something you'll need to work on consistently since it's not a one-time fix. These best practices will help you refine your strategy and get more from your efforts.
- Track Your Analytics - Use analytics to track key metrics like AOV, conversion rates, customer lifetime value, and customer behavior. These e-commerce metrics will help you understand what's working, what's not, and how to improve.
- Focus on Customer Experience - A positive shopping experience is crucial for encouraging people to spend more on your site. You'll want to make sure your site is mobile-friendly and easy for anyone to use.
- Train Your Customer Support Staff - Make sure your team has the know-how and skills to upsell and cross-sell effectively. They should be able to recommend relevant products and answer customer questions.
- Monitor and Adjust Your AOV Strategy - Monitor your AOV strategies and make adjustments as needed so you can adapt to your customers' needs.
- Set Clear, Data Driven Goals: Establish goals for your AOV. This will help you stay focused and make it easy to see if you're moving in the right direction.
Frequently Asked Questions (FAQs) about Boosting AOV
1. How do I calculate my average order value?
Calculating your AOV is simple: divide your total revenue by the number of orders. So, if you sold $1000 dollars of product to 10 people, your average order value would be $100.
2. How often should I review and adjust my AOV strategies?
Aim for a monthly review to assess performance and make adjustments as needed. More frequent reviews may be necessary during peak seasons or when implementing new strategies.
3. What role do analytics play in understanding and improving AOV?
Analytics are very important for understanding customer behavior and the effectiveness of your AOV strategies. You'll want to keep an eye on metrics like conversion rates, cart abandonment rates, and popular product combinations to identify areas for improvement and optimize your strategy over time.
4. What are the best ways to improve my average order value?
The best ways to improve your AOV include offering free shipping thresholds, bundling products, upselling and cross-selling, implementing a loyalty program, introducing limited-time offers, and personalizing recommendations. The best strategies for you will depend on your specific business and target audience.
5. Is it possible to maintain customer satisfaction while increasing AOV?
Absolutely! Just make sure you're delivering top-notch value to your customers. You can do this by offering relevant recommendations, high-quality products, and exceptional customer service. When customers feel valued, they're more likely to make larger purchases.
Final Thoughts
Increasing your Average Order Value is a game-changer for any e-commerce business. By implementing the strategies and best practices we've discussed, you can significantly boost your revenue while building customer loyalty.
Continuously analyze your data, adapt to changing customer behavior, and never stop experimenting to discover what works best for your unique business.
By staying proactive and providing value to your customers, you can maximize your AOV and drive sustainable growth for your online store.
Author Bio
Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site. With over 10 years of experience, he’s the leading WordPress expert in the industry. You can learn more about Syed and his portfolio of companies by following him on his social media networks.
