How to increase your average order value

How to increase your average order value

When you have an ecommerce store you are always looking for new ways to convert customers and increase your average order value (AOV). Your AOV is pretty much what it states, the average order value of all the orders placed in your store.

By increasing your AOV you will have more revenue with the same number of customers. To calculate your average order value, tally your total revenue then divide that by the total number of orders you have received.

Total Revenue ÷ Total Number of Orders = Average Order Value

 

In this post, we’re going to offer you tips and strategies to encourage your customers to buy more from you than they may have initially planned.

Here’s what we’ll cover:

  • Free shipping costs and implementation.
  • Cross-selling strategies.
  • Integrating add-ons and personalization.
  • Upsell higher tier products.
  • Creating bundles and discounts.
  • Developing a rewards/loyalty program.
  • Using time-sensitive offers.
  • Adding targeted recommendations.
  • Generous return policies.

Let’s dive in.

Free shipping costs and implementation

Customers are cost-sensitive when it comes to shipping fees. Shipping charges are one of the primary reasons for cart abandonment.

The best approach is to offer free shipping once a certain order amount is met. This way the order amount is worth it for you to pick up the tab.

One way to do this is by offering tiered shipping. A tiered shipping fee structure encourages customers to purchase more to hit the next level of shipping benefits. For example:

  • Charge a flat rate for standard shipping on any order under $25
  • Free standard shipping for orders from $25.01 to $49.99
  • Free Priority shipping on orders $50 or more

Shipping fees are expensive, and if you are going to offer free shipping you have to be sure you can afford to absorb those costs. Review your margins to make sure that your product pricing structure can support you picking up shipping without it being a loss.

Related: How to offer free shipping without hurting your bottom line

Cross-sell strategies

Cross-selling is when you recommend a product that is related to the product being viewed. You have all the data to know what your customers are buying, including what they purchase together.

A great example of this is if you sell cellphones, you would cross-sell cases and charging accessories.

Displaying “recommended” products typically bought together on each product’s page can direct customers to purchase additional items — items they may not have thought of but will need or want.

Integrating add-ons and personalization

Add-ons can be as simple as offering an extended warranty on those cellphones you offer. Or how about offering personalization features, like color, so customers can make your products their own? All for an extra fee, of course.

Upsell higher tier products

An example would be a T-shirt made of less expensive material than those made with 100% organic cotton. While they might have landed on the page for the initial product of interest, exposing them to other similar but more expensive products can increase their order value.

Creating bundles and discounts

Bundling products that have a natural synergy just makes sense.
If you are selling camping supplies, you can bundle a water filter, first aid kit and fire-starter at a discounted price than if purchased separately.

By offering a discounted price to buy a bundle of items together versus individually, the incentive is there to save money while buying more.

And, don’t forget quantity discounts. The more they buy the more they save. Just be sure to display the pricing levels so that customers can see the incentive.

Developing a rewards/loyalty program

Reward programs encourage customers to spend more because you are offering them the opportunity to use those points/dollars to use instantly, towards future orders or to acquire free items.

The more they purchase the more rewards or loyalty points they can accumulate.

 

A recent study found that customers had an “increased lifetime value of 29% with more than 80% of that lift come from increased customer retention when offered a loyalty program.”

Just be sure to run tests to determine the best mix of instant rewards versus banked rewards for future use by your customers.

Using time-sensitive offers

Black analog clock on wood background

At the end of each year, look at the next year’s calendar and set up your promotion dates and discount codes for all the holidays ahead.

You can also have flash sales and unannounced sales just for customers noting that they only have so much time (24 hours, three days, etc.) to take advantage of the sale.

Another option is after-cart up-sells.

Rather than landing at a “thank you for your order” confirmation page, send them to a page where they can purchase select products at a discount. These discounts are only available right then and there.

Time-sensitive offers create FOMO (fear of missing out) and can dramatically increase your average order value.

Adding targeted recommendations

Make additional purchase recommendations based on your customer’s order history.

Send a reminder noting it’s time to order more and encourage customers to place a new order for higher quantities — at a discount.

Generous return policies

Create a policy that is clear, establishes trust, and takes the risk out of making additional purchases on products that the customer may be on the fence about.

Make your policy visible on each page. For example: “30-day risk-free return policy!”

Related: Returns and refunds policy templates for online shopping sites

Some final tips

The No.1 way to increase your average order value is to build trust and credibility. This happens with quality website design and reviews and testimonials necessary to build legitimacy. The fact is that customers spend more with those businesses that they can trust.

Additionally, know your customers intimately and market directly to them. By virtue of visuals, verbiage and on the platforms you know they hang out on.

Without these final tips, all the other strategies will fall flat.

Now you know have the blueprint to increase your average order value for your ecommerce store. Be sure these strategies are visible on your site, that you announce them on your social media accounts and to your mailing list.

Now, let’s make some (more) money!

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