You must be wondering sometimes: Why loads of traffic but the profit is not as much as you thought? It’s not about finding more customers, but it’s about how to increase average order value for each check-out, which means raising more sales from your current products.
Typically, whenever a customer enters your shop, there will always be tips to convince them to keep adding things to the carts. Thus, in this article, we’ll sort out all the best strategies of how to improve average order value for any e-Commerce store. Let’s find out.
What and how to calculate effectively Average Order Value (AOV)?
To calculate the AOV in eCommerce, just divide your total revenue by the total orders, like this:
How to calculate and increase average order value
Simply speaking, it’s the average amount spent by each customer whenever they make a purchase in your store.
Why does Average Order Value matter for eCommerce businesses?
Though AOV usually underrated in eCommerce, smart business owners will still adapt the AOV metric because of these reasons:
- Grow Overall Revenue: Raising 5$ per order might seem a little, but what if you multiply it by 100 orders? When you improve your average order value for each transaction, you’ll see a huge change in margins for real.
- Renew Your Stocks: This might not affect dropshippers much, but for large size businesses more (who frequently store big inventories). Therefore, improving AOV will help cleaning up your excessive stocks faster.
- Save Marketing Budget: Sales growth means your advertising spent for each product has now become cheaper, fact.
- Identify Customers’ Needs: Tracking and defining your customers’ favorites, you’ll understand their behavior and from that, optimize your best product range.
10 easy ways of how to increase Average Order Value effectively
1. Offer Discounts at a minimum Money/Volume Spend
Most popular brands use this tactic a lot, for both online and offline sales.
Remember your last time seeing campaigns such as Buy 3 get 1 or Two for the price of one? Yes, they’re everywhere.
“Buy 1 get 1” is F&B stores’ favorite campaign.
Whenever entering a store on purpose, customers tend to buy exactly the products they’ve looked for.
At this point, it seems pretty hard to convince them to buy other items and increase average order value.
However, if you offer discounts on larger quantity purchases or higher money spent, customers will consider buying more as a result.
The tip is always to provide them a reasonable number, for example:
- Save 10$ when you spend a minimum of 79$.
- Buy 3 items for the price of 2 only.
2. Display Total Savings in Shopping Carts and Check-out Pages
As a consequence of the promotion offering, customers might have added more items to their cart for the discounts. But what if they change their mind?
Customers love to save money, or at least to feel like they are saving money.
Seeing how much savings in check out pages to convert buying decisions.
Don’t let them have even the smallest chance of regretting! Display the overall saving amount right in carts and receipts, to make consumers feel like this is a great deal. That will increase average order value for real.
3. Give Free Shipping at a Minimum Spend
This seems like the easiest way above all, however, not everyone knows how to execute it without losing too much money.
How to offer free shipping for eCommerce stores?
There are 4 simple commonly cases to offer free shipping:
- For A Special Occasion: Help drives more visitors even during tough periods to improve average order value.
- Offer Free Shipping For Special Items: Some products will make more profits than others in some situations. For that reason, you can offer an additional time-limited Free Shipping to boost even more sales.
- For Orders That Has Quantity Of (X) Items: Buy more items at once to save the shipping fees (worked best for overseas customers).
- Order Reaches The Amount Of Money: 9 out of 10 customers willing to buy 30% more just to get free shipping, so why not?
How to calculate free shipping to not lose money?
- Find out your current Average Order Value
- Increase 30% more to your AOV number
- This number is the minimum price for you to apply a free shipping threshold reasonably.
How to set free shipping threshold reasonably (Source: Aaron Zakowski)
For example, your eCommerce store AOV is 200 dollars, by adding a 30% increase to it then your new number is $260 – THIS is the minimum amount that you can set free shipping on without losing too much money.
So your promotion will be “Free Shipping On All Orders Of $260 Or More”, and if customers haven’t reached the limit yet, let them know by displaying the promotion right on their carts or check-out pages.
4. Cross-selling and Up-selling
This tactic works well with most product types, that’s why it is one of the most effective ways to increase AOV in eCommerce.
Recommend related items in combination
Cross-selling is convincing customers to buy more products related to the item that they’ve picked before.
Showing product recommendations to upsell more.
As you see, Zara recommends a related skirt, sandals and sunglasses, that will make a great combination with the floral top you’re checking on.
Moreover, always showcase the picture of models wearing all items at once, so when customers see it they’ll consider buying a full combo together.
Display beautiful product feedbacks from previous customers
If your product images can’t even convince visitors to buy, then your feedback will.
Over 91% customers are willing to buy and if they see positive reviews on the page, that’s why this method is perfect to increase your average order value, like this:
- Import user-generated content from other visual channels (like Instagram) to strengthen social proof.
- Showcase beautiful photos of your products to inspire customers to buy more.
A beautiful Instagram grid will strengthen your website’s social proof.
Seeing product reviews from other customers is more trustable than anything else, and you can embed Instafeed to your websites for free with Socialwidget on Shopify.
Upsell a higher priced items to increase Average Order Value
Based on the current item customers are seeing, you can suggest a bigger set including that item in it, or a similar product that is more expensive.
This tactic works pretty well for cosmetics industry
5. Create Combos or Bundle Deals
Always give promotions/discounts for product bundles to increase your AOV fast. So how to do it and what’s the difference with those methods above?
Well, the advantage is that you can sell unrelated items, different-price-range items, and even worst-selling items together. 3 simplest ways to do this:
- Percent off: Recommend using for low priced items
– For example: Buy 3 items to get a 10% discount.
- Special price for product bundles: Used for both related and unrelated items.
– For example: Pick 5 items on the list for $25 only.
- Direct money discounts: Work better on medium to high priced items.
– For example: Buy 3 items to get $5 off.
Bundle deals are fastest way to increase AOV
6. Flash Sales
Short-time special offers have better performance than any daily discounts like Everyday 5% off. Just some notices:
- Make it “flash” which means make it “fast”, don’t stretch out the time for more money cause it won’t work.
- If your average order value hasn’t increased for too long, this tactic can raise it up very effectively and immediately.
- Work best during slowed periods of sales cause Flash Sales will boost 35% more transactions.
Time-sensitive promotion helps boost up sales really fast.
7. Focus on website visual to highlight products
It’s good when your website recommends things for shoppers, however a better eye-catching look will encourage them to click on.
Depending on what types of products that you’re selling, here are things that you should give them a strong display:
- Best-selling items
- Top trending products (daily/weekly/monthly)
- Short PR video
- Customers’ review, feedback, recommendations (ask for testimonials if needed)
- Staff-picked stuff (usually for Food & Beverages sellers).
- Higher priced items that have better quality.
Give your favourite items an appealing position to catch attention.
Product highlighting is considered as increasing social proof, and that’ll help boost up AOV for your eCommerce store.
8. Always provide First Time Offers
First time shoppers could be very promising, and the only way to increase their average order value: Giving them an exclusive first-time promotion.
If you just started on eCommerce, this customer type are actually your main ones, so convert them into long-term customers like this:
- A discount code sent to their email (now you got the info).
- One-time special discounts
- Exclusive bundle deals including popular products
If customers feel happy about their first purchase, there will be a higher chance they will come back to shop again. Isn’t it great?
1st time offers can also help you collect customers’ information.
9. Customer loyalty program or membership
New customers have first-time offers, but how about loyal ones who’ve been shopping with you for awhile?
The solution is creating a reward program to gain more customer trust and therefore increase eCommerce AOV.
Starbucks has a strong membership program compared to others.
This tactic is pretty cheap and easy to implement for different types of eCommerce business, for example you can try these:
- Point based rewards: Giving points every time customers make a purchase on something.
- Tiered loyalty program: Encourage customers to enter higher membership tiers for more exclusive discounts/promotions.
- Mini-games: Rewards don’t have to be a discount code every time, try a voucher or a limited item as a gift.
10. Provide more Personalization in different ways
If you don’t know customers well, you cannot know what is best to keep them coming back.
How to increase average order value persistently? We believe that providing customers with tailored experiences is the best way to do it.
If your customers engage mostly through your shopping sites, check out these tips to provide more on-site personalization:
- Show recommendations related to last checkouts: Recently bought a tote bag? Hit them up with sunglasses or floral dresses.
- Add auto chatbots to maintain engagements on the go: A custom message that says “Hi Andy, nice to see you back, I think these items would look good on you, wanna check them out?” is cute enough to give it a try.
- Invite customers to subscribe with email: Seems old school but you’ll be amazed at how effective it is. Via email, you can sway back customers from a long, long time ago with discounts or promotions.
Email works best for customers who haven’t shopped in your store for awhile.
Last thing to remember.
Knowing how to increase your average order value, you will see good results coming on the way. Indeed, using small tactics like above can make your buyers feel like they’re being cared for, and therefore keep your AOV goes up consistently.