If you’re looking to improve your ecommerce profits, there are certain areas you can focus on to drive results. Most of the time, store owners will focus their efforts on increasing website traffic and boosting conversion rates. However, there is another important metric that often falls by the wayside – average order value (AOV).
A higher AOV simply means that your customers are spending more money per transaction on your e-commerce store. This translates to healthier profits from the same number of customers. As a result, your marketing expenditure is more efficient due to the simple fact that there is no direct increase in your sales costs.
In this article, we discuss six strategies you can employ to effectively increase average order value for your ecommerce store. Before we get started though, the formula for calculating AOV is available below:
Average order value = Total revenue/ Total number of customers
And now back to our useful suggestions on how to increase average order value.
1) Give Intelligent Product Suggestions To Customers
When customers come to your website, they are often looking for a specific item. if they only add what they came for to their shopping basket and checkout, your average order value remains stagnant. An excellent way of encouraging them to take an interest in other goods is by offering targeted product suggestions. You can easily do this by adding ‘recommended Items’ sections to your products and your shopping cart page.
Try to carefully direct your customers towards products that are related to or complement the ones they want to buy. There are some great apps on the market, such as AutoCommerce, which will assist you with this process. These solutions work by automatically gathering data on website visitors and then intelligently suggesting products to them based on that intelligence.
2) Offer Free Shipping On Orders Over A Certain Amount
A great way of encouraging customers to spend more money is by offering free shipping on orders over certain thresholds. This simple yet effective tactic makes customers feel like they are getting more value for their order. In turn, they will be more inclined to add items to their shopping basket.
A good strategy for working out what your order value threshold should be is to add 30% to your current AOV. For example, if your current AOV is £100, then you would offer customers free shipping on purchases over £130.
You can also increase or decrease the percentage you add to your current AOV so that it is more in line with your industry, niche, or specific business circumstances. Just remember that higher thresholds garner more money but may not attract as many people to your offer. Lower thresholds might be more enticing to a greater number of customers but earn you less money per customer. Conduct some testing to find your average order value sweet spot.
3) Provide Discounts On Orders Over A Certain Amount
Following on from offering free shipping on orders that reach a certain value threshold, discounts are another effective way to increase average order value. Everybody loves a good deal. By giving out discounts for purchases over a specific amount, you entice more customers to add items to their carts.
For example, you can offer 10% off order values above £100. Beyond being a great customer incentive, it also creates an ascending discount value as the order value increases. In the customer’s eyes, this can mould a perception of receiving greater value by spending more money.
4) Offer Customers Bundle Deals
An innovative way of increasing your average or value is by offering customers bundle deals. These are groups of products that together are cheaper than they would be individually. In so doing, you provide customers with more value for each order.
A good method of doing this is to offer a selection of items that make up a whole feature or experience. For example, if you are selling computer consoles to gamers, you might bundle them with a controller and a game.
The premise for offering bundle deals comes down to simple maths. Instead of discounting an individual £20 product by 25% to make it £15, you can bundle two products and sell them together for £30. For the customer, the bundle purchase price offers exceptional value. The deal literally translates to “buy one, get one half price”. Such offers are widely used to amplify sales. They also increase average order value – in this example by double the amount of the individual discount.
5) Establish A Customer Loyalty Scheme
Consider offering your customers a loyalty program whereby they earn redeemable points as they purchase from you. It’s an excellent way to boost your ecommerce average order value. Allow your customers to then use their rewards to save on future orders using tactics like discounts and coupon codes.
Not only does this foster customer retention, but it also provides extra incentive to spend more money at checkout.
6) Set Up Time-Sensitive Offers
When you offer time-sensitive deals to customers, you provide a psychological impetus for them to make a purchase. The ‘fear of missing out’, also commonly known as FOMO, is more powerful than you might think. When that proverbial clock is ticking down and a great deal that will be gone soon lies await on table, more people tend to take immediate action.
This approach is most effective when used in digital ad campaigns. It gets more leads to the website and one step closer to conversion. While it’s considered a more short-term method of increasing average order value, it’s a great tactic for quick results
That’s How To Increase Average Order Value
As can be seen, there are many different ways to increase average order value and boost revenue for your ecommerce store. Whether you give customers intelligent product suggestions, offer free shipping over certain amounts, establish loyalty schemes, set up time-sensitive offers, or use a number of other proven strategies, you can effectively encourage shoppers to spend more money with you when they complete checkout.
To learn more about how to increase the average order value for your Shopify store, get in touch with one of our ecommerce specialists today.