5 Effective Ways to Boost Average Order Value (AOV)
There are multiple ways to grow your business and increase your sales. However, many brands get caught up in trying to increase the number of customers, instead of trying to maximize the value from current customers. By squeezing extra value out of your current customers, you can reallocate funds into acquiring new customers and continue to grow your business. Below, we’ve outlined 5 effective ways to boost your average order value (AOV).
What is Average Order Value (AOV)?
The average order value is the average amount of money customers spend when ordering from your store. This information is key to understanding your customers' behavior and will give you an insight into popular products, purchase behavior, and what methods of increasing AOV would be most effective for your business.
Average Order Value is calculated by:
AOV= Total Revenue / Total Number of Orders
5 Effective Ways to Boost Average Order Value (AOV)
Upsell or Cross-Sell
Upselling and cross-selling are the most popular strategies for boosting AOV and you don’t have to look very hard to see why. For example, McDonald’s cross-sell every time they ask “would you like fries with that?” and upsells every time they ask “would you like to make that a meal?”
The key differences between the two are upselling encourages the customer to purchase more expensive versions of the product or service. This upgrade could be an add-on or higher quality or premium version of their product or service.
Cross-selling encourages customers to purchase more related products, as opposed to one high-priced item). A great example of this is Apple. Once you add your new iPhone to your cart, Apple shows you all of the protective cases available.
Another great way to cross-sell is to utilize your product images to make suggestions. For example, if you’re selling a dress, use photos and videos in your product listing to show the matching handbag, accessories, or shoes that go with it. You’ll commonly see this on fashion sites with a “you might also like” section below the product listing. Our friends over at Apricoat have used a "Frequently Bought Together" section, allowing customers to quickly shop products that are relevant to them.
In addition, you can set up algorithms to analyze behavior and track preferences to automatically push more of the products and services your customers prefer. However, it’s important to appear helpful, friendly, and genuine as nobody likes to feel overwhelmed. Finally, be strategic with your upsells. When spending $1200 on a new iPhone, it’s a no-brainer to spend another $60 - $100 on a case to protect it. Keep this in mind for your own store. If someone is purchasing $100 in products, it would be easy to convince them to spend another $20 on products that compliment their order, as opposed to another $80 - $100.
Create Packages and Programs
Following on from above, providing bundle deals by grouping products that often sell or go well together, is a great way to increase AOV. This encourages customers who would normally only buy one item to buy the complete set. This can also be applied to courses and services. For example, when selling a camera, you could bundle it with a photography course at a lower price than if the customer bought it individually. Bundles are also a great option for customers in a hurry or nearing site exit, as it removes the overwhelm of choice and allows them to purchase everything they want (or need) in just one click.
Additionally, you can also offer discounts for buying in bulk. Whether it’s cosmetics, dog food, or hair care, when a customer sees the savings that come with purchasing more than one of the same item, it encourages them to add more to their cart.
Similarly, subscription programs are ideal for customers who regularly purchase your products or would like to. As with the bundles, it’s key to make the price and convenience attractive so the customer will sign up and continue with the subscription.
Fresh Roasted Coffee offers the above with their one-time purchase price and auto deliver price, which allows you to select how frequently you want your delivery and the quantity you want each time.
Reward Order Spend with Free Shipping and Gifts
“Spend just $6 more for free shipping”. We’ve all seen this or something similar at the checkout and it’s one of the most effective ways to increase AOV. Especially as one of the main reasons customers abandon their carts is due to shipping costs.
The goal here is to make the free shipping threshold feel achievable for most of your customers, so it’s important to take into account your current average order value. For example, if your current AOV is at $25, offering free shipping at $50 would probably see most customers abandoning their carts.
In addition to free shipping, you can also offer free gifts and discounts when customers reach an order value threshold. And remember, you can set more than one threshold to cater to customers spending smaller and larger amounts.
Personalize the User Experience
With shopping switching heavily over to the digital world, consumers still love the feeling of having a personal shopper by their side, which we can achieve through a personalized user experience. By reviewing order history, you can target certain audiences with products and campaigns. The more personalized it feels, the more likely customers are to spend more. In addition, having live chat support for any questions is also a great way to make the experience feel more personal. This can also help to reduce abandoned items and carts as customers can immediately get answers to any questions they may have. Made By Mary has a small pop-up question box on the side, so it feels like an assistant is on standby at all times.
Another great way to personalize their experience is to start a loyalty program. It’s not only a great way to increase AOV but also helps to increase customer retention. There are a variety of ways to run a loyalty program, but the most common allows customers to accumulate points with every purchase. Once they have enough points, customers can enjoy a free gift or a discount which encourages them to purchase more than they originally would have.
Build Trust with Customer Reviews
Customer reviews and feedback can hugely impact a buying decision. Therefore, if you have great reviews for your business and product, make sure you display them clearly throughout your website and social channels. To encourage more reviews, you can email customers after their order has arrived thanking them for their business and asking for their feedback. You can also offer a discount or gift card to entice them to leave reviews.
In conclusion, the combination of the strategies above will help to improve your AOV, however, it’s important to be constantly reviewing your buyers' behavior. This will allow you to effectively adjust the above strategies, such as upselling and cross-selling, to best suit your customers' behavior.
Any questions? Let us know in the comments below.