Increasing average order value (AOV) is one of the core activities every e-commerce owner will have to tackle. You can always make the effort to improve conversion rates or drive more traffic to your website but, at the end of the day, your success will hinge on finding a way to encourage customers to spend more money in your store.
When you can nail down a well-defined plan to increase AOV, you can pave your way to a profitable online store. Get it right and watch your sales and company growth skyrocket.
To help you get started, we put together this guide to share some key ways to increase your AOV and boost sales.
Table of contents:
- What is average order value?
- How to calculate average order value
- Eight powerful ways to increase average order value
- Average order value FAQ’s
What is average order value?
AOV is one of the top metrics to track for online stores. eCommerce businesses use it to calculate the average total of every order placed over a set period of time.
Grayson Lafrenz, CEO of Power Digital Marketing, endorses AOV and ascertains: “You might have a torrent of traffic and a respectable conversion rate, but if the average order value is low, it will be difficult to stay in the green.”
Why?
Because tracking AOV will help you measure the long-term value of individual customers and understand their buying habits.
This type of data-driven information will help you drive better decision-making when it comes to marketing and pricing strategies, helping you to decide:
- How much to spend on advertising
- How to price products
- How to approach your marketing efforts
Refining your actions according to historical data as opposed to a “gut feeling” will make your changes much more effective. Derek Raponi from Data Insight Group elaborates:
“Data analysis is able to take into account far more variables, values, and conditions than the human mind can possibly handle. Good data and the right analysis skills can direct you in ways you had never even considered before, further improving your business results and allowing you to capitalize on opportunities more quickly.”
Acquiring this data involves a simple calculation:
How to calculate average order value
Calculating AOV works like this:
Revenue ÷ Number of Orders = Average Order Value
Here’s an example of what your calculations might look like:
- Your total revenue for March was $40,000
- The total number of orders in your eCommerce store for March was 1929
- You divide 40,000 by 1929 which comes to 20.73
- Your AOV during March was $20.73
This data can highlight consumer trends. For example, let’s say you’re selling four flower bouquets priced at $15, $20, $40 and $50. If your average order value is $20, this means that:
- The majority of your customers order one item
- Your cheapest bouquet is your best selling product
In this case, improving your proposition and tweaking your prices or offers may be a sure-fire strategy to boost your AOV and, as a result, your ROI. The following tips will give you an idea of the ways you can adjust your marketing and pricing strategies to get to this sweet spot.
Eight powerful ways to increase average order value
1. Display product recommendations on your website
Monetate conducted a study recently to quantify the sales impact of product recommendations. The research found online retail browsers who engaged with a recommended product had a 70% higher conversion rate during that session.
The key to successful product recommendation is data-informed personalization. When you can recommend a product to a customer they really want, you’re saving them time and effort, encouraging them to make a purchase.
Gathering this data can be completed in three ways:
- Directly asking customers through surveys, feedback forms, or other means of gathering info
- Indirectly tracking customers using customer behavior monitors
- Adding other sources of customer data to your own
Marketing automation tools like ManyChat can help you collect, analyze and act on customer behaviors clocked in your Messenger, SMS, and email channels. You can track engagements and transactions and send special rewards to loyal customers, so they keep coming back to spend more in your store.
2. Offer free shipping
When it comes to increasing AOV in your ecommerce store, your goal is to encourage customers to buy more in one go. Amazon nails this approach through its “Free Delivery on Qualifying Orders Over $25” offer.
Shipping is a price shoppers don’t want to pay. Online retailers can offer free shipping in return for ordering more in your store, and can entice customers to buy more.
Use a strategy like this to show related or more expensive items at checkout while promoting your “buy more for free shipping” offer. It also helps people find items they may have been looking for.
3. Create product bundles
Another great way to encourage multiple orders and increase your profit margins is through bundling products. The idea is that you bunch a set of related items together to build a cheaper package for the customer, giving them more value for their buck.
One study from McKinsey estimates that 35% of all Amazon purchases come from recommendations, some of which qualify as bundles, and those recommendations can have as much as a 60% success rate, according to Forrester.
You can bundle complementary products and let customers pick and choose which they prefer. Best Buy uses this approach for most of its products, for example:
If run a Shopify store, you can easily search the Shopify app store for product bundle apps to use. Many of these have free trials. Test different bundling product campaigns and choose one that achieves the best conversion rate for your ecommerce store.
Increase AOV and drive more revenue for your store with ManyChat. It’s free to get started.
4. Upsell or cross-sell during checkout
Upselling and cross-selling are responsible for 10-30% of e-commerce revenue. It encourages customers to buy more expensive or complementary items.
It can also serve as a great reminder for both new and repeat customers who might leave something behind. In the example below, a coffee company upsells to a bigger bag for three more bucks, then cross-sells coffee filters to increase AOV.
Cross-selling invites customers to buy related or complementary items (for example, a bag of coffee beans could be cross-sold to a customer buying a coffee machine). You can execute upselling or cross-selling during checkout by including personalized prompts at a specific stage in the process.
Good copy is the key to effective upselling and cross-selling. Using enticing words in your prompts such as “Add Extras,” “You May Also Like,” or “Others Also Bought” for a layer of persuasion.
5. Create a post-purchase follow up sequence
Upselling and cross-selling can be used post-purchase too, and you can create sequences for these actions using ManyChat. You can add a flow trigger within ManyChat for when a customer places an order in your Shopify store.
Once this action has been performed, a follow-up ‘Thank You’ Messenger message is sent and can include a product feed, incentivizing customers to follow through on an upsell or cross-sell purchase. You could follow-up with a coupon or customer loyalty program offer to turn one-time buyers into repeat customers.
The flow trigger can help jump on the excitement of a new order, and make good recommendations for customers based on their needs.
6. Send cart abandonment messages in Messenger
With ManyChat, you can reach and recover lost customers after they abandon a cart by sending them messages on Messenger, SMS, and email. You can also grab their attention by adding a gallery of the products in your message.
For example, Fletcher Goods, an outdoor sporting goods online store, uses Messenger to send abandoned cart messages. They even accept payments in Facebook Messenger:
Accepting payment inside the chat window is key to recapturing the sale and increasing AOV.
Another great way to get people back to your ecommerce site is with an SMS message:
SMS also presents an opportunity to help customers in real-time, encouraging them to make a bigger purchase. Perhaps a customer is worried about buying more expensive items because they’re not sure if the added cost is worth it. You can talk to them easily using SMS Live Chat to answer their questions and ease their worries.
For Shopify stores, you can integrate with ManyChat to deliver click-to-Messenger ads to lookalike audiences from your store, and send automated cart abandonment messages across Messenger, SMS, and email to recover sales.
7. Launch a customer loyalty program
One study conducted by Smile.io, a loyalty rewards program management company, revealed that brands who use customer loyalty programs see at least a 13.71% increase in average over value from program members versus non-program members.
Moreover, when a customer joins your rewards program, it gives you the chance to build closer ties with them. You’re building trust with them and, in turn, they’re more likely to make higher-value purchases than new customers. It’s also a great churn busting technique for e-commerce stores.
SheIn, an online clothing retailer for women, offers affordable clothing for women around the world. Their rewards program lets customers earn points by verifying their profile, commenting on social with a picture, or sharing pictures on social media. Members can then use their points to get discounts and shop in the store.
The key to a successful loyalty program is to employ this kind of points or rewards system easy to use, earn, and spend. No one wants to spend months racking up points to buy one shirt on a discount. There are plenty of great customer loyalty program examples that you can imitate to create a great one for your brand.
8. Offer new customers an irresistible deal
Increasing order value doesn’t just have to come from repeat customers; you can also encourage new customers to buy more with a deal or a discount right when they land on your site.
You can give new store visitors a one-time discount when they purchase a certain product or bundle deal. And if they love what they order, it’s even easier to get them to shop again and add more products to the cart.
Average Order Value FAQ’s
Why is average order value important?
Increasing average order value is one of the most important ecommerce metrics to track. It’s how online retailers balance customer acquisition costs and increase profit margins. You can use it to optimize your checkout page and drive more sales.
How do you increase average order value?
- Display product recommendations throughout your ecommerce website
- Offer free shipping with minimum purchase value
- Create product bundles
- Upsell and cross-sell on your check-out page
- Send post-purchase follow up messages
- Send cart abandonment messages through Messenger
- Start a customer loyalty program
- Offer new customers an irresistible deal
What is average basket value?
Average basket value refers to the number of products sold in a single purchase. It’s equal to total units sold / number of invoices and is another important ecommerce metric to track alongside AOV.
Improve customer experience to increase AOV in your store
If you want to improve your average order value, you want to start working on the customers’ experience in your store. What is the customer experience like when they first enter your website? How can they communicate with your brands if they have questions? Is it clear what other products you offer?
Gauge the solutions you offer to these questions. Armed with the eight tips above, you can better encourage people to buy more (helpful) products, and improve average order value for your store.
