How to increase average order value

How To Increase Average Order Value

If your business exists in the e-commerce domain, you will know that the competition is fierce and the customer's expectations are even fiercer. With that in mind, you need to find innovative ways to boost your business's profitability. 

One powerful strategy that can significantly impact your bottom line is increasing your average order value (AOV).

In this blog, we embark on an enlightening journey to unravel the secrets of driving higher AOV. We will explore strategies and techniques that can revolutionise your business's success. 

Whether you're an online retailer, a service provider, or a B2B enterprise, this blog aims to equip you with the knowledge and actionable insights to unlock new levels of profitability and sustainable growth.

While there is a whole heap of metrics that you should keep up with as the proud owner of an e-commerce business, AOV is one you can't ignore.

Why is AOV such a crucial metric, you may ask? The answer lies in its ability to magnify your revenue streams and enhance customer lifetime value. 

By encouraging customers to spend more during each transaction, you increase immediate revenue and establish more robust relationships, foster customer loyalty, and open doors to cross-selling and upselling opportunities.

Join me as we delve into the world of average order value. What it is, why it is important and finally, getting into those strategies and techniques that can transform your business.

How To Increase Average Order Value

Average Order Value: What Is It And Why Is It Important?

If the question is, ‘’What is average order value?’’ The answer is in the name.

Average Order Value (or AOV) is the average amount spent each time a customer places an order. By creating an average, you know how much your customers spend each time they make a purchase.

When I explain it like that, it might not seem like a metric that should be on your radar.

Would it make more sense to focus your time on getting more customers through the door instead of employing strategies that increase the average orders of customers you already know?

If your answer to that is yes, I can understand why! But increasing your AOV isn’t just great for profitability.

Focusing on increasing your AOV can also get these benefits knocking on your front door:

Revenue growth - Boosting AOV directly translates into increased revenue. Encouraging customers to spend more during each transaction amplifies your overall sales and generates higher income. This can significantly impact your business's profitability and long-term sustainability.

Increased customer lifetime value (CLV) - AOV plays a crucial role in determining customer lifetime value, which measures the total value a customer brings to your business over their entire relationship with you.

When customers make larger purchases, their CLV increases, indicating a higher potential for repeat purchases and increased loyalty.

 By focusing on increasing AOV, you maximise immediate sales and build stronger, more profitable relationships with your customers over time.

Cross-selling and upselling opportunities - Increasing AOV opens doors to cross-selling and upselling opportunities.

By strategically suggesting complementary products or enticing customers with higher-priced alternatives, you can inspire them to explore additional options and make more substantial purchases.

This drives immediate revenue and introduces customers to a broader range of your offerings, potentially creating a ripple effect of future purchases.

Improved profit margins - Higher AOV can also lead to improved profit margins.

With larger orders, you can optimise your resources and operational efficiency. By reducing the costs associated with processing multiple small orders, you can allocate more resources to fulfil higher-value transactions, ultimately increasing your margins and bottom line.

Competitive Advantage - In today's highly competitive e-commerce landscape, businesses constantly seek ways to differentiate themselves.

By focusing on increasing AOV, you can stand out from the competition and provide a unique value proposition.

A higher AOV demonstrates that your customers trust your brand, find value in your products or services, and are willing to invest more in their purchases. This can elevate your reputation, attract new customers, and strengthen your position within the market.

Cost effective marketing efforts - Increasing AOV allows you to maximise the return on your marketing investments.

Instead of solely focusing on acquiring new customers, you can leverage existing customer relationships to drive higher sales.

 By nurturing and incentivising customers to increase their order value, you can make the most of your marketing efforts, reduce customer acquisition costs, and achieve a better overall return on investment.

How To Increase Average Order Value

Now that you know all of the wonderful benefits that increased AOV can bring you, it’s about time that we get into the strategies and techniques that can get you there.

Below are eight strategies you can use immediately to skyrocket your AOV.

I’m sure that when you’re reading along, you might find that some of these techniques have worked to increase your AOV when shopping online at your favourite retailer. That is perfect because you know first-hand that it works!

Implement Tiered Pricing

To kick off our list, we have tiered pricing. By offering different pricing tiers or packages to your consumers, it incentivises customers to choose higher-priced options.

By highlighting the added value and benefits of a more premium package, you encourage your customers to upgrade their orders.

Let’s imagine you wanted to buy a repeat order of your favourite face wash. You’ve added it to your basket and you’re about to pay. 

But, before you check out, you get a popup notification that informs you there is a bundle that includes your face wash, a toner and a moisturiser that would be perfect for you with some pennies knocked off for good measure and a cheeky discount code included for your next purchase.

In this instance, your retailer has shown you a package might cost a little more than you had intended to spend on that day. But, it will benefit you (and them) in the long run.

Create Product Bundles

Following swiftly on from our last point, creating product bundles is an effortless way to increase your AOV.

By bundling together complementary products or services at a slightly discounted price compared to purchasing them individually, you encourage your customers to add more items to their cart. Which in turn, increases their AOV!

If you wanted to get really specific with this, you could implement a trigger into your marketing automation system that lets you know when someone has bought a particular bundle. You can then use this information for customer segmentation. Let’s carry on with our skincare example from above.

If one of your customers bought the skincare bundle that is defined for treating dry skin as opposed to any of the other skin types your other bundles are aimed towards, you know that either they or someone they know fairly intimately has dry skin. With this information, you can then personalise their messaging. 

When there is a new product launch that would suit someone with dry skin, you can send it their way. Or, if they’ve not been purchasing your products or responding to your emails, you could send them a discount code specifically for products that suit them.

Offer Volume Discounts

Offering volume discounts is a surefire way to increase your average order value. 

This strategy encourages customers to buy more in order to take advantage of the cost savings, thereby increasing their order value.

Food retailers employ this strategy often. Every time I pop into Tesco for my weekly food shop, I find myself drawn in by a deal that gives me a price discount if I buy more than one. Or, if it’s a particularly lucky day, buy one get one free will always have a space in my heart.

The bottom line is, we all love a cheeky discount or the feeling that we are getting something free of charge. Use it to your advantage to boost your AOV!

How To Increase Average Order Value

Free Shipping

This is another strategy that I’m sure won’t be new to you. But, maybe you didn’t realise the aim when it was presented to you.

Carrying on from the point above, we all love free stuff. The most annoying thing for most people when they are online shopping is having to pay for shipping. 

By setting a minimum order value your customers must meet to qualify for free shipping, you nudge them to add more items to their cart to meet the threshold. 

Why would they pay for shipping when they could get something else they’ve had their eye on and effectively spend less?

They get an extra little treat and you enjoy higher AOV.

How To Increase Average Order Value

Limited time offers and up-sells

Have you ever had an experience where you found completing a piece of work challenging until it was crunch time? You’ve known about this deadline for a while but for some reason, until time is working against you, you can’t seem to get yourself to sit down and crack on?

You pull your socks up and get to it when you know it is now or never. Funnily enough, we behave the same way when we’re shopping online.

If you create a sense of urgency for your customers by offering time-limited upsells or add-ons during the checkout process, you encourage your consumers to add more to their basket.

By presenting irresistible offers that complement the customer’s initial purchase, you can entice them to increase their order value before completing the transaction.

Loyalty programmes and rewards 

Just about every big retailer has some form of loyalty program or reward system. Boots has a membership card, Tesco has its club card, and your favourite beauty salon probably has something similar.

Implement a loyalty program that rewards customers for reaching certain spending thresholds or making repeat purchases.

By offering exclusive discounts, points, or rewards, you encourage customers to increase their order value to unlock more significant benefits.

Post-Purchase Upsells and Add-ons

After a customer completes their purchase, you can offer relevant upsells or add-ons that enhance their initial purchase. 

Suppose your consumer bought some new garden shears; you could send them an email that shows them an excellent price for a new watering can or any other garden tools.

Presenting these options immediately after checkout increases the chances of customers making additional purchases, driving up their order value.

Offer Social Proof

Retail Touchpoints found that 66% of consumers are more likely to be convinced to purchase a product because of its positive reviews. 

No matter how brilliant the product, sometimes we need to know that someone else has had a positive experience before investing. Especially if the product has a higher price point.

Build a relationship built on trust with your audience and offer them social proof through their experience with you.

This could look like sneaking a few new customer reviews into your email messaging, ensuring a live review section under each product or continually posting reviews and testimonials on your social media platforms.

With the newfound confidence that you arm your consumers with, you’ll see that your AOV starts to grow.

Time to get that AOV up?

Finding ways to increase your average order value isn’t just about profitability and getting money through the door.

It can increase your CLV, open new opportunities to up-sell and cross-sell, improve profit margins, give you a competitive advantage and make your marketing efforts more cost-effective.

While money is the aim of the game for all businesses, (we live in a fiscal world after all!) hitting two birds with one stone is going to be a good use of your time.

You can use the strategies displayed in this blog immediately to boost your average order value.

If you’ve been struggling with hitting targets on essential metrics such as AOV, CLV or ROI, I know a group of Ninjas waiting in the wings if you need help.

We help businesses of all shapes and sizes to grow and reach their marketing goals.

If you’ve been on the lookout for some help or if you would like to have a chat about those metrics and how you can change them for the better, book a call with a Ninja to see what we can do for you.

If you’re as passionate about your marketing as we are, I’m sure we’ll be able to find something that is the perfect fit.

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