How To Boost Your Online Store’s Average Order Value?
We’ve talked about two important e-commerce store KPIs in our previous blogs. One, dealing with abandoned carts, and another focused on reducing high bounce rates on an e-commerce store. In this blog, we’ll see how e-commerce store owners can increase their online store’s average order value for better performance and higher ROI.
But first, let’s understand the term – Average Order Value.
Average Order Value refers to the average amount spent by customers each time they perform a transaction with an online store. AOV can be calculated by dividing the total revenue obtained by the number of orders placed.
Average Order Value is a key performance metric that online businesses track in order to understand their customers’ buying behavior. This metric can be measured for any time period. However, most e-commerce establishments monitor the monthly average.
Now that you know what AOV is and how it’s calculated, let’s move on to see how you can increase the Average Order Value for your online store –
1. Recommend Products
Often, customers are so busy shopping for a product that they might overlook all the other products that you’re selling. This results in smaller carts and hence, reduced average order value.
Product recommendations can work wonders in this regard. By clubbing all your best sellers, or profiling similar products that other customers have purchased, and displaying them on the product page or the checkout page, you can easily increase your store’s average order value.
2. Cross Sell
This method is quite similar to recommending products as mentioned above. However, in this, instead of recommending other popular products from your store, you can mention items that pair well with the product in the cart.
For example, if the customer is buying a laptop, you can recommend accessories or add-ons such as a mouse, an external keyboard, a laptop stand, etc. This is similar to what you do in a physical store – promote a complementary product (cross-sell) or offer an upgraded version of the product (up-sell).
3. Offer Volume Discounts
Volume discounts are another way to increase the average order value for your store. This works especially well for food and grocery based e-stores and even online fashion and apparels stores, for that matter.
Offering two of the same products at a price slightly lesser than double the price of one can persuade customers into buying more. For example, a hand towel costs $9, but you offer a discount of 30% on the purchase of 3 hand towels.
You could also bundle your products and mark them at a price less than what the same items would cost if purchased individually. This is another way to inspire customers to purchase more items.
4. Give away Coupons
Though not a long-term strategy, coupons offer a great way to boost your average order size. However, coupons should be used carefully and only when they match what your brand is trying to achieve. A luxury brand giving out a discount doesn’t really sound viable, right?
Setting a spending limit for the coupon can encourage customers to spend more than they would have without the discount so that they can enjoy the benefit of saving. Say, for example, you offer $5 off on the next purchase for customers who spend $50 or more on their current shopping.
5. Set Shipping Thresholds
Offering free shipping may not always be the right option for your business. Hence, setting a shipping threshold will help you motivate your customers to buy more while ensuring your profits are not dragged down by free shipping costs.
The threshold for free shipping should normally be 10 to 15% plus the average order value. However, make sure you test it so that your sales are not affected adversely by the set shipping threshold.
Encouraging Your Customers to Buy More
Your average order value ultimately translates into increased profits and continued success for your brand. And the best way to get the best return on your investments is to focus on your existing customers and encourage them to buy more from you.
The above-mentioned methods can be used effectively to motivate customers to add more items to their cart and improve your AOV. These considerations will not only keep customers coming back but make them want to spend more and boost your business.