Average Order Value: How to increase it?
Average Order Value (AOV) is the average amount of money each customer spends per transaction with your store. Most E-Commerce platforms and any analytics services like Google will provide this figure, but you can calculate your average order value using the below calculation:
Total revenue / number of orders = average order value
AOV is determined using sales per order, not sales per customer. So, even if you have one customer that comes back multiple times to purchase, each order is calculated into AOV separately.
To increase your Average Order Value, you either want customers to add more items to their cart or add more expensive items. Below I’m going to provide you with three key ways to increase AOV.
1.Provide product recommendations
Often, your potential customers are coming to your website to look for one item and aren’t focused on looking elsewhere on your site, this can lead to small carts and small AOV.
To help with this problem you can add product recommendations to your product pages or in the checkout process. This not only increases the AOV but also improves customer experience because it’s a frictionless addition to either page and allows the user to browse products without clicking through to other pages. Consider using wording on your website that encourages your customers to view more product in a way that aligns with your brand - such as “Editor’s recommendations” or “Customers also liked.”
The products you select to show in product recommendations are important and must align with your business goals at the time. You may decide to provide more expensive items, slow moving stock or popular items in the recommendations, it’s up to you.
2. Upsell and cross-sell complementary products
This tip also involves adding product suggestions to your product page. Provide your customer with suggested products that may pair well with the product already in a customers cart, such as accessories or add-ons. For example, a necklace with matching earrings.
You can take this to another level with fashion and apparel websites. When customers are buying online, help them put together a full outfit. If they have a pair of pants in their cart, show them a top and jacket that goes with those pants - these are typically the items you would pair together in a photoshoot, so reuse those images!
Many businesses will provide discounts here for adding another item to the cart, a win-win for your business and the customer. As I talked about last week, It’s more expensive to get a new customer than it is to upsell an existing customer, so by providing a discount for adding another item to a cart you’re not losing out. Make sure it’s big enough so a customer actually wants to do it.
This is essentially cross-selling and upselling. Cross-selling is when you promote a complementary product, whereas upselling is when you promote a product upgrade or a more expensive version of the product.
3. Create Bundles and Packages
Everyone loves a deal. If you want to increase your AOV and want your customers to buy more, try creating product bundles or packages that cost less than if the same items were purchased individually.
By bundling products, you increase the perceived value of a customer’s purchase. One great approach is to create a bundle that provides an all-in-one experience by offering a package of products for a particular experience. Make it easy for customers to get everything they need in one stop! For example, a skincare brand may sell individual items like toner, face wash, and moisturiser. But to cater to all of a customer's needs, the brand could bundle those three items together and sell them as a set.
Try and think of what experiences you can reenact with your products.
Sell more to your customers that want to buy
The most cost-effective and efficient way to increase average order value is by concentrating on your existing traffic and your loyal customers. They’re already browsing your brand, you just need them to spend more. When you focus on engaging and activating those who are already engaging or spending with, you have fewer barriers to overcome. As well as focusing on new customer acquisition, focus on creating a better experience for your potential and current customers to increase their AOV — the customers who spend more, get more - and consequently make you more!
If you’d like any more advice or a list of apps that might be useful, email me at email@example.com