Enhancing ROI and ROAS is a common objective for ecommerce enterprises, and numerous approaches can be employed to achieve this. For those managing Google Shopping campaigns, prioritizing campaign structure is recommended. If your focus is solely on search ads, consider expanding to social or display platforms. Naturally, optimizing the overall shopping experience is crucial, and this tactic offers multiple advantages, including boosting the average order value.
As evident above, average order value benchmarks exhibit variations across different industries. However, the strategies for augmenting average order value often hold universal applicability. Continue reading to uncover 10 pragmatic yet unobtrusive methods to elevate your business’s average order value. Let’s delve in!
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What is average order value (AOV)?
Average order value (AOV) is a key performance indicator (KPI) that quantifies the average expenditure per transaction on a website, within an online store, or over a specific timeframe. Businesses frequently utilize it to monitor customer behavior, pinpoint lucrative sales avenues and segments, and ultimately evaluate and enhance their sales performance.
AOV calculations can be performed for a company as a whole or for particular product categories, channels, or geographical areas. For instance, a company might compare its AOV year-over-year or investigate the impact of various marketing initiatives on AOV.
By grasping the calculation of AOV and the elements influencing it, businesses can implement measures to elevate their average order value and bolster their profitability.
How to calculate average order value
To determine your AOV, simply divide the total revenue generated from all orders within a defined period by the total number of orders placed during that same period.
To illustrate:
- Total revenue: $2,300,000
- Number of orders: 56,450
- Average order value = $2,300,000 / 56450 = $40,744
10 ways to increase average order value
Let’s explore nine actionable strategies to effectively increase your average order value and elevate your business’s profit margins.
1. Enhance Your Website’s Social Proof
When a new visitor lands on your website, they might be encountering your aware of your brand for the very first time. This is your opportunity to make a strong impression and demonstrate why they should choose to purchase from you.
Social proof serves as a testament to potential customers that others have had positive experiences with your product or service, instilling confidence in them to make a purchase. There are various ways to leverage social proof, but for the purpose of increasing AOV, consider these approaches:
Incorporate Reviews on Product Pages and Homepage
If you have customer reviews for specific products, prominently display them on the respective product pages. Here’s an illustration from a brand called Oodie, showcasing customer reviews directly on their homepage.
Utilize Testimonials and Trust Signals
Customer testimonials and endorsements from influencers contribute to building trust and credibility, potentially leading to increased sales and a higher average order value.
Showcase Your Achievements
Adding your accomplishments and accolades to your website is another effective method to enhance social proof and AOV. This practice fosters trust with potential customers, demonstrating your credibility as a company.
For example, LARQ proudly features their awards on their website.
2. Experiment with Different Website Copy
The text content on your ecommerce website plays a pivotal role in influencing customer purchase decisions. If your current conversion rate is unsatisfactory, consider A/B testing your website copy. This involves creating two versions of a specific element and comparing their performance to determine the most effective option.
You can A/B test virtually any component of your website and landing pages, including:
- Headlines
- Call-to-action buttons
- Product descriptions
- Product images
- Website layout
- Checkout processes
For inspiration, explore prevailing ecommerce website trends and illustrative examples.
3. Prioritize Customer Service
Website customer service is often undervalued, but it deserves significant attention as it eliminates purchasing obstacles and cultivates trust, both of which contribute to a higher average order value.
Moreover, exceptional customer service ensures swift and efficient problem resolution, ultimately saving time and resources.
Consider implementing these measures:
- Integrate 24/7 Live Chat: Live chat empowers website visitors to receive instant answers to their queries, mitigating any hesitation or confusion they might have about making a purchase.
- Develop a Comprehensive Help/FAQ page: By providing your customers with a reliable resource page, you demonstrate a commitment to delivering an optimal experience, potentially leading to an increase in your average order value.
- Display a Contact Number: Maximize accessibility to your business by providing a contact number, ideally with a tap-to-call feature for added convenience.
- Include a Contact Email: A dedicated contact email address is essential. Customers should have a direct channel to reach you with any questions or concerns they may have.
Excellent customer service is particularly crucial when selling high-value items or those requiring substantial investment or commitment.
4. Introduce Upsell Opportunities…
Upselling involves encouraging customers to opt for a higher-priced version of the product they are interested in. For instance, if a customer is considering a basic pair of shoes, you might attempt to upsell by presenting a more expensive alternative crafted from superior materials, offered as a limited edition, or featuring customization options.
In the example below, Proflowers goes beyond a standard bouquet option by offering Deluxe, Premium, and Exquisite alternatives.
5. …and Cross-sell Options
Cross-selling entails suggesting complementary products to customers. For example, when a customer adds a dress to their cart, you could cross-sell by showcasing jewelry or shoes that would complement the dress.
This strategy effectively increases AOV by facilitating the sale of multiple products to a single customer. It also provides an avenue for selling surplus inventory.
Pro tip: Upsells and cross-sells are particularly effective for a dropshipping business model, but exercise caution to avoid appearing overly aggressive. The key is to ensure that the offered products are genuinely relevant and valuable to the customer.
6. Create Product Bundles
Bundling products is a prevalent tactic employed by businesses to encourage higher spending per order. For instance, a beauty product retailer could bundle shampoo, conditioner, and a hair mask.
Consider this example from Target: upon adding a product to your cart, the website suggests a bundle of frequently purchased together products.
Pro tip: Successful bundles hinge on offering complementary products that enhance each other’s value. The bundle’s price should also represent a compelling deal for the customer.
7. Implement Limited-Time Offers
Limited-time offers instill a sense of urgency, prompting customers to make purchases before the opportunity expires. Examples include:
- Offering a free gift with the next purchase for a limited time
- Providing discounts on specific products or categories
- Capitalizing on seasons and anniversaries for limited-time sales
- Running stock clearance events with limited-quantity sales
Incorporate countdown timers on your website to visually convey the offer’s duration, as demonstrated by Pura Vida below:
Pro tip: Regardless of the sales promotion, ensure its prominence on your website to prevent customers from overlooking the offer and missing out.
8. Leverage Exit-Intent Popups
Exit intent popups serve as a valuable tool for increasing AOV and boosting overall sales. These popups appear when a customer intends to leave your website, though other triggers can be set, such as time spent on site or scroll depth.
Typically, the popup presents an offer, such as a discount or a free gift, to entice the customer to remain on your website and complete a purchase or subscribe to an email newsletter.
Pro tip: Exercise caution to avoid overusing exit-intent popups, as excessive popups can annoy visitors and drive them away. Utilize them strategically, for instance, on product pages rather than the homepage.
Get creative ideas for your popups!9. Establish a Free Shipping Threshold
This tactic motivates customers to add more items to their cart to qualify for free shipping. If your threshold is $50 and a customer has $42 worth of items, they are more likely to add more to reach the threshold.
You can define the threshold based on a dollar amount or quantity, such as free shipping for orders over $50 or for orders with more than five items. In the example below, the threshold is set at $35.
Pro tip: Determining an appropriate free shipping threshold for your business is crucial. Setting it too high may discourage customers, while setting it too low may impact profitability due to shipping costs.
10. Implement a Customer Loyalty Program
Customer loyalty programs are highly effective for increasing AOV, fostering customer loyalty, and improving customer retention. They incentivize repeat purchases and encourage larger orders to earn rewards.
Various approaches can be taken to establish a customer loyalty program. Offering discounts to repeat customers, awarding points redeemable for free products, or implementing referral programs with rewards for bringing in new customers are a few examples.
Pro tip: Ensure the chosen customer loyalty program’s mechanics and reward system are clear and appealing to customers to maximize participation.
How to increase average order value (recap)
These are just a few of the many strategies available to elevate your average order value. Experimentation is key to discovering what works best for your business. Remember, even minor increases in AOV can significantly impact your bottom line.
Here’s a recap of the 10 ways to increase average order value:
- Enhance your website’s social proof
- Test out different website copy
- Make customer service your priority
- Include upsell options…
- Cross-sell options
- Bundle products together
- Add limited-time offers
- Use exit-intent popups
- Add a free shipping threshold
- Start a customer loyalty program
Continuously track your results to gauge the effectiveness of your efforts. With a strategic approach, you can rapidly boost your AOV and propel your business to new heights.