The eCommerce landscape has dramatically changed over the years. The rising acquisition costs make it harder to earn a profit. This leads to an ever-growing need to make more money off each sale – that is, increasing your average order value (AOV).
Due to the high traffic and acquisition costs, relying solely on finding new customers to generate more sales isn’t going to cut it anymore.
Rather than only trying to increase sales, focus on tactics that increase the amount your buyers spend on each transaction.
But how do you actually get customers to spend more?
What is AOV
Average order value (AOV) is the average amount of money each customer spends when they make a purchase from your online store.
Knowing your AOV is key to understanding who your best customers are, how to set up campaign targeting, and is also a decisive factor that helps position your pricing, shipping, and other key strategies.
Increasing your average order value directly impacts your revenue growth and leads to more profitable sales.
We’ll get to that in a minute, but first, let me show you how to determine your AOV.
Why increasing AOV matters
Improving your AOV will directly and positively impact your revenue growth and help you scale profits upward.
Not only that but having a higher AOV will also help your eCommerce stay afloat. It’s a major differentiator between business success and failure.
You see, as customer acquisition costs continue to rise and competition gets even more fierce, you need to squeeze more money from each sale to stand a chance.
How to increase your eCommerce AOV
Increasing your AOV means you’ll be able to recoup the cost of converting a customer, while still being able to make a profit.
Now, because of unforgiving competition and high advertising costs you need a much more advanced strategy in order to really turn that traffic into profit.
To increase your AOV, you need to convince customers to add more items, or more expensive items, to their cart.
Upselling, cross-selling, conditional free shipping and other tactics are tried and true AOV boosters.
In case one simple upsell doesn’t do the trick, you can have a continuous flow of various offers aimed to raise your AOV.
Stack multiple offers to maximize your order values, grow revenue and supercharge your profit.
This is why some online stores (including your competitors) can afford to pay high CPC, constantly run discounts and still make a profit.
1. Use Web Design to Highlight Higher Priced Plans
“For many businesses,” said Casey Hill of Bonjoro, “the most effective way to increase AOV, is to present the purchase options in a way that highlights your higher dollar value options,” Hill explained how many businesses offer 3 pricing tiers—but they often want to sell more of the mid and high tiers.
In order to make that happen, Hill explained, “you want the visual aesthetic of your website to highlight those choices, both in terms of colors/layout and in terms of verbiage.”
2. Add a Discounted Upsell After Order Completion
According to Growth Hackers’ Jonathan Aufray, using upsells to boost AOV is all about giving customers a reason to spend more and creating a sense of urgency around it. Whereas most businesses send customers to a thank you or order confirmation page after checkout, Aufray recommends taking this opportunity to upsell instead.
“Let’s say a client buys a product for $100 and is about to leave the website. Instead of directing them to a thank you page, direct them to an upsell page. Propose a product related to what they just bought, and note that if they purchase that extra product now, they get a 30% discount.”
“Most buyers will buy this upsell,” Aufray said, “and your AOV will increase automatically.”
Mark Thompson of PayKickstart shared a few concrete examples of how impactful upselling can be. In one such example, Thompson and the team started with total revenue of $113,164 and average order value of $66.96. By adding upsells, they more than doubled both revenue and AOV, which grew to $146.22.
3. Use a Minimum Dollar Threshold for Free Shipping
Roberta Perry of ScrubzBody increased their average order value from $45 to $78 by making one, seemingly small, change: increasing the minimum order amount customers need to hit in order to get free shipping.
We’re all consumers here, too, and we’ve all found ourselves trying to find one more $10 item, so we can avoid paying for shipping. It’s a small thing, but it works.
“If customers are near the threshold for free or reduced delivery, then a pop-up tells them this. That usually results in them adding more items to the cart to qualify,” Jon Deak of Hot Juice told us.
Roman Kniahynyckyj of LyntonWeb said they offer free shipping with a minimum purchase for one month and saw AOV jump from $70 to $80.
The key to making this trick work is to ensure customers are well informed of how much it takes to get free shipping and how near or far their current shopping cart is from that threshold. Alistair Dodds of Ever Increasing Circles said one of the best ways to do this is by using a plugin.
“You can install a plugin that shows users how, by spending just a little more, they could qualify for free shipping. For example, if the user has placed a $35 product in their basket, the message will suggest spending just $15 more to qualify for free shipping.”
4. Take an Analytical Approach to AOV
“Instead of starting with a tool or tactic, do your homework first,” advised Dennis Moons of Store Growers.
“First, look at your top-selling products and dig a little deeper. Why do customers buy them? How do they use them? What’s stopping them from being successful with them? Next, explore how additional products, higher quantities, or a subscription can help them with that.”
“Remember that, like Conversion Rate Optimization, optimizing your AOV is not about one single website update,” Robert Rand of JetRails added. “If you’re serious about a high AOV, you need to review your metrics on an ongoing basis and look at factors from shipping options, to loading speeds, to merchandising.”
G2’s Deirdre O’Donoghue knows it can be tempting to try every tactic under the sun to increase AOV—buy O’Donoghue recommends taking a methodical analytical approach instead.
“For example, try segmenting your customers based on the amount they spend, and then target customers who spend less with cross-selling and those who spend more with loyalty programs. If this doesn’t work, then move onto another method like free shipping.”
“Never implement all the tactics at once because it will be more difficult to analyze what method is raising your AOV,” O’Donoghue cautioned.
5. Cross-Sell Related Products During Checkout
This tip may seem like a no-brainer, but there’s a right way and a wrong way to cross-sell. Getting it wrong could mean stagnant AOV.
“The key to an effective cross-sell,” Anthony Capetola of Sales & Orders said, “is to offer items that will add value to the customer’s experience rather than superfluous items. For example, if someone is buying an Xbox, you want to show Xbox video games or accessories.” Read: don’t try to cross-sell with unnecessary or unrelated products.
Salva Jovells of Hockerty added that “the customer has to see the cross-sell as a piece of advice.” For example, “which dress shirts combine with my new suit? If you can provide a reliable answer to that question, your AOV may increase.”
6. Bundle Products and Offer Bundle Discounts
“Bundling has been the best approach that I’ve used to significantly increase average order value,” Marc Andre of Vital Dollar told us. “The key is to create a bundle of products that will all be of interest to customers and will represent a great value.”
“The more you can bundle together related products,” Jake Rheude of Red Stag Fulfillment noted, “the more likely you’re able to increase AOV.”
Lisa Chu of Black n Bianco explained that “When customers feel they’re getting a better deal, they’ll be willing to spend a little more,” noting that big box stores like Costco have perfected this strategy. “After adopting this strategy for our products, our AOV increased by more than 25%.”
David Attard of CollectiveRay reflected on the instinct of sellers to discount items. That only leads AOV downward. Instead, Attard recommends discounting as a bundle. “Rather than taking a product worth $10 and lowering it $7, you should take two products and offer them as a bundle for $14. It’s still a 30% discount on the original price,” Attard explained, “but your AOV will go up instead of down.”
7. Cross-Sell and Upsell in Your Email Flow
Andrea Loubier of Mailbird noted how up- and cross-selling are all about striking the right balance between prioritizing the current sale and working to add value. “If you’re too pushy, it can distract your customers. If you do nothing you can miss out on a valuable opportunity to increase your income.
”Loubier’s solution to this tightrope is to include upsells in the email flow—the confirmation email, to be precise. “It isn’t included when purchasing, so as not to interfere with the initial sale, but it will arrive as soon as the purchase is made in the buyers’ inbox.”
“Think along the lines of, ‘Thank you for purchasing ABC. Due to your recent purchase, you can now purchase XYZ for 10% off,’” said Tom Buchok of MailCharts, noting that you’ll “spend virtually nothing to set up add-on emails, so any takers will put you automatically in the green.”
Clinton Sosnoski of CanadaWheels Inc. notes that it’s important to use the data you have to personalize and tailor these up- and cross-sell emails to the individual customer. “We take a hands-on approach with our customers, so using the data we collect from them we can tailor recommendations for future purchases.”
Boost AOV and Grow Revenue
Average order value is one of the many levers you can pull to help grow any business’ bottom line—and it’s also the one that involves minimal additional marketing and advertising spend. Put the expert tips above to work, and you’ll see order values and revenue grow in turn.