Increasing your average order value is a powerful way to grow your overall sales. Follow these eight tactics to get started.
It’s no secret that average order value (AOV) is an essential metric to track for any online business.
But if you ask an ecommerce manager what website metrics they’re actively working to improve, you’ll likely hear some combination of: website traffic, conversion rate, or revenue.
Here’s the thing: by increasing your average order value instead of trying to win over new customers by driving paid traffic to your site, you can draw more value out of the customers you already have.
Meaning you can grow your business without having to invest heavily in additional marketing and advertising to drive more unqualified traffic to your site.
In this Insight, we’ll be sharing eight tactics that you can utilize on your website to motivate customers to buy more.
Why is Average Order Value Important?
Average order value (AOV) measures the average dollar amount spent every time a customer places an order on your website. To calculate your website’s AOV, simply divide total revenue by the total number of orders.
Average order value is an often overlooked, but incredibly important metric for ecommerce managers to pay close attention to. AOV provides a window into the purchasing behavior of your customers, and that information can be used to improve the effectiveness of your overall marketing efforts and pricing strategy.
Improving your average order value of your website will have a direct impact on your sales margins and profit, while also providing you with critical insights into the behaviors and buying patterns of your audience.
Eight Tactics to Improve Your Average Order Value
Motivating your customers to spend more on your website can be achieved through smart marketing and merchandising tactics, or through direct incentives, like a “buy one, get one free” offer. To help illustrate these tactics, we’ll use a familiar example: grocery shopping.
1. Identify what makes your audience “hungry”
There’s a reason why you should never go to the grocery store hungry. Why? Because you’ll likely find yourself walking out with twice as many things as you initially planned on buying.
Everything turns into a necessity when you’re hungry. That’s why a hungry crowd is the greatest advantage you can have to increasing average order value for your website.
Consider your audience’s needs. What are their purchase motivators? Why should they be hungry for what you’re selling? How can your products/services satisfy their specific needs?
Once you’re able to pinpoint what makes your audience “hungry”, you’ll have a much better understanding of how to tailor your messaging and ad copy to their specific wants and needs.
Here are a few suggestions to get started with:
- Talk to your customers: Opening up a direct line of communication with your audience is one of the best ways to learn what motivates them to purchase. Consider running a small focus group to understand what makes them “hungry” for your products/services. User testing is another great way to learn about your customers and can play an important role in helping to increase your average order value.
- Consider your competition: How are your competitors tailoring their messaging to create desire? What incentives are they utilizing to drive sales?
- Analyze past campaigns: Leverage the data you already have on past ad performance to help inform your offers and messaging. What are the top campaigns in the last year that drove the highest ROI? What offers spark the most interest in your audience?
2. Cross-sell complimentary products
There’s a reason why grocery stores always position the snack aisle in close proximity to the beverage aisle. Smart merchandisers understand the importance of stocking complimentary items together. The same rule should apply when designing an ecommerce store.
Someone who’s purchasing a heavy raincoat may also be interested in getting a waterproof hat or a pair of rain pants. Don’t leave it up to the customer to remember everything they need when shopping on your website. It’s your job to help them out.
- Cross-sell every chance you get. For every item you sell, come up with add-ons and recommend them to your visitors. Cross-selling isn’t just a product page or checkout tactic. It’s a service you provide. Do it consistently and watch average order values respond to your helpfulness.
- Create bundles of items that make sense together. You know they’ll need a reel, fishing line, and bait to go with their new pole, don’t let them forget! Create a bundled offer to make it easy for people to buy everything they need at one time.
- Look for trends in your order history. Are there connections you hadn’t realized before? It’s very likely that there are product combinations you haven’t thought of, because you can’t think like your target audience. Look through your order history to identify buying patterns to help inform your cross-selling efforts.
3. Offer a limited-time promotion
Limited-time offers are a simple and often very effective approach to increasing average order value.
You know how it goes: you’ve been eyeing that new line of Allbirds wool runners since they were released last month, but can’t justify spending $150 on tennis shoes. Fortunately, you just received an email announcing a flash 50% off discount on the exact pair of shoes you’ve been watching!
Will you buy the shoes? Of course you will, and you’ll probably get an extra pair of laces and insoles while you’re at it. Do you need the shoes? Maybe not, but how could you pass up a deal like that?
Make no mistake: the limited-time offer is a powerful sales tool that can help you improve your average order value, if executed properly.
Here’s are some ways you can utilize limited-time offers to encourage a higher average order value:
- Set your free shipping threshold higher than your AOV. Get shoppers to stretch a bit. Adjust the free shipping threshold to encourage customers to add one or two more items to their cart for free-shipping. Would you rather spend $40 and pay for standard shipping, or spend $50 and unlock free shipping?
- Use countdown timers to build on the sense of urgency. Countdown timers can be an effective method to build urgency and increase conversion rates if they’re used correctly. Don’t be intrusive, be helpful. If free shipping is only available before a certain time, implement a countdown timer to let customers know that.
- Leverage price anchoring. Don’t just show the item you have on a limited-time discount for $199, show a similar item alongside it for $499. Anchoring prices with comparisons will help shoppers realize the price they’re being offered isn’t so high after all.
4. Amplify social proof throughout the customer experience
Leveraging social proof on your website can be a surprisingly effective method for improving average order value. Think about it from the perspective of the consumer…
You’re standing in front of the ice cream display at your local grocery store trying to figure out which one to choose, when someone walks up, grabs a certain brand quickly, and says “This stuff is amazing.” There’s a good chance you’ll listen to that person and grab a container of the ice cream they recommended.
We tend to trust our peers more than we trust brands. Every ice cream company will say that their product is superior, but when a fellow shopper confirms that claim, you’re apt to believe it.
- Make liberal use of testimonials on your pages
- Include product reviews from customers
- Encourage customers to submit testimonials and reviews
An ecommerce store that’s well-stocked with customer testimonials is on the fast track to success. If you have one satisfied customer, there’s no reason you can’t have testimonials on your website. Make getting testimonials part of the customer journey – always send a follow-up email asking how the product was a few days after purchase.
5. Upsell a better (or higher-priced) item
Upselling is a time tested method for increasing average order value, and it’s widely used by both retailer and ecommerce businesses.
When you’re buying coffee filters at the grocery store, why would you buy the 50 filter pack when you could just as easily spend an additional $5 and buy the 150 filter pack? Upselling is at work in more aspects of your everyday life than you might think.
Upselling seems to work well for retail stores, so why not utilize it on your ecommerce website? When a person is in a buying mood, your job is more to provide additional items to buy than to encourage the shopper to buy.
6. Create an eye-catching display
In the midst of the produce section, you see a special display for Vitamix blenders. There’s even a helpful demonstrator there handing out smoothies and explaining exactly why you need to have a Vitamix.
You’ve heard about the Vitamix before, but the price seems a bit steep. Now that you see how quick and easy it would be to make your own delicious drinks, though, and understand how a Vitamix can help your family stay healthy… that blender is in the shopping cart and headed home.
We mentioned earlier that design should be functional. Special displays are a great way to make that happen.
- Highlight best-sellers. Let people know what’s hot and why.
- Highlight trending products. Everybody else is buying this; get yours.
- Highlight customer recommendations along with testimonials.
- Put special attention on a product that has a learning curve to it. Include a short training video on the page to show how it works.
- Video, video, video. Show and tell works wonders for just about anything.
7. Utilize direct incentives
Discounts can work to increase average order value, as long as they’re implemented properly. Relying on an exit intent pop-up that promises a 25% discount toward the user’s first purchase will only hurt your AOV in the long-term.
Be smart about how you incentive a purchase. Nordstrom is known for their “free gifts” with a purchase over a certain threshold. They’re essentially giving away perfume samples that they already receive for free from their distributors, but the messaging makes it seem like Nordstrom is going out of their way to offer you something “special”.
Here are some ways to leverage the coupons and discount codes at your online store:
- Provide coupons, discount codes, or gift cards the buyer can apply to the next purchase
- Offer free items when price thresholds are reached
- Set up a loyalty rewards program
- Make charitable donations on behalf of the buyer
These are starter ideas. The list of possible incentives could be huge. The main thing is that your strategy includes ways to incentivize every purchase.
8. Elevate your personalization
Providing a personalized experience for your customers can be a highly effective method for increasing average cart value. Let’s say you’re wandering aimlessly around the grocery store looking for a bottle of club soda. A smiling employee notices your dilemma, takes you to the right place, and points out a special BOGO offer running right now.
The chances of you buying that club soda have increased considerably because of the specialized service you received. Ecommerce sites are capable of watching a customer progress through the store, then popping in to offer help wherever it appears necessary. Here are some tips to improve personalization on your website:
- Utilize a live chat feature. If you don’t already utilize live chat feature to help guide customers through your ecommerce store, you’re missing out on a significant opportunity for sales growth.
- Personalize offers based on the customer’s order history. If a customer recently purchased a bag of organic dog food from you, they may also appreciate you notifying them of a new promotion you’re running for organic dog treats. If you’re going to recommend new products to your customers, make sure those recommendations are relevant to their individual needs.
- Keep customers involved by getting them on your mailing list. Recruit customers as app users, or add them to your SMS list to further improve your personalization.
- Provide 24/7 methods for site visitors to get questions answered. This is where automated chatbots can be incredibly helpful. If you don’t have the capacity to hire full-time customer service agents, the next affordable option is to automate that service. Bottom-line: you need to be available to your customer at all times.
Done correctly, though, personalization is perceived as helpful and smart. You can start with the basics and take it as far as you want, but the potential here is staggering. This is one of those “get on the bus or get run over by it” concepts every ecommerce manager or executive should consider.
Now Start with these Fundamentals
The most powerful marketing tactics in the world originate from a short list of fundamentals. We’ve just covered eight of them.
To find out what motivates your customers to buy more on your ecommerce site, take a look at what entices you to dip deeper into your budget.
Pay attention the next time you’re at the grocery store. Don’t be afraid to apply the same merchandising strategies you notice in a retail store on your ecommerce website. After all, running an online store isn’t that much different than running a retail store. In both situations, your primary goal is to convince shoppers to buy more.
If you’re looking for actionable ways to improve average order value on your ecommerce website, you may want to consider investing in a conversion optimization program. At The Good, we’ve spent the last 10+ years helping ecommerce brands improve their key website metrics, including average order value. Request a free landing page teardown and receive customized recommendations for how you can start improving the AOV of your website right now.