If your online store has a lot of traffic, and you’re converting those potential buyers into customers, you’re already doing something right. You’re already one step ahead of many eCommerce businesses out there. But are you really getting the maximum potential from your customers?
When evaluating marketing efforts and pricing strategies, a key metric for every data-driven business is average order value. It’s how you optimize your business plan for real impact on your bottom line. So take a closer look at your numbers. Is your average order value consistently low?
Website traffic and high conversion rates are worth celebrating, but here’s the thing–drawing more value out of your existing customers will take you a lot further than trying to win new customers through paid traffic drivers. Instead of investing in more marketing and advertising, you need to focus on motivating your customers to buy more.
What Is the Average Order Value (AOV)?
Average Order Value is an important eCommerce metric that measures how much money customers spend on your site over a set period of time. It’s one of the most useful KPIs for online businesses because it allows you to identify different customer groups based on their spending.
Couple that with an analysis of what revenue-generating channels are most effective and you’re off to a great start. By analyzing these metrics, you can easily make effective marketing decisions about things like advertising budgets, store layouts, and product pricing.
Top Strategies to Grow AOV
A small increase in Average Order Value can have a significant impact on your bottom line, and getting there is all about how you develop your marketing strategies and treat your customers.
Here are 5 tactics for optimizing your eCommerce store that will encourage customers to increase the size of their carts– and your store's overall AOV.
- Offer free shipping services
Free shipping is one of the most powerful marketing tools for eCommerce businesses, and it's also an effective tool for increasing your average order value.
Getting something for free has influenced every customer’s decision at one point or another, so it makes sense to provide free shipping services to customers who spend a certain amount. It’s a proven strategy that encourages your customers to add more items to their shopping carts. In fact, 90% of buyers say that free shipping is one of the most important factors influencing their purchasing decisions, and research shows that it can directly increase revenue by 10% and significantly boost conversion rates.
If you’re not sure what threshold to set to qualify customers for free shipping, extensive research shows that a 30% increase in your average order value works best.
- Use limited-time offers
Most online shoppers admit that receiving a discount increases their likelihood of purchasing a product or service. Flash discounts and volume offers such as “spend $100, get $20 off” persuade your customers to spend a little more money in your store, and if the deal is limited in time or availability, it becomes even more appealing.
The power of a "limited time offer" lies in its ability to instill a sense of urgency in your audience, and using a countdown timer tactfully can build on that urgency and work in your favor.
- Upsell or cross-sell your complementary products
Upselling and cross-selling are tried and true strategies for moving merchandise and increasing order value. Just like brick and mortar stores stock and display complementary products together, smart online merchants design their eCommerce stores in a way that motivates customers to upgrade or complement the products they already intend to purchase.
You can come up with add-ons and recommend them to shoppers, or create bundles of items that complement each other. It’s a way to help customers remember (and find) everything they need, and for them, it’s just easier to buy it all in one go. But keep in mind that, as with any tactic, overuse can work against you, so tread carefully. Successful merchandisers have refined their strategy over time, and they know what works:
- Don't oversell; instead, recommend as a friend would.
- Provide low-cost upsells to increase the likelihood of a purchase.
- Experiment with post-purchase upsells.
- Set up a customer loyalty program
Customer loyalty is a powerful tool that retailers can use to differentiate themselves from competitors, and it can be one of the most effective ways to increase AOV and maximize revenue. To foster this, you can create loyalty programs such as reward functions or giveaways that make your customers feel special and allow them to connect with your brand.
Research shows that this strategy pays off in the long run. By increasing retention and repeat purchases, a loyalty program supports your marketing efforts and eCommerce growth. In fact, an online buyer who uses a loyalty reward in a purchase has a 39% larger basket size than a customer who does not–so make sure you incentivize your customers and elevate their shopping experience by rewarding them for their loyalty.
- Implement a flexible return policy
Having a quick and easy return option always increases a buyer's confidence in making a purchase because it gives them the option to easily exchange or return an item if it doesn’t work out.
According to research, good return policies increase sales without increasing the volume of returns. That’s because people are more likely to add products to their carts when the return policy is flexible, and if you sell high-quality products, your return rate will be very low.
A good return policy actually increases your AOV since it motivates customers to come back to your store. The numbers speak for themselves: 92% of customers are more likely to make purchases from your store again if returns are simple. Compare that to the alternative, where 80% of customers are deterred from making a purchase in the first place if the return policy is inconvenient.
Just make sure your policy is clear, well-written, and easily accessible to customers to facilitate returns and exchanges and keep your operations running smoothly.
Boost Your AOV & Increase Revenue
Ads, emails, seasonal promotions, free shipping services, and coupon codes are common methods used by eCommerce retailers and marketers to drive traffic, and they work. But many online store owners overlook the importance of increasing the average transaction value, so it’s essential to focus on boosting your eCommerce AOV.
Start by determining your current average order value, then set a strategy for the next steps. Your goal is to convince customers to add more to their carts, so think of their buying patterns and figure out what would motivate them to dip deeper into their budget when browsing your store.
In the meantime, keep your eyes peeled for more tips on boosting sales and increasing your revenue right here on the eShipper blog.