Pratikkumar P. Gaikwad | 10 min read | June 30, 2020
You are launching your e-commerce business and have been able to market your products and sell them consistently. But you’re finally noticing something. Nearly all your orders average to the same, small amount.
Your shop looks like it’s on the brink of slowing down and every month the sales start looking stagnant. What is it that gives? You know that one solution is to get more visitors to your website and then, more orders. But that can mean more work and more money for some store owners and leaves them constantly running on the treadmill of acquisition.
Additionally, you may motivate your consumers to buy more items or consume more costly goods (or both!). That comes down to knowing how your average order value can be measured and improved.
2. What is the average order value?
The average value of the order (AOV) is the total amount of money each customer pays on your store per purchase. This simple formula can be used to calculate your average order value: total revenue/number of orders = average value of the order
Look at a realistic example: if your shop has a $1,700 gross profit divided between 100 orders, the average order value will be $17.00. Which means a customer pays on average $17 for each order at your store.
You may have learned about a few other primary metrics too:
Average basket value: Average basket value is a metric close to AOV. This number tells you how many items are typically sold per transaction, instead of measuring how much customers spend per transaction.
Lifetime value of the customer: This tells you how much each customer is worth over the course of their entire business relationship. If this number is low or decreases, the focus on customer retention will be on you.
You’ll need to persuade buyers to add additional items, or more expensive items, to their cart to increase the average order value. we’ll share five practical strategies throughout the rest of this post that can help boost your store’s average order value and get your customers to check out with larger carts. Shopify App developers: Read how the order editing implementation is having an effect on the Web Design and Technology site.
3. How to increase the average value of the order
Consider making product recommendations
Occasionally, consumers remain focused so hard on purchasing one of their items that they forget to look around to find more. This leads to fewer carts and lower overall order prices as a consequence.
Consider adding product recommendations to your web pages or checkout page to fix this issue. By profiling popular products, or products purchased by other customers in addition to what is currently in the user’s cart, you can not only minimize friction before checkout but also increase the average value of the order.
This is a great technique, particularly since it also incorporates social evidence.
You don’t have to confine yourself to sharing what other users have seen. You should make decisions based on your own goals for the sector. For eg, you might be trying to sell some slow-moving product. Brand reviews offer a perfect way to gain feedback on certain particular goods.
Try using phrases such as “Complete the look” (for fashion and clothing websites) or “Consumers always ordered” on your website while offering additional items for your consumers.
Upsell or cross-sell complementary products
As for the previous approach, this technique includes applying recommendations for the company to the product page. In this scenario, instead of merely recommending other common items from your shop, select goods that suit the object in the user’s cart well, such as accessories or add-ons.
That is essentially upselling and cross-selling. Cross-selling is when promoting a similar product, while upselling is when promoting the improvement of the product or a more costly edition.
Place minimum order for a discount
You may also increase the total profit for the order by motivating customers to pay a minimum amount. This could be a minimum free shipping order number which is easy to set up in Shopify.
Many examples of benefits to minimum order include giving a discount or free gift. Giving a 15 percent discount on orders over $75 or a free t-shirt on orders over $100, for example. Try using a discount bar on your website to make it clear that you are providing a minimum incentive to order.
Establish a Customer Loyalty Program
Consider setting up a rewards or loyalty program if your store sells consumable products — something customers need to repurchase, like razors or shaving cream.
Creating a customer loyalty program is a retention strategy that helps you forge customer relationships, which will eventually encourage customers to buy again.
Loyalty services will also help boost the store’s average order value. Recently Nordstrom revamped its customer loyalty scheme, The Nordy Club, to reward big spenders.
When there is an incentive for your customers to earn points under your loyalty program, you can expect to see a significant increase in your average order value.
Offering a service that provides discounts that can eat into your sales may sound counterintuitive, but a study showed that existing customers spend 120 percent more than new customers annually. And, according to the 2017 COLLOQUY Loyalty Survey, “large rewards” are the No. 2 reasons customers enter customer loyalty programs.
Bundle products or build packages
When you want consumers to order more products, consider designing merchandise bundles that cost less than if the same products were bought separately.
Through bundling goods, you increase the relative worth of the transaction of the consumer. One great approach to product bundling is by offering a package of products to create an all-in-one solution for the desired experience.
This makes it easy for consumers to get everything they need in one shot, thus removing the need for more testing. Then you sold several items instead of one. You may also enable the consumers to design their own orders by creating custom items or packages that allow customers to select which items or add-ons they want in their order.
This also functions with personalized sets, allowing buyers to select which items or accessories they want in their box prior to checkout. For starters, encouraging consumers to create their own first aid kit, make-up kit, or gift box. Instead of offering the elements of these packages on a stand-alone basis, allow your buyers to build their own package and thereby raise the average order value.
4. Sell more to people who want to buy more
The most cost-effective and reliable way to increase the average order value is to concentrate on your current, most loyal customers. They recognize and trust your brand, what you’ve got to do is get them to invest a little extra.
When you concentrate on supporting and empowering people who are already investing with you, you have fewer obstacles to conquer. Instead of turning the procurement wheels, concentrate on developing a better exchange of value — customers that invest more, get more.