New clients do not always translate into more money. It makes sense that business owners are looking to their current clientele for income growth, as new clients typically have high customer acquisition costs and lengthy payback periods. At the lowest possible expense, you may boost your profitability by getting the most out of your present clientele.
By implementing tactics to raise average order value, you can set up your company for development and profitability. Continue reading to learn more about how to raise this important measure.
- What is the average order value (AOV)?
- The rationale behind aiming for a greater average order value
- How to calculate average order value ?
- The top 16 strategies to raise average order value
- Track performance and modify your sales strategy
What is the average order value (AOV)?
The average amount a customer spends on a single transaction in your store over a given time period is measured by the average order value. AOV is an important measure to monitor, and you should make sure to compute it on a monthly basis at the very least. Try to compute it every day for holidays such as Black Friday. This indicator will assist you in determining the efficacy of your marketing tactics.
The rationale behind aiming for a greater average order value
The fact that raising average order value increases income without raising marketing or sales expenses is one of the key reasons you should strive for it. Some advantages of raising your AOV are as follows:
Boost in sales
You are selling more merchandise when you raise the average order value. This will lead to an increase in sales for your e-commerce company, which is advantageous for business.
Your revenue rises as a result of more clients purchasing more goods. Additionally, your revenues will increase if you employ the appropriate tactics. But keep in mind that higher sales does not always translate into higher profitability, so you should carefully analyze your pricing plan.
When the average order value in your store rises, you can shorten the sales cycle. As a result, your online store will start making money sooner rather than later. You can also invest more in advertising and other strategies for business expansion.
Greater return on investment (ROI)
Let’s say you have a one to six-month repayment time. You’re performing great in comparison to other online retailers. However, by increasing the average order amount, you can shorten this period even further. Higher revenue indicates a quicker route to profitability and a higher return on investment.
Increased customer lifetime value (LTV)
Another important indicator to consider when assessing the health of your organization is customer lifetime value. The AOV and LTV do not preclude one another. Customer LTV is indirectly impacted by AOV since it influences customer value. Improved LTV is a result of higher average order value; however, the latter’s strategies are more tailored and long-term.
How to calculate average order value ?
The following formula can be used to get the average order value:
Average Order Value = Total Revenue/Number of Orders
XYZ e-commerce store had 900 orders last month, bringing in a total of $12,000 in income. Now let’s figure out the AOV.
AOV = $12000/900 = $13.3
The top 16 strategies to raise average order value
Prior to putting the following strategies into practice in your online store, carefully examine your statistics to determine the root cause of your poor AOV. From there, you can select the best course of action. Avoid using all of these strategies at once as well, since you won’t be able to tell which ones are working for you and which aren’t.
1. Choose enticing layouts for your product pages.
Your conversion rate is impacted by the language, colors, layout, and graphics you choose. To attract clients, make sure your products have greater pricing levels, discounts, and packages available. The Baymard Institute states that optimizing the checkout design increases your chances of conversion by 35 percent.
2. Highlight trending products
To increase the visibility of your popular products, highlight them on your website. Make sure your product pages have attractive photographs, and if you have any deals, make sure they are prominently displayed. It is possible for these tactics to raise the average order value.
3. Offer social proof
Online purchasing decisions are significantly influenced by social proof, such as testimonials and reviews. Customers who see positive ratings for online firms will spend 31% more, according to Invesp. Put all those wonderful reviews on your website in a strategic way to raise the average order value.
4. Personalize shopping experience
Customers will be more willing to spend money with you if you use data to provide them with more individualized experiences. You can utilize the order history of your customers to determine their preferences and create goods and marketing campaigns that specifically target them. There is an increase in the average order value with this focused strategy.
5. Set up free shipping threshold
This tactic is already widely used by e-commerce sites to increase average order values. Post the free delivery offer on your website. Customers can be informed at checkout if their order falls below the threshold by adding a notification through plugins. In order to reach the threshold, it incentivizes users to add more items to their carts.
6. Include product discounts
Subtracting from the average order value can increase it. But include a minimum spend rather than just lowering the purchasing price. For instance, you may provide customers who spend $90 or more a $10 discount. A larger average order value is the result of volume discounts offered by certain online retailers.
Additionally, displaying the financial benefits that customers receive from making several purchases encourages them to spend more, which increases AOV.
7. Create special new customer offers
One of the best ways to get new consumers to become repeat customers is to entice them with unique offers. For new customers, packages are an option. Customers will return for more if they like the merchandise and the shopping experience, which will raise the average order value.
8. Bundle complementary products
Combining complementing offers is a fantastic method to provide your clients cross-selling. Discounts like “buy three for the price of two” or “buy two to get a free gift” are conceivable. When they know they would save money, people who had only intended to buy a portion of a set buy the entire set. Make sure your price plan accounts for both your profit margin and the extra products. One of the best ways to raise your average order value is to offer product bundles.
9. Create a loyalty program
You can build brand ambassadors and improve client retention rates with a loyalty program. Participants in the program might accrue points or savings on particular goods. These recurrent clients are less expensive to advertise to and offer a greater potential for marketing success. The average order value increases as a result.
10. Give out gift cards & coupons
You may boost your average order value and drive repeat business by offering gift cards and coupons. Customers will come back when they have a gift card that they may use for their subsequent purchases. Be sure the complimentary gift is included in your pricing. Additionally, let them know that the gift card is only good for their subsequent purchases.
11. Create a contest
Make a competition where clients who make frequent purchases can win reward bundles. Tell clients they have a chance to win the prize if they make a purchase. Apps abound to assist you in managing the competition. When you hold a contest like this, you can occasionally increase the average order value.
12. Cross-sell & upsell items
The technique of recommending related products to customers is known as cross-selling. As an example of a cross-selling tactic, you may suggest makeup brushes to a consumer purchasing makeup goods. Ascertain that you have images of the items together. An upsell entices buyers to purchase additional items or more costly variations of the same product. An extended average order value is the result of the two.
13. Down-sell add-ons
Reducing prices By offering add-ons, you entice customers to make a subsequent, less expensive purchase. It is comparable in efficacy to cross- or up-selling. Assuming you are selling a $75 product, you can follow up with a $20 product. It typically works. If the products are valuable, you will ultimately have a greater average order value.
14. Offer reliable customer support
Sometimes, customers can require assistance before making a purchase. They will depart from your website if there is no assistance. Including live chat guarantees that all consumer inquiries are addressed, which motivates users even more to complete the purchase. Live chat assistance is beneficial for expensive things such as furniture. Keep using live chat to ensure a higher average order value.
15. Make time-sensitive offers
In the off-season, time-sensitive promotions are a great way to raise the average order value. On specific items, you can provide discounts for a brief period of time. Customers will increase the number of things in their purchasing basket due to the hurry.
16. Offer a flexible returns policy
Customers’ decisions to return things to you are likely to be impacted by a negative return experience. Your ability to be open and accommodating will assist ease a customer’s concerns about making a purchase from you. Make sure your website makes it clear what your return policy is, and be accommodating if a consumer returns an item they bought to make sure they come back. Gaining repeat business contributes to the average order value growth.
Track performance and modify your sales strategy
The average order value is only one of many important indicators you should be tracking to see how your company is doing. ProfitWell Metrics is one such application that does the tracking for you at no cost. Other advantages of utilizing our program consist of:
Track important metrics
To assist you in maintaining control over your AOV, we monitor revenue (ARR and MRR). Don’t overlook other crucial business measures like client lifetime value, retention, and cost-effectiveness.
Create customer segments
When developing individualized and targeted marketing efforts, segmentation is essential. To help you better understand and interpret the KPIs, ProfitWell divides its clientele into 107 distinct segments.
Set the best prices for your products
We use data from our free tools that is supported by research to assist you in determining the best data-driven prices for your goods. We offer this feature in all of our paid products.
Now, in the end, we hope that through this post you were able to gain knowledge on the strategies to have a higher AOV for your store.
Moreover, if you are looking for an ecommerce development company that can help you manage your store or even assist you in creating an ecommerce app, then you should check out Appic Softwares. We have an experienced team of developers that can help you manage your store.
Additionally, you can even hire dedicated developers from us and let them manage your store. So, what are you waiting for?
How big is an order on average?
The average amount a consumer spends on a single transaction in your store over a given duration of time is known as the average order size or average order value.
Average order value (AOV) is influenced by what?
The number of products in each order and the average cost of each product are the primary factors influencing the average order value.
How can the order count be increased?
By putting methods in place that motivate clients to make larger purchases from your online store, you may boost the number of orders.