how to increase average order value

How to Increase Average Order Value

Making sales is great. Making the most out of every sale is even better. As an ecommerce store owner, think of how much you spend to get a lead or customer to your store, once that person is on your site it’s your job to make the most of it.

Fewer larger orders are more lucrative than more smaller orders. With more smaller orders you’re spending more on ads and shipping. If you can get customers to spend more each order that will lower your ad spend ratio and you’ll be spending less on shipping too.

You should start by figuring out your average order value (AOV) if you don’t already know what it is. Track this number if you’re not already. This is a great metric that will tell you what’s going on with your store and if you’re making a difference.

Increasing Your AOV: An Art and a Science

When it comes to increasing your AOV there are tips, tricks and things to try but like many things in business there are no concrete answers, no one size fits all. There are things that you should test and try out and tweak as you go.

One of the biggest examples is how big of a price jump can/should you ask customers to make? If they have $20 worth of products in their cart should you ask them to spend $100 on an upsell? The answer is it depends. Some people suggest that the cap is a 20% price increase some say 50% but the real answer is to see what works for you.

Make sure you’re offering upsells and cross-sells that actually appeal to your customers. If you nail that, customers will be willing to stretch their budget as needed.

What you should do every time is make sure that you offer an upsell. It doesn’t have to be major or aggressive but if you don’t offer you’ll never know what works or what your customers are looking for.

3 Ways to Increase AOV3 Ways to Increase Average Order Value

Discount Larger Quantities

Upselling to a bigger size is a classic way to increase AOV. You’ll see this technique everywhere from cell phones to fast food. For just a few dollars more you can get twice as many fries! For only a few hundred dollar more you can get twice as much storage on your phone!

When it comes to supplements to incentivize the upsell it’s best to sell more servings with a built in discount. There’s no need to sell a bigger bottle with more servings because that just means more inventory and more skus to manage and in general more work for you.

The key is a buy more save more discount model. The more bottles they buy the more money they can save on each bottle. For example you could knock 5% off 2 bottles, 10% off 3 bottles and 15% off 4 bottles.

Make sure whatever discount you use makes sense for your pricing model and product costs. The point of increasing you AOV is to increase profitability so you don’t want to put yourself in a position of losing money by giving too deep of a discount.

Bundle Multiple Products

Another way to increase your AOV is by bundling multiple related products together. This is known as cross-selling. By testing out different bundles you can see which products fit best together.

Just like with upselling to a bigger size you want to emphasize the bundled savings. The total price is how much it would cost to purchase each item separately at full price while the bundled price should be an impressive discount from the full price. Make sure that you calculate what that discount will mean for you and if you can afford it.

The great thing about a bundle with multiple products is that it serves more than one purpose. Obviously the primary purpose that we’re focusing on is increasing AOV, which it does. The other thing that it does is introduce your customers to different products.

If you have a customer that returns again and again to buy the same thing what if you could get them to return again and again to buy the same two or three products? But customers are generally hesitant to try new things. That’s where a bundle comes in.

Try bundling your top two products one or two other (less popular) products. The should all make sense together, for example you might try a bundle of protein powder, BCAAs, pre-workout and a fat burner.

Offer Spending Incentive

The third easy AOV booster you might try is by straight up offering an incentive to spend more. This is super common and you’ll see many ecommerce stores using this as an upsell tactic.

Some of these incentives include

  • Free shipping
  • Free gift
  • Percent discount
  • Dollar discount

Free shipping is a really popular option. People are willing to go a long way to get free shipping. But whatever incentive you use, you need to make sure that the threshold is right. Knowing your current average order value comes in handy here.

If your current AOV is $20 try incentivizing customers to spend at least $50. Again make sure you can afford whatever incentive you’re offering by looking at your margins first. Playing around with incentives and thresholds can be a lot of fun and teach you a lot.

Try giving a gift or free shipping before you jump to offering discounts. Coupons and discounts are like a slippery slope and once you start giving them out people will start expecting them. They’ll even put off purchasing unless they have a coupon to buy and it will take bigger and bigger discounts to get customers excited. It’s a vicious cycle that you should try to avoid if possible.

Read: How to Leverage Your Network to Boost Your Business