How do you grow sales for an eCommerce business? In broad strokes, it all comes down to just three tactics:
- bringing in new customers
- growing the number of transactions each current customer makes
- increasing the average order value (AOV) — your total revenue divided by the number of orders
We can all agree that it is easier to convince a current customer to spend a little more on one order than to make them place several orders. And, it is definitely much easier than to attract new customers.
By growing your average order value, you will be able to generate more income for the same amount of effort and spend more on ads.
What Average Order Value Is Considered Good?
Growcode has recently analyzed ten eCommerce studies to derive the benchmark for the average order value, and they got $128.
Now, is this the number that every eCommerce business should strive to achieve? No, you should only use it for loose reference because there are so many factors that have an impact on that number. Here are some of them:
- Seasonality: average order value numbers might be higher and lower during certain seasons depending on your industry.
- Ecommerce giants: Amazon is included in those studies, and it has definitely shifted the benchmark higher. No wonder — its conversion rate is at 13%, while the average conversion rate for eCommerce businesses is 3.32%.
- Industry differences: according to the data from IRP Commerce the AOV benchmark for cars and motorcycling is $161, and for kitchen and home appliances — $68. So, what might be a good AOV for you, might turn out a low one for a business from another industry.
Once you’ve established your target average order value, you can start figuring out how to grow it.
Here we are going to unpack the basic ways to increase the AOV, as well as some rarely used ones.
How to Boost Your Average Order Value
We will start with some tried-and-true practices and showcase some examples.
1. Provide Product Recommendations
Many visitors come to your site looking specifically for one product and ignoring your new arrivals or bestsellers. You can make them spend more by providing recommendations on the checkout or product pages.
Show the customer your products that:
- are popular or new;
- have been viewed or purchased by other visitors;
- have been viewed but not purchased by this customer (use the shopper’s purchase history);
- are on sale;
- will dovetail with the product that’s already in the cart.
Here is an example from Uniqlo, a Japanese casual wear brand.
Once a customer has chosen an item, other products are suggested to complete their look. This strategy is called cross-selling — when you provide complementary product recommendations. By adding these recommendations, you’ll have a higher chance of growing your average order value.
2. Give Minimum Purchase Discounts
Encourage shoppers to spend specific amounts by offering discounts or free shipping. For example, a person gets a 10% discount if they make an order for $100 and more.
Here Raise gave a $10 discount for every $100+ spent on their gift cards.
You can come up with other incentives like a gift or a coupon. And you can always offer free shipping.
According to a study by comScore, 61% percent of those who have abandoned their cart, did so because of the shipping costs. So free shipping will always be a plus. Moreover, to spice things up, put up a progress bar where a customer can see how much more they have to spend to earn free shipping.
3. Create a Tier-Based Loyalty Program
A loyalty program is a retention tool that allows you to build a long-term relationship with your customers, encouraging them to come back and spend more at your store. Customers that become members, get special perks like discounts, gifts, or samples.
A tier-based loyalty program provides different levels — the more a customer spends, the more perks they get. Here is what Nordstrom, a luxury online retailer, offers to its visitors:
As they spend more, their status goes up and they get benefits like free alterations, being the first one to see new arrivals, and invites to beauty workshops. And you, in return, get a higher average order value.
4. Use Cross-Selling, Upselling, and… Down selling
We have already touched the topic of cross-selling in section #1, where Uniqlo suggested a complementary product to complete a customer’s look.
Now, upselling is a technique where you offer an upgrade of a product that the customer is going to or has just purchased.
Here is how MeUndies has delicately combined both approaches:
First, they suggest buying matching underwear for a customer’s partner, which is an emotional tactic and, can increase repeat purchases by 80%. Then, they perform an upsell by offering a subscription service.
Down selling is another thing you can try to grow your order value. Just offer discounted add-ons on the Thank You page where the customer is redirected after the purchase. For example, if they’ve bought a couch, you can offer a care kit for it with a 10% discount.
Now, when you place your upselling, cross- or down selling recommendations on the Thank You page, you might come across as too pushy. To make things look more subtle, send those recommendations in your order confirmation emails. This will create a mental distance between the initial purchase and new offers.
5. Offer Different Finance Options
Some people can pull off participating in the Nordstrom’s loyalty program, while others can’t afford a single necklace from them.
So why not offer a flexible payment plan for those customers? In fact, allowing them to pay in installments can grow your sales by 40%.
Apple provides such opportunities for their Apple Watches:
They also combine other selling tactics here — an incentive in the form of a $50 gift card, as well as a sense of urgency that encourages the customer to hop on this wagon.
Moreover, to grow your AOV, make the customers pay more over time than the price they would have paid upfront. After all, we all know the rule of credit card companies: customers are ready to spend more as long as they don’t have to pay it all at once.
Lesser Used AOV-Growing Tips
Many eCommerce businesses stop at creating a loyalty program and cross-selling. But why not get creative and experiment with something else? Here are some lesser-known tactics to grow your average order value.
1. Sponsor a Charity
It will be even more effective if you break down the costs for the customer — what percentage of the price will go to charity.
2. Create a Shopping Bot for a Messaging App
Many eCommerce stores now have a live chat or a bot, where a customer can ask all the needed questions and be guided through the shopping process.
But some companies have gone one step further and created a bot on one of the messaging apps like WhatsApp, Kik or Facebook Messenger. After all, that’s where people are now spending most of their time online.
Sephora, for example, has created bots on both Facebook Messenger and Kik. On Messenger, a customer can book makeover appointments, and on Kik — receive make-up tips and be further redirected to the Sephora website for purchase. These bots can, of course, be used to offer upsells and cross-sells while providing consultations.
3. Create Games and Contests
Add a bit of adrenalin to the shopping process at your online store, and your average order value is bound to increase.
Games and contests can be that source of adrenalin. Take the Monopoly campaign McDonalds launched a while ago. When ordering food and drinks, customers can get some of the items with a “property label”, which features the names of locations on the Monopoly board. And similar to the original game, when you collect a set of locations of the same color, you receive a prize.
This campaign encouraged customers to order more and “upgrade” their orders.
Depending on your niche, you can either do something similar with your online store or launch a more simple contest where customers have a higher chance of getting a prize when they order more products.
Taking an Analytical Approach
You’ve probably noticed that there is a wide variety of techniques you can use to grow your average order value. However, don’t dive headfirst into it, and start using every single one at once. Instead, take a step back and reflect on the following:
- What value do your customers get from using your products?
- How can you help them get the most of it?
- What else can you offer your customers to improve their experience with your products?
Maybe, a subscription service is a good idea? Or offering products in bundles could help?
Remember, that trying new tactics to grow your AOV should be an ongoing process. You can start by offering cross-sells to your customers who don’t spend much and loyalty programs to those who spend more. Then, evaluate your results, and if that doesn’t work, try another tactic. Always watch your metrics and act accordingly.
Increasing your average order value is a surefire way to grow your eCommerce sales. You can try providing product recommendations, offering upsells and cross-sells, and different payment plans. Or, you can donate a percentage of your profits to charity and let the customers know about it.
Whatever you choose, remember — what works for one online retailer might not work for you. Growing your AOV demands an analytical approach with an ongoing evaluation of your tactics.