What is AOV?
Average Order Value is the average amount spent per transaction in a store. Overall, your AOV provides insight into how much profit each order brings in.
To calculate AOV, divide total revenue by the total number of orders. Let’s say your store made a total profit of $50,000 in one month and had a total of 1000 orders:
$50,000 / 1000 = $50 AOV
Why is AOV important?
AOV gives you a view into customer buying habits and what they’re spending on each order. As a result, you’ll be in a better position to evaluate your pricing, merchandising, and AOV marketing strategies.
In other words, increasing your Average Order Values is an opportunity to grow revenue without spending on new customer acquisitions. Important to note that many eCommerce businesses will typically look at what their AOV is and will look to get customers to spend above that threshold.
You’ll gain a clearer vision of customers’ spending habits by looking at the three different measures of central tendency, i.e.:
- Mean: The average value of all orders (the traditional AOV)
- Median: The middle value of all orders
- Mode: The most frequent order value
This will help you shape your strategy and drive the maximum number of AOV sales.
How to increase average order values
So, we’ve answered the question ‘What is AOV?’. Now, here’s an overview of the different techniques you can consider to improve Average Order Value.
Each technique goes hand in hand with delivering quality online experiences.
1. Sell higher-value items
Selling higher-value items will naturally increase you Average Order Value. But what’s the secret to selling these higher-priced items?
Tap into the creativity of your marketing team and focus on enriching the information you’re providing on top-range items.
Having a solid product data strategy will be crucial. The more detailed the product information is, the more leverage you have to convince browsers to convert to buyers.
Provide consumers with all the information they need and make them believe they must absolutely own your amazing product.
2. Make intelligent product recommendations
Now, we all know that nobody likes to be sold to. So it’s important to present product recommendations in the right way.
In other words, you want to ensure the products you are recommending will be of interest to that specific customer. A great way of doing this is by using Artificial Intelligence tools to look at previous purchase history.
Making intelligent recommendations is a great way of helping customers find complementary or additional products.
To add to that, it can improve the customer experience as a whole by enabling them to get the most from their purchase. According to Salesforce, product recommendations can drive up to 24% more orders and increase revenue by 26%.
Cross-selling online is a super effective way of boosting your AOV. A cross-sell is when you promote complementary products that go with the item your customer is looking to buy.
For instance, you might suggest tennis balls for someone buying a tennis racket. Alternatively, you could highlight the necessary extras e.g., a light bulb for a new lamp.
The benefits of cross-selling are two-fold. Firstly, your customer will get more value from their online experience. In other words, they’ll have everything they need to get the most from their online purchase.
Secondly, you can sell more and positively impact your AOV. Make it easy for your customers to find those nice little extras, and focus more on the optional, low-value extras to boost the average order value even further. If someone’s spending $50, it’ll be hard to make a cross-sale of an item priced at $20, but easy to get them to add a $10 item.
This is another great way of increasing your online sales. To effectively up-sell, you need to make browsers aware of your higher-value products. Put the spotlight on newer or upgraded versions of your products or services. Rich product data, product comparisons, and product prompts at checkout are all effective up-selling techniques.
When you are up-selling, it’s important to clearly highlight why the higher-value product is better than the original one your customer was looking at. Tell them what additional features or benefits the product has.
Another way of upselling is to offer a discount on a pricier product after an order has been completed. Overall, it encourages customers to buy more, which will have a positive impact on your average online order values.
5. Suggest kits and bundles
Bundles and kits enable you to sell two or more related products to the one your customer is looking at. This makes it easier for the customer to get everything they need from you instead of having to search elsewhere.
Up your game even more and offer a discount in addition to a super convenient all-in-one solution. Or you can give customers the option to create their own kits or bundles with their preferred products.
Offer kits that create this all-in-one solution for your customers. For example, fashion retailers could offer a shirt, jacket, trousers, tie, and shoes as a wedding package for men. Essentially, this means you’ll be selling multiple products instead of just one which will go a long way in helping you increase your Average Order Values.
6. Use personalization
eCommerce businesses are increasingly providing product recommendations based on totally personalized data. This works so much better than just suggesting items related to the product your customer is looking at.
Business 2 Community cites that 75% of consumers are more likely to buy from a business that recognizes them by name. If you’re using personalization to increase average order value, also make recommendations based on past purchases for the best results.
Product data is crucial to personalization because you can get in-depth insights into your customer’s preferences. You can then use this data to send personalized messages and product content to create online shopping experiences they’ll remember!
If you know a customer values sustainability, you should display product content that emphasizes items made from sustainable materials. Put that message at the forefront of your product page, with tailored product descriptions and imagery.
7. Customer loyalty programs
Customer loyalty programs are a tried and tested way of boosting customer lifetime value, as well as helping you increase your Average Order Values. This is especially true if you sell consumable items customers have to buy on a regular basis. When you offer the opportunity for customers to earn points as they spend, they’ll inevitably add more items to their orders so they can benefit later down the line.
A winning customer loyalty program should evolve as your customers’ preferences evolve. In other words, you should make sure you’re serving them offers they can’t refuse that keep them coming back for more. All in all, customer loyalty programs can help you boost Average Order Values by around 14%. Moreover, you’ll see major improvements in customer retention and customer lifetime value.
8. Offer free shipping for orders over a certain value
If this is a route you choose, it’s advisable to look at your modal Average Order Value i.e., the most common order value.
By setting the minimum order at that price point, you’ll likely tempt more customers into adding a few extra items to take advantage of your free shipping offer.
However, be sure to set the free delivery threshold at a point where you know you’ll be able to afford it. After all, you don’t want it to negatively affect your margins.
Shipping is a key consideration for consumers shopping online. So much so, a recent report found that around 30% of consumers expect free shipping for orders over a certain amount.
Having this offering is a great way of setting yourself apart from the competition, as well as improving the customer experience. Overall, you will benefit from higher conversion rates, fewer abandoned items, and of course, higher AOV!
9. Provide a live chat functionality
A key element of creating seamless customer experiences is removing any uncertainty your customers might have. Even when you provide the highest quality of product data, browsers may still have questions they want answers to before committing to a purchase. If they’re unable to find the answers to these questions quickly and easily, chances are they’ll vote with their feet and go elsewhere.
Having a live chat functionality reduces the chance of this happening as you can instantly answer any questions they have. Likewise, it’ll improve the overall customer service you offer meaning browsers will be more likely to convert to buyers. This is especially true for higher-value products where customers want an extra layer of reassurance.
Granted, product reviews, User-Generated Content (UGC), and other forms of social proof are all great tools. However, live chat has the potential to help you significantly increase your AOV. Here are some live chat tools to check out:
How to improve Average Order Values with product data
To maximize the benefits of these unique ways to increase sales and improve AOV, you need solid product data management processes:
Product information is what powers recommendations, related products, kits, bundles, and personalization. It also fuels your live chat functionality, giving your customer service teams all the information they need.
So, take control of your product data to reach and exceed your business goals through improved Average Order Values!