When looking to increase revenue for an eCommerce store, finding new customers through marketing campaigns is effective. But i’also possible to achieve growth by measuring the performance of your online store and how it’s attracting existing customers as part of a wider eCommerce strategy. A crucial KPI to analyse during this process is Average Order Value (AOV).
What is AOV?
Average order value is the average amount spent per transaction in a store and 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 a view into customer buying habits. You’ll have a better indication on how much consumers are spending on each order and be in a better position to evaluate your pricing, merchandising and marketing strategies.
Increasing your store’s AOV is an opportunity to grow revenue without spending on acquiring new customers.
How can you increase AOV?
Selling higher value items
Selling higher value items will naturally increase AOV. But how can you sell these higher price tag items more successfully? Tap into the creativity of your marketing team and focus on your enriching the information you’re providing on top range items.
Detailed product data is especially important when promoting pricier products. Arm consumers with all the information they need to make an informed decision, and put the spotlight on your most valuable products.
Giving customers a helping hand finding alternative or additional products they might add to their order is a proven strategy for increasing average order value. According to Salesforce, product recommendations can drive up to 24% more orders and increase revenue by 26%.
Cross-selling is promoting complementary products that go well with the item that’s being purchased. This might involve recommending tennis balls for someone who is buying a racket. Or it could be providing necessary extras e.g. the perfect fitting light bulb for a new lamp. You could provide optional, low-value extras to boost the value of order even further.
Making it easy to find these extra purchases means your customers don’t have to leave your store/site to get them somewhere else, and helps increase your sales.
Up-selling means promoting an upgraded product or service to increase revenue. Rich product data, product comparisons and up-selling at the checkout are all effective techniques.
Up-selling is great for AOV because it makes consumers aware of high-value products and inspires them to buy more e.g. with offering a discount on a pricier product after an order has been completed.
Bundles and kits
Creating product bundles/kits is a great way to sell two or more related products. This makes it easier for the customer to get everything they need – and maybe even offer them a discount as well as convenience.
A great approach is to offer a kit that creates an all-in-one solution to a consumer’s needs. Fashion retailers could offer a shirt, jacket, trousers, tie and shoes as a wedding package for men. Giving consumers everything they need at once means they won’t have to look elsewhere for related products – and helps you boost Average Order Value as they purchase more items.
eCommerce stores are increasingly providing product recommendations based on totally personalised data, rather than just items related to whats on the product page.
Business 2 Community cites that 75% of consumers are more likely to buy from a business that recognises them by name and recommends options based on past purchases.
Product data is crucial to personalisation because it allows brands to learn about consumer preferences in more depth. You can then also provide personalised messages and product content when that customer is shopping.
If a customer values sustainability, your site could display product content that emphasises items made from sustainable materials, and puts that message at the forefront of product page, with tailored product descriptions and imagery.
Product data driving strategy
To maximise the benefits of these AOV techniques, it’s essential that you put the focus on your product data. Your product information is what powers recommendations, related products and personalisation, so taking control and improving it is the first step to stepping up your strategy.
Rich product data is an essential part of expanding a product range and you can find out more here.
How does PIM help with AOV?
Manage vast amounts of product data across a large range
Growing your revenue across more channels means having to manage a higher volume of product data. It means keeping track of information across a large range and being able to access it when necessary.
A Product Information Management (PIM) system simplifies how data is managed and stores it in one location. This removes manual processes and gives your marketing team the freedom to concentrate on creating personalised product offerings.
Defining important product relationships
Setting-up the right product relationships is an integral part of increasing average order value. By linking products together in a clearly defined structure, you’ll be able to build the foundation for successful cross-selling and up-selling opportunities.
PIM facilitates this by linking related items together in product bundles e.g. a beach kit that consists of sunscreen, sunglasses and a towel. It’s easy to set up a bundle and promote it through a specific channel, making sure it’s offered to the right people at the right time.
Creating product experiences
Your product information is a huge proportion of your eCommerce customers’ pre-purchase experience. Detailed descriptions, well-designed imagery and other supporting media and information all help create immersive online product experiences.
Using PIM alongside your other sources of eCommerce data to further harness the power of product data and give truly personalised experiences really puts you on the path to success!
Increase AOV – Grow your business
Driving eCommerce growth means looking at strategy throughout the customer journey. Improving average order value is one of the most effective ways for you to increase sales from existing customers, whether that’s by optimising product descriptions for high-value items, generating highly relevant product recommendations, or offering timely and personalised up-sells at the checkout.