When you want to increase your eCommerce store revenue, finding new customers through marketing campaigns is effective. You can also achieve growth by measuring the performance of your online store and how it attracts existing customers as part of a wider eCommerce strategy. A crucial KPI to analyze during this process is your Average Order Value (AOV).
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 marketing strategies.
In other words, increasing average order value is an opportunity to grow revenue without spending on new customer acquisition.
How can you increase average order value?
Selling higher value items
Selling higher-value items will naturally increase average order values. But how can you sell these higher-priced items successfully? Tap into the creativity of your marketing team and focus on enriching the information you’re providing on top range items.
Detailed product data is especially important when promoting pricier products. You need to arm consumers with all the information they need to make an informed buying decision. Put the spotlight on your most valuable products and make them shine with rich product information and digital assets.
Helping your customers find alternative or additional products to add to their orders is a proven strategy for increasing AOV. According to Salesforce, product recommendations can drive up to 24% more orders and increase revenue by 26%.
Promoting complementary products that go with the item that’s being purchased is another great way of increasing AOV. This might involve recommending tennis balls for someone who is buying a tennis racket. Alternatively, it could be providing necessary extras e.g. the perfect fitting light bulb for a new lamp. Provide optional, low-value extras to boost the average order value even further.
Make it easy for your customers to find these nice little extras so they don’t have to go somewhere else. In doing this, you’ll likely see an increase in your sales – win, win!
You can also increase revenue by putting the spotlight on upgraded versions of your products or services. Rich product data, product comparisons, and up-selling at the checkout are all effective techniques.
Up-selling makes consumers aware of your higher-value products. It encourages customers to buy more, which will have a positive impact on your AOV. For instance, offer a discount on a pricier product after an order has been completed, or offer free shipping.
Bundles and kits
Bundles/kits enable you to sell two or more related products. This makes it easier for the customer to get everything they need from you instead of going to your competitors. Up your game even more and offer a discount in addition to a super convenient all-in-one solution.
Offer kits that create this all-in-one solution to your customer’s needs. For example, fashion retailers could offer a shirt, jacket, trousers, tie, and shoes as a wedding package for men. Essentially, this means they’ll be buying more items from you, which will increase your average order values.
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.
Product data driving strategy
To maximize the benefits of these AOV techniques, you need to put the focus on your product data. Your product information is what powers recommendations, related products, and personalization. So, taking control and improving it is the first step in refining your eCommerce strategy.
Rich product data is an essential part of expanding a product range. 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. You need to keep track of information across a large range and be able to access it when needed.
A Product Information Management (PIM) system is a centralized hub for product information that streamlines the entire data management process. Remove manual processes and give your teams the power to concentrate on creating personalized product offerings.
Defining important product relationships
Setting up the right product relationships is a vital part of increasing average order value. By linking products together in a clearly defined structure, you can 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. Essentially, this means you can make sure it’s offered to the right people at the right time.
Creating product experiences
Your product information is a huge proportion of your customers’ pre-purchase experience. Detailed descriptions, well-designed imagery, other supporting media, and information will all create immersive online product experiences.
Use PIM alongside other sources of eCommerce data to really harness the power of your product information. Overall, you need to provide totally personalized and meaningful product experiences if you want to get on the path to eCommerce success.
Increase average order value and grow your business
Driving eCommerce growth means defining your strategy for every stage of the customer journey. Increasing average order value is one of the most effective ways for you to increase sales from existing customers. Optimize product descriptions for high-value items, generate highly relevant product recommendations, or offer timely and personalized up-sells at the checkout. So our final words are: Streamline your product information management processes and increase your average order values with amazing product data.
Ready to grow your business with improved AOV? Here’s a handy video on how to do just that with PIM
*We always want to make sure we deliver the highest quality content, which is why we updated this blog in September 2021. This blog was originally published in 2020.