How to increase your average order value

In this blog post, we look at average order value and explain why it’s a great way to measure your loyalty program effectiveness.

What is average order value

One way to grow your revenue is to increase your average order value. (AOV).

AVO = revenue / number of orders

If your revenue is $100,000 and you’ve had 1000 orders, then your average order value is $100.

You can then use this figure as a tool to benchmark against the cost of your other marketing efforts and your loyalty program effectiveness.

For example, if it costs you on average $150 to acquire a new customer and each customer is spending an average of $100, then you can quickly see you’re making a loss and should consider whether you are using the right tools to acquire your customer.

But what if you could increase the average the customer spent from $100 to $300?

Why you should want to increase it?

Acquiring new customers is expensive, so why not look at ways to encourage the customers you do have to spend more.

It’s a good way to increase your cash flow.

This post will cover tactics you can implement per purchasing section to increase the average order value:

  • Homepage
  • Search pages
  • Product pages, and
  • Checkout 

 

HOMEPAGE

First-time bundle offers 

One way you can increase the average order value is to offer deals for first-time customers. Perhaps offer them a slight discount when they purchase more things from a bundle.

increase average order value

Bombas offers people using their store for the first time a 20% discount on purchases if they buy four pairs of socks or more.

This means rather than their first cart total being $9, it rises to $28.80 because they’re buying four pairs of socks rather than one.

Free shipping threshold

Indicating there is a threshold to receive free shipping is a great way to increase your average order value.

Jessops the camera store offers free shipping when you spend over £50. This means customers who are say £8 off the threshold, might see it as better value to spend £8 or more, and get free shipping than paying £7 just for shipping.

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SEARCH PAGES

When people are searching for their desired product on your ecommerce store there are things you can do in order to increase the average order value.

Bestsellers

Why not highlight what your best sellers are. This way customers are able to see what other people are buying.

Personalised results

If you know someone is searching for a certain thing, then why not show them other things related to that. Personalising your search results is a great way to get in the mind of your customer and convince them to buy more from you.
increase average order value

When I’m searching for a smoothie maker on Amazon, it also shows me the items other people have bought. It assumes we have similar buying patterns to the other people who have bought the smoothie maker and therefore we might also like the things they have gone on to buy.

 

PRODUCT PAGES

Package deal

When someone is focussed on one item, one way to increase the order value is to offer them a package deal, meaning they buy the thing they were originally interested in, plus a few more things at a discounted price.

Packaging these deals together is a clever way to increase the order value.
increase average order value

Here, I was looking to buy the tripod, and Amazon has shown me that for just £22.43 I can also get two accessories to go with my tripod.

They also make the buying process easy. So if I was interested in this bundle, it comes at no extra effort on my behalf to get it.

Loyalty program

A loyalty program is one way to increase the average order value.

Offering rewards for completing certain actions such as spending a certain amount will encourage people to spend a bit more in order to redeem the rewards.

For products people need to re-purchase, a loyalty program is an effective retention strategy that can increase order value and customer lifetime value.

Not only this, but a loyalty program leads to greater advocacy for your brand and product and studies show that your loyal customers make up 70% of your customer base.

 

CHECKOUT

Your checkout is probably the most effective place to increase your average order value. This is because customers who have reached the checkout process are already invested in your product.

They are almost certainly sure they’re going to make a purchase today, so encouraging them to spend a bit more is an easier task.

Here, you can implement the same approaches as you have done above, however they often have a higher conversion rate.

Think about when you’re shopping in a supermarket in a brick and mortar store. The store deliberately places items  near you whilst you’re in the queue in the chance they get some of the impulsive customers.

Did you forget?

One key tactic you can implement is the “did you forget” feature. This feature reminds customers that there are other products that go with the product they’re planning to buy.

For example, if you were going to buy some new leather shoes online, then at the check-out, you could have a pop-up message say “did you forget shoe polish” along with a button to easily add it to the cart.  

 

Takeaway

Increasing your average order value is a good and inexpensive way to boost your revenue and encourage repeat customers. Not only that, but it’s also a great way to assess your loyalty program effectiveness.

 

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