When you open an e-commerce website, you can market your products and sell them to customers constantly. But after a time, you will see that your products are getting average out to a low amount, and if that keeps happening for a long time, your revenue will not improve in the next few months. But if you manage to get more traffic, then the number of orders will increase but to get more traffic, you will have to work more on your website and spend more money or effort on marketing your products. With a good marketing campaign, you can convince your customers to buy more expensive products from your store. But that will require you to measure and improve your average order value. We will tell you what the average order value is in this post, and we will show you how to improve it.
What is the Average Order Value?
The average order value is known as AOV, which refers to the average amount of money your customers spend on your store every time they buy new products. The formula for measuring your average order value is: total revenue/number of orders = average order value. Here is a hypothesis of it: if the entire revenue of your store is $1,700 and the number of demands is 100, the average value would be $17. This means your customers spend $17 on average for every order in your store. If you use Shopify for your eCommerce store, then the company will calculate the amount for you, or you can use third-party apps to measure your average order value. Besides average order value, average basket value and customer lifetime value are also some of the common terms. The average basket value is equal to the average order value. Nevertheless, it never tells you how considerably each customer is spending on average on your store. Rather, it tells you how many products you are typically selling per order. And customer lifetime value signifies how extensively a consumer is spending money over the course of your customer-vendor relationship. If the customer’s lifetime value decreases over time, you will have to focus on how to get it back. To increase your AOV, you will have to convince your customers to add more products of more value to their shopping carts. Now, we are going to talk about those strategies.
How to Boost Average Order Value?
When you know your company’s average order value, you can strategically plan your marketing campaign because AOV will help you out with the right metrics you need to learn about the value of each of your customers. With AOV, you can set goals and strategies and then evaluate how the strategies are working out for your business. Most of the time, the marketers invest their energy into building stable website traffic, but it would be better if you focus on AOV instead. And another benefit of AOV is it does not typically come with costs, while increasing traffic does. Developing your AOV will help you increase your revenue directly and will also create more profits when the buyers are already buying from your store.So, here are the top tips to increase your average order value:
Provide Product Recommendations
Mostly, when your customer finds one product in your store that they had been looking for, they typically stop searching for more. This will create smaller carts and smaller average order values. When you are giving recommendations on the checkout or product page, you can leave out this problem. You can recommend to them the popular products or the products that your other customers have purchased that are similar to the products on your current customer’s cart. It will increase your average order value.
Cross-Sell Complementary Products
Cross-sell or upsell your products involves adding product suggestions to the product page. You will have to pick out the products that go well with the ones on your individual customer’s cart and then suggest those products to your customer. For instance, when your buyer is purchasing a birthday cake, suggest to them some candles as an add-on. This way of promoting complementary products to your customers is a proven strategy for improving average order value.
Set Order Minimums And Offer Discounts
You can create a better average order value by encouraging your customers to spend a minimum amount on the orders. You can ask them to add a minimum amount for free shipping, and they will add more items to their carts to gain a discount. For example, ask them to add a minimum of $100 valued products to their cart to access free shipping. And at the same time, you can also offer a coupon or a free gift to increase their chances of adding more products to the cart. For example, if they add $150 of value to their carts, they offer a 15% discount along with free shipping. There are Bold Quantity Breaks, Free Shipping Bar by Hextom, and many other apps that allow you to set up minimum order incentives.
Create a Customer Loyalty Program
Building a customer loyalty program means creating an opportunity for your customers to be in touch with your business or store. For example, if one of your clients purchased a vitamin supplement from your store, ask them to join a loyalty program that would gain them some points and help you to get them back to your store to repurchase that supplement. With a customer loyalty program, you can expand the average order value of your eCommerce shop. These royalty programs typically encourage your customers to buy more items and gain more rewards after spending a lot of money on your products. Your customers can use those reward points to gain more discounts for the items they are going to purchase in the future. More discounted prices are the best reasons for your customers to join a loyalty program.
Create Packages or Combos
If you want your customers to buy more items from your stores, then create product packages or combos that cost less together than the individual products. By combining the products, you are increasing the value of the products by building AOV. The best way to offer a package of products is to identify the products that provide one experience but multiple solutions. For example, if you are opening an online food store, you can create a combo of chow mein and chili chicken for an affordable price. But if the buyers go for the individual products, they would have to buy them for more money. This is the best way to draw your shoppers and increase your average order value.
Conclusion
Along with these points, you can apply a return policy and coupons and discounts to gain your customers’ trust, and they will come back to your store every time they have to buy something that you offer. In short, words, to increase the average order value of your e-commerce store, you will have to attract your customers, keep them engaged, and gain their trust. The more you apply these approaches, the easier it will be to implement average order value on your business.
My name is Vijay Singh Khatri, and I enjoy meeting new people and finding ways to help them have an uplifting experience. I have had a variety of customer service opportunities, through which I was able to have fewer returned products and increased repeat customers when compared with co-workers.
