AOV (average order value) is one e-commerce metric that many online marketers don’t pay enough attention to. It’s very simple to calculate: you take the total revenue in a specific period of time and divide it by the total number of orders in that same time period.
For example, if you generate $10,000 in revenue one day and did 500 sales, then your AOV was $20. The higher the AOV, the better. Your business makes more money if your average order value is high, as it often costs the same amount of money to drive each visitor to your website.
If you are spending on average $2 for each visitor, if you are able to increase your average order from $20 to $50 it’s going to have a massive impact on your profit. It’s really a metric that needs more attention, simply because when you figure out how to increase this number the overall impact it has on your business is more significant than other areas of improvement.
If you spend some time mapping out ways to increase your AOV, you can experience growth without attracting any additional customers. Then, once you figure out how to increase your average order value, you will see even larger spikes in revenue when you do go after additional customer channels.
It’s a piece of the online marketing plan that many don’t spend enough, if any, time on. It’s also one of the easiest way to generate more revenue without more customers, which is why you’re leaving money on the table if you ignore this advice.
I’ve put together a list of eight tips that you can implement with a few website tweaks and apps, which can all help you generate more revenue. It’s a no-brainer — if you have an e-commerce website you should jump on this immediately.
Use these suggestions to easily increase your average order value.
1. Implement 1-click upsells on your checkout page.
Implementing one-click upsells can be the most lucrative strategy, as evident how every major e-commerce website has some sort of upsell variation within their checkout system. While listing “similar products” or “other items you might like” can work, they still require that the customer click on the item and then if they bite, they have to then add it to the cart and then begin the checkout process all over again.
This will not convert high because people are lazy. Even if they may have an interest in the item they don’t want to waste any more time, and because of this you will miss out on additional sales, which all contribute to raising your average order value.
When you implement 1-click upsells it automatically puts the item into the cart, or you can even use plugins that will show an upsell AFTER the checkout process is complete and it asks the customer if they want to also purchase a related item and noting that they just need to click the button and it will automatically be added (and charged) without having to check out again. The simple fact that the customer has to do nothing more than click one button creates a high conversion rate.
2. Create buy one, get one half-off options.
If you are selling products or a service with high margins then you should consider offering a buy one, get one half-off special, and run it often. You will typically find that when you do this you will generate many more sales than you would without the special, and because of the offer it results in a much larger revenue haul.
You don’t have to offer special like this in the shopping cart either, as you will see a much better response rate if you simply have two purchase options for the products or services you apply this strategy to. For example, if you are selling supplements, and there is a protein powder that costs you $10 to manufacture and you sell it for $60, you could do a buy one, get one half-off offer and let’s just take a look at how the numbers spike in terms of revenue.
If you just offer it at the regular price of $60, let’s assume you generate 500 sales a month. That would be $30,000 in revenue and $25,000 in profit. Now, if you offer the buy one, get one half-off offer you are going to draw much more attention to the product. So, instead of 500 orders you are going to see 800 orders come in a month. That would be $72,000 in revenue and $56,000 in profit.
Even though you are discounting one of the items, you would generate more than double the revenue and more than double the profit. Play with the numbers and see if this will work for you. If your margins are high, this is the easiest way to not only increase your AOV, but also scale your business at a rapid rate.
3. Offer multiple-quantity package discounts.
I’m going to stick with the supplement industry on this tips, and specifically highlight a product that you have probably seen all over social media, as the company uses influencers and celebrities to push it.
It’s called Sugarbear Hair, and it’s a supplement that claims to help grow strong and healthy hair. I’m sure it’s low cost and very high margins. If you look at their pricing you will see that the customer can buy one bottle, 3 bottles or even six bottles. While the price drops a few dollars per bottle, they throw in little (cheap) gimmicks to push the customer to opt for the larger quantity offerings.
They offer a hairbrush when you buy three bottles and a hairbrush along with a cosmetics bag. These items more than likely cost less than a dollar each, yet they are 3X and 6X-ing the average order value simply by offering that option.
Consumers love to feel like they are getting something for free, no matter how insignificant it may truly be. Do these people need 3 and 6 bottles of this? No. But they bite because of the multi-quantity offer. If it makes sense for your business I would suggest offering it, as it costs you nothing more really, and can multiply your revenue several times over. The cost to acquire each customer is going to be the same regardless of what they buy, so you might as well squeeze every dollar possible out of them.
4. Require a minimum spend amount to qualify for free delivery.
Did you know that free shipping is the number one factor customers look for (and use to decide whether or not to buy from a particular website)? It’s true, and while you should offer it if you can, why not consider adding a minimum dollar amount threshold to qualify for it? Doing so can really spike your average order value, because most people will gladly buy something extra if they feel they are receiving a major benefit for doing so.
As crazy as it may sound, someone will often gladly purchase another product and spend another $30 to qualify for free shipping, which essentially would save them $5.99. All logic goes out the window when you introduce a free shipping threshold, because everyone wants it. They feel like they have won when they unlock that perk.
I have seen a lot of well-done floating bars at the top of sites that will show your total cart value and then also how much more you need to spend in order to unlock free shipping. There are many ways you could also dynamically integrate related or suggested products, which would help the customer find items to add.
While you might push a few away, the average order value increase across the board will be far more beneficial in the long run.
5. Offer loyalty points for hitting spend thresholds.
Have you ever watched grown adults play games at carnivals or amusement parks, spending an absurd amount of money to try to win a stuffed price that probably cost less than $1 to produce? It’ mind boggling, yet it plays into psychology — create something attractive and present it in a fun manner and people will have their wallets open wanting to participate.
Loyalty points are really catching on and most of the large e-commerce brands have a program in place. What your points can be used for is up to you. Some will allow customers to use them to pay for purchases in the form of credit, and others will offer limited edition products that can ONLY be purchased using loyalty points.
I like the second option, because points as cash is nothing unique. If you release limited edition products and make them seem unattainable your customers will take extra steps to secure the points needed to get their hands on whatever it is that you are offering. This leads to increased spending, pushing your AOV numbers far higher than they would be without a loyalty program in place.
6. Offer custom gift messages and gift wrapping upsell options.
Are you selling products that have a high probability of being gifts for someone? Even if you only offer a small percentage of gift-type products, this little strategy can easily increase value, with high margins.
Gift messages are something that you can offer, allowing the buyer to pick a card theme as well as typing out a message. You can print the message or even offer a hand written upsell option. Gift wrapping as well. This is all low cost and high margin upsells that you can task your fulfillment center with.
If you fulfill and ship in-house this will be easy, but if you outsource it you may have to cut them a nice percentage to get them to play ball. Consider the options and understand that to test this your investment is very minimal. Imagine if you were able to add $10 to 20,000 orders annually? That would be an extra $200,000 in annual revenue just waiting to be collected. When you think of what you could do with that extra revenue it becomes much more attractive and gives you incentive to look for opportunities like this.
7. Showcase recommended products after the add-to-cart step.
I mentioned adding a one-click upsell to your shopping cart above, and while this is a similar strategy, it’s very different. Your one-click upsell offer has to be hyper targeted and present the customer with one offer. You have one shot to blow their mind and get them to click to purchase.
With recommended products after they add one to their cart, you can showcase multiple products that are related to whatever it is they just added. With this, you want to go pretty wide in terms of offering, as you want to increase the chances of at least one thing catching their eye and causing them to click-through to at least check out the offer.
I would suggest that you display anywhere from 8 – 12 items and have a countdown timer above them along with a discount code. If you give them 5 minutes to bite and offer a 5% or 10% off code you will see that offer convert very high.
8. Offer immediate discounts for hitting higher spend thresholds.
If you challenge your customers to spend more and offer them discounts for doing so you will see many gladly accept that challenge. I’m talking about an offer that would look something like this:
- Spend $99+ and instantly receive 10% off your entire order!
- Spend $199+ and instantly receive 15% off your entire order!
- Spend $299+ and instantly receive 20% off your entire order!
- Spend $499+ and instantly receive 25% off your entire order!
They key is to work this into your website design and make it as visually appealing as possible. An animated status bar that shows their spend level along with the different discount tiers can be highly effective. Often times just seeing the next tier will push them to spend more in order to reach it.
Conclusion
When growing an e-commerce website most store owners will focus all of their time and energy on attracting more traffic. While this is always a good focus point, you should also be working on ways to get each customer to spend more money every time they check out.
Improving your AOV is the easiest way to see a major revenue spike, and as you can see from above, there are several steps you can take to make that happen that require very little effort.
Question for those currently running e-commerce websites: what is your current AOV and what would a 20% increase mean to your overall revenue? I’m curious to hear, so drop your responses in the comments below.
