30-second summary:

  • Running an ecommerce store makes it a must to know customers’ buying habits, insights about your marketing campaign performance, and how well your pricing strategy is performing.  
  • However, your average order value (AOV) can be a key to getting more into customers’ carts and increasing your revenue.
  • Kevin Payne lets you in on how you can increase your AOV through some smart, simple, and effective methods.

When you’re running an ecommerce store, you should know that average order value (AOV) can help you get to know your customers’ buying habits, insights about your marketing campaign performance, and how well your pricing strategy is performing. 

In this post, we’ll talk about what AOV is, the simple formula to calculate it, and how to increase the AOV of your own ecommerce store. 

What is “Average Order Value” (AOV) and how it works

Average order value refers to how much each customer spends per cart checkout with your store. It’s calculated by dividing your total revenue in a given period by your total number of orders in that same period. 

So say your total revenue in a single month was $40,000 and you had 1,000 total orders that month. That means your AOV is $40. 

Increasing your AOV may be more effective at boosting your overall sales and revenue than, say, focusing on getting more store visitors. This is because you’d be earning more per customer from the start who are purchasing more or higher-priced products instead of trying to get more customers to purchase, say, one item at a time. 

Nine tips to increase your ecommerce store’s AOV

With all the newest developments we see in ecommerce software and seeing better research about consumer ecommerce habits, there are several new tactics you can try to increase your AOV in 2020. Let’s take a look at them here. 

1. Create a free shipping incentive

Offering free shipping when a customer hits a minimum purchase amount is a classic tactic you can take. This still works today because free shipping feels like an added value to your store.  

For your customers, they’re more likely to want to get more products for their money than to put into a shipping fee. So make the most of this insight by setting a minimum purchase amount for consumers to be eligible for free shipping. 

Tips to increase AOV - Shipping incentiveSource: Ulta Beauty 

2. Start a minimum spend discount tier 

If you’re running a promotion, creating special discount tiers can do great to increase AOV. For example, during an end-of-season sale, you can offer discount tiers for 15%, 20%, and 25% off if consumers hit different minimum purchase amounts. 

This works by introducing bigger savings for customers. So if they were already eyeing multiple products from your store, this incentivizes them to check out all these items to get the most savings. 

Tips to increase AOV

Source: Core dna

3. Introduce limited time offers 

Another way to get customers to purchase more in a single transaction is by introducing some limited time offers, like a seasonal product or discount code on a specific collection. Be sure these are compelling enough to inspire people to take action.  

Set an end date for your promo, and make sure the added value consumers get is irresistible in their eyes. 

Your limited time offer also isn’t limited to simply discounts either. Think outside the box. Can you offer next-day or even same-day shipping if customers order by a certain time? Can you include freebies if they buy within the next two hours? 

Tips to increase AOV for ecommerce store - Limited time offersSource: Core dna 

4. Have a flexible exchange and returns policy 

One way to encourage customers to purchase more from your store is if they know they’re able to return or exchange items that either don’t fit or meet their expectations.  

Assuming your items are things like clothing or gadgets and not items like facial brushes or hygiene products, you can create a fair exchange and returns policy that gives people a reason to buy.  

Also pair this with other tactics above, such as a minimum purchase for free shipping or discount tiers so you’re sure customers will be adding more items to cart without fear that they can’t return or exchange items later. 

Tips to increase AOV

Source: BigCommerce  

5. Display a related products section

With the right ecommerce platform and integrations, you can display a “Related Products” section on your product pages to display items that are similar to the one customers are currently viewing.  

This works especially well for products that have different styles or colors or belong to the same category.  

This section essentially shows your customers that, if they aren’t really liking the specific product they’re viewing, there are related ones they can check out instead. 

6. Offer valuable add-ons

Add-ons may be displayed like related products but they vary in their use in that add-ons are offered as a way to complement something users have in their cart. 

For example, when a customer adds a shaving set into their cart, they’re offered supplementary items like a post-shave balm or a razor stand. 

7. Promote products in sets 

Another way to increase AOV is by bundling your products into a higher-priced set. If customers were to purchase these items separately, they would end up spending more – but a well-curated set can offer them all the products they want with a small discount. 

This tactic also works well with travel-sized items or trial packs for customers who are either new to your store or are looking to try new things from your brand.  

The example below by Joy Organics uses this tactic well. They put together their best-sellers into one “Sampler Pack” so customers can try their top-selling products without purchasing things in either a full size or complete pack. 

Tips to increase AOV - Promote products in sets

Source: Joy Organics 

8. Include trust badges and customer reviews

You can increase AOV by increasing the level of security and trust that customers feel when browsing your store. After all, customers are more likely to purchase from an ecommerce store that they’re sure is reputable. 

Tips to increase AOV - Trust badges and customer reviews

Source: Book Your Data 

Book Your Data does a great job of showing how rust badges and reviews featuring loyal and even popular customers can establish trust with new visitors right away. 

Sprinkle in trust badges like “Safe Checkout” or “Money-back Guarantee” across your site. Icons like free shipping or free returns can also entice customers to check out more items. 

Yet another way to establish trust right away is through customer reviews. Display reviews on product pages or for your entire store. If customers loved your next-day shipping perk or easy exchange process, you can talk about those to ease new customers’ minds. 

9. Nurture existing customers so they become repeat customers

Lastly, you’ll want to make sure your existing customers become loyal to your store. Loyal customers have been shown to spend 67% more than new customers – they’re more likely to make repeat purchases or check out more items per transaction. 

So you’ll want to do some retention marketing. This can be as easy as implementing a content marketing strategy that aims to nurture existing customers with high-value content like inspirational blogs, relatable lifestyle quotes, and the like. 

Plus, with content marketing, current marketing and sales efforts like excellent customer service and great products just become elevated in the eyes of customers. They see that you’re serious about meeting their needs and solving their problems in the long-term, so they will be more likely to stick around. 

Source: Rankings.io

Start earning more per customer 

Make your ecommerce store work better for you by implementing the tips and tactics above to increase average order value. Keep experimenting and creating new campaigns, and soon you’ll find which strategies work best with your customers.