How to increase AOV in your online store
- 02 September 2021
How to increase AOV in an online store? – It’s by far one of the most important questions in every e-commerce business. AOV stands for average order value, and as you already know from our article about KPIs in e-commerce, it’s a critical indicator of your store’s condition. In this article, we are going to take a look at several proven ways of increasing the average order value index in your store. And no, it’s not just about upselling and cross-selling.
The AOV index should be analyzed together with many other elements in your business, starting with the CPA (cost per acquisition) index and ending with your profit at the end of the month. You see, if CPA is high and your AOV is low, it can turn out that your store, instead of making money, only covers the expenses, and you don’t go forward, even if you serve tens and even hundreds of customers monthly.
Increasing the AOV index is one of the best things that can happen to your store. Thanks to higher average cart value, you:
- Make more money
- Can confidently invest in marketing activities
- Can test different forms of promotion (including product bundles and affiliate marketing)
- Survive temporary drops in sales less painfully
How can you calculate AOV on your own? It’s quite simple. All you have to do is divide your revenue from a specific period by the number of orders. At this point, we have to answer an apparent question – what can you do to increase the AOV index in your store? There are several ways to do so. Let’s examine them!
How to increase AOV
UPSELLING AND CROSS-SELLING
That’s probably the most straightforward way to grow AOV. These two techniques have a lot in common, and they are all about proposing products that will encourage your customers to leave more money in your store:
- When it comes to upselling, you offer a higher (more expensive) model of the product your customer is currently browsing. If, for instance, you sell electronic products and your customer is looking for a 50-inch TV, why not recommend them a 65-inch model? Take a look at this example:
- Cross-selling is all about recommending complementary products that go well with the customer’s current cart. For instance, if you sell skates, you should also recommend helmets and other protectors.
Unlike many people think, delivery can constitute a significant part of your purchase, especially when you buy cheap products (under 30 USD). Offering free delivery after reaching a specific price cap can encourage your customers to add more products to the cart in order to achieve it. You can put a counter in the cart section showing how much money the customer has to spend in order to get free delivery. Such a straightforward solution can be very effective!
A LOYALTY PROGRAM
Customers are more willing to spend more money in the stores that offer them loyalty programs. Of course, that’s because they hope to get discounts and extras in the future. Think about implementing a loyalty program in your store. You can encourage customers to collect points and exchange them later for vouchers, discounts, and gifts with a relatively low effort.
According to 3TL.com, consumers in paid loyalty programs are 62% more likely to spend more on the brand and 59% more likely to choose the brand over competitors. This means that loyalty programs still work nicely.
Take a look at such a program available at Sephora:
Sephora calls their program Beauty Insider. This program lets customers earn points on all their purchases and redeem points for rewards. These rewards are usually deluxe product samples and product bundles. And that’s a key to a successful loyalty program – offer something valuable to your customers.
Time-limited offers can be extremely effective, primarily because people are more willing to spend money if there is a sense of urgency. This mechanism is frequently used by influencers and other people offering, e.g., digital courses, but also by retail chains. Offer your customers a time-limited offer, and you can be almost 100% certain the AOV index will go sky high shortly.
Freebies work similarly to free delivery. If you set a specific threshold above which customers get a gift, you can expect many customers to buy more products just to receive it. It’s crucial, though, for this gift to be attractive. If you want to “reward” a customer who has just bought a 10,000 USD TV with free batteries for the remote, you’re missing the point. The freebie has to be tailored to the order’s value.
This last option is particularly effective in the fashion industry, but not only. If you provide users with a straightforward way to return ordered products, they will be more eager to buy more because of the confidence that returning them will not cause any hassle.
For example, Macy’s provides users with the pack and ship service. All you have to do is print a mailing label and ship your product from any UPS location for free. Read more here. Perhaps you can think of something similar?
Don’t forget about attractive prices!
Possibly, that’s the most obvious way to increase the AOV index. Make sure your prices are really attractive from your customers’ perspective – you can use a price monitoring tool for that purpose. What;s more, Dealavo provides e-commerce companies with a dynamic pricing platform enabling them to set and maintain optimal prices according to specific pre-defined rules (e.g., top3 in Google Shopping).