7 simple ways to increase your Average Order Value
In product based e-commerce businesses there are only so many levers you can pull to increase revenue without introducing new products or making fundamental shifts in the business. Getting the balance right with these levers creates an excellent footing for sustainable growth.
One key metric you can work on pushing up is the average order value (AOV).
Presuming the percentage mark up on your products are all in the same ballpark, it’s a no-brainer to assume that the higher the order value, the more profitable the order.
When you add ads into the calculation, if you can spend the same amount converting a customer to a value of £50 as you can to £65, it’ll equate to making your ad spend go further.
Higher AOV = Higher Return on Ad Spend
The higher your return, the better your profits, and the better your profits, the more you have to invest in your growth.
Increasing the Average Order Value
Clearly there’s no benefit in increasing order value if you heavily erode your margins, so it’s about finding the sweet spot between maintaining sufficient margin to make the bump in value worthwhile, and making the stretch in spend attractive to your audience.
7 quick and easy options to try:
Volume discounts - This works particularly well on products that are used regularly, such as hair or body care, or supplements, but customers aren’t buying into a subscription. They make a saving, and don’t need to reorder so soon, and you have already converted the next sale without incurring extra marketing or distribution costs. Presuming the customer is new, you have also just bought yourself double (or more) the time for your customer to fall in love with your product.
Upsell to collections or bundles - This one takes more buy in from the customer than a volume discount, as they need to be on board with more than one product, and are not necessarily getting longer value from their purchase. Bundling with products which really add value to the original product is a key starting point. Bundling to address particular pain points can also be very successful. If you’re struggling with bundles, how about allowing your customers to create their own bundles?
Cross-sell - An alternative to bundling is to add in cross-sells, or ‘frequently bought together’s. You can double up here by offering in the cart and also at checkout, or if you feel that’s too much, test these features at different points of the customer journey to measure where you get the most impact.
Promote more expensive products - Have you become a little too comfortable relying on your lower cost entry product to attract new customers? Have you tested being bolder and going straight out with something that is of higher value (and has a good chance of elevating the value of your brand)? Assess your audience carefully on this one, but don’t assume that they aren’t willing to pay more and enjoy your premium products.
Raise your prices - This might feel like a really blunt tool, but the cost of your products need to be regularly reviewed in the context of protecting your bottom line and planning for reinvestment of profits for growth. Price increases can put off customers, but they can also increase the perceived quality and value. No one is suggesting over-pricing, but do be aware of under-pricing and the negative effect it can have on your growth.
Test your free shipping threshold - This one works hand in hand with the point above. Through testing you might discover that free shipping has a bigger impact on sales than a lower product cost, so it’s advantageous to raise your product prices, but offer lower or free delivery. You could also test raising your free shipping threshold to encourage higher cart values. That will impact in both directions, but only by testing it for your business will you discover if you come out more profitable as a result.
Target higher spenders - Depending on the platform and campaign type you’re running, use data from your highest spending audience in your targeting.
If you know you have a great product, an audience and a website which converts well, this stuff is the fun, slightly nerdy bit which allows you to push the boundaries of your business that bit further, and make it a more efficient machine, primed for growth.
If growth is on your agenda, but you’re not confident your ads are ready to support that journey, we’d love to have a chat.
We work with product based businesses, the majority on Shopify with Klaviyo supporting on email. Our focus is growth, and we want to work with exciting brands who are not content with stability… they’re ready to scale.