What Is Average Order Value and How Can You Increase It?

Anyone running an e-commerce store knows it is impossible to stand still. There is a constant demand to offer more products, improve the offers, boost conversion rates, and earn more revenue. Much of the focus is often placed on the conversion rate, with many tweaks to the sales process helping to give a boost. Getting more traffic will also lead to more sales, even if the conversion rate stays the same. One topic that is less commonly discussed, though, is getting customers to buy more from you. If you can increase the total purchase cost, every order will offer greater revenue.

What Is Average Order Value (AOV)?

AOV is the average amount a customer spends per transaction. To find out the AOV of your store, take the total revenue from sales and divide it by the total number of transactions. This number can be increased by getting customers to either buy more products per order or to choose more expensive items. The AOV is clearly just one metric to consider as it won’t factor in other costs like advertising and store operations. You can, however, use the metric to track whether you are successfully encouraging customers to spend more when they visit your store.

How Can You Increase Your Average Order Value?

There are a number of techniques you can use to increase AOV. While they have all been proven to work, it is important to track and test results to ensure they produce positive results for your store.

Free Shipping Offers

Shipping costs can often lead to cart abandonment, with many consumers reacting negatively to an additional cost they weren’t anticipating. Promoting a free shipping offer when a particular dollar amount is met, though, can produce a beneficial result. When visitors see they are close to the threshold for free shipping, they are likely to seek out an additional item that hits the target.

Selected Discounts

Discounts might reduce the price of individual items, but can lead to an overall higher cart amount. A general discount, such as for a Black Friday promotion, can lead to consumers picking up an array of items. You can also lead people toward particular discounted products, particularly of a higher price, to encourage them to include more expensive items within the purchase.

Loyalty Programs

Loyalty programs are often used to keep customers coming back. They can, however, encourage greater AOV as customers want to amass more points. Typically, higher priced items will lead to more loyalty points, so engaged customers will have an incentive to choose more expensive items. As long as the rewards make sense for your business, a loyalty program offers multiple benefits that leads to more consumption.

Product Bundles

Stores with a number of different products can increase AOV by packaging together complimentary items. There should be an incentive to buying a bundle, but this process can be straightforward. You can simply offer a small discount if a customer adds a related item to their cart. Alternatively, you could physically package popular items together, creating a special edition version of the product line.

Cross-Sell Products

An alternative to a product bundle is to cross-sell items that are highly related. Instead of offering a benefit to buying the bundle, you can just showcase the products that customers typically buy together. If you were selling a smartphone, for example, you could list a few related items like phone cases and headphones to encourage additional sales.

It is difficult to run a consistently profitable e-commerce store if you are not focused on improvements. Competition in most industries means there are strong competitors trying to take your customers and other marketers looking to copy your store concept. Increasing the AOV is just one of a number of factors you can improve, but it should be given importance within your business. When you can increase the AOV, spending more money on customer acquisition becomes possible and you can start to focus on growth.