DTC Ecommerce // December 9, 2023Increasing Your Average Order Value: 11 Effective Strategies for Success
Posted by Fuze
If you’re a DTC brand looking to thrive in today’s competitive ecommerce landscape, increasing average order value (AOV) should be your primary focus. Even a nominal increase in average order value can result in significant improvements on your return on ad spend and bottom line profit.
In this article, we will explore 11 proven strategies that can help you increase your AOV and take your brand to new heights.
1. Cross-Sells and Upsell
2. Implementing Volume Discounts
3. Encourage Higher Spending with Order Minimums for Free Shipping
4. Implement Merchandising Strategies
5. Build Customer Loyalty through a Rewarding
6. Personalize the Shopping Experience
7. Drive Urgency with Limited Time Promotions
8. Gain Customer Trust with Social Proof and Reviews
9. Surprise and Delight Customers with Free Gifts or Gift Cards
10. Offer Flexible Payment Options to Encourage Higher Spending
11. Establish a Hassle-Free Return Policy for Customer Satisfaction
Before we explore the strategies to boost your AOV, let’s outline what AOV is and why it’s so important.
Average Order Value is the average dollar amount per order spent by your customers. Increasing your ecommerce website’s AOV means you’re boosting the amount customers spend on each purchase, which results in more revenue for your business.
Calculating your AOV is a simple but crucial first step in understanding your current performance and setting goals for improvement. It tells the story of your customer’s purchasing behavior and helps you define a roadmap for success.
Average Order Value = Total Revenue / Number of Orders
For example, let’s say your total revenue for a month is $20,000 and you had 400 orders during that period. To calculate your AOV, you would divide the total revenue by the number of orders:
Average Order Value = $20,000 / 400 = $50
So, in this example, your Average Order Value would be $50.
Using the above example, let’s say you implemented a shopping cart upsell strategy or special promotion that generated a $10 increase in AOV. This would mean an additional $4,000 per month or $48,000 per year in revenue.
One powerful and proven strategy to increase your AOV is by implementing cross-selling and upselling techniques throughout the shopping experience.
Cross-selling involves enticing customers to add additional products to their cart before checking out. A standard strategy is to highlight lower priced, complimentary items. In the below example, Sephora suggests a set of low-cost products as upsells in the shopping cart. These are items the customer may not have seen while browsing the site and all are under $15.
Upselling, on the other hand, involves encouraging customers to upgrade to a higher-priced product in the same category. This can be done by highlighting the benefits and features of the more premium option. Perhaps you offer the premium product at a slight discount. If the price is still greater than the lower priced item, you will profit by enticing the customer to upgrade.
By incorporating these techniques into your sales process, you can encourage customers to spend more and increase your AOV.
Another strategy to boost your AOV is by implementing volume discounts. Offering discounts for purchasing multiple items or reaching a certain order value can incentivize customers to add more items to their cart. By providing these incentives, you not only increase the average order value but also encourage customers to buy more, resulting in higher overall revenue.
The popular men’s apparel brand WYR Wear recently ran a “Buy 5 items, get 10% off” promotion. As shown below they gamified the experience by including a progress bar in the cart drawer to show shoppers how many items they have to add to trigger the discount.
The cart drawer also includes product upsells, which we covered above.
Shipping has gotten more expensive over the past several years and customers are extremely conscious about spending more money than necessary. By implementing order minimums for free shipping, you can incentivize customers to add more items to their cart to meet the requirement. This strategy not only increases your AOV but also provides a positive shopping experience for your customers.
Pro Tip: Implement an in-cart progress bar to show customers how much more they need to spend to hit the free shipping threshold. An ever present, visual cue will serve as a teaser throughout the shopping experience.
Strategic merchandising can have big impacts on AOV. By placing related products together, highlighting product bundles, or featuring “Recommended for You” sections, you create opportunities for customers to discover and add more items to their cart. Thoughtful merchandising can increase customer engagement and drive higher AOV
A common tactic used by many apparel brands is to curate items that compliment the one a customer is currently viewing to complete the look. This works well because it reduces the amount of thinking and searching shoppers need to do to put together an outfit, and makes it very easy to quickly save items to a wishlist or add to their cart.
Bundle deals and bulk options are highly effective strategies to encourage customers to spend more. By offering discounted prices or exclusive deals for purchasing multiple items together or in bulk, you create a win-win situation. Customers get value for money, and your AOV increases as customers choose to take advantage of these offers.
Dollar Shave Club’s below holiday promotion bundles products together for either a discounted price or a free gift. This “get more for less” strategy is an age-old marketing technique that is proven to drive higher AOV.
Loyalty and reward programs for direct to consumer brands have massive impacts on driving AOV and LTV.. By offering exclusive post-purchase rewards, discounts, or early access to new products for loyal customers, you incentivize them to spend more and buy more often.. Not only does this boost your AOV, but it also fosters a long-term relationship with your customers, turning them into brand advocates.
The collagen brand Obvi, which does north of $15 million in yearly revenue, has built a huge community of devout fans. Obvi gives customers numerous options to gain and spend rewards points, adding gamification and convenience for anyone looking to save on their next purchase.
Creating a personalized shopping experience can make customers feel valued and understood. By analyzing customer data and preferences, you can offer personalized recommendations, product suggestions, or discounts tailored to their specific needs. This personal touch can result in higher AOV as customers appreciate the effort taken to understand their preferences.
A tried and true personalization method that can be added to virtually any ecommerce store is showing related products at the bottom of every product detail page. This ensures that even if a customer doesn’t add the current product to cart, they immediately see a set of similar or related products that may pique their interest.
Creating a sense of urgency can encourage customers to make immediate purchases and increase their order value. By offering limited-time promotions, flash sales, or exclusive discounts for a specific time period, you create a fear of missing out (FOMO) effect, compelling customers to buy more before the offer expires.
The ecomm giant Shein has perfected these tactics to the tune of over $24 billion in annual revenue. In the below example they are running a Black Friday flash sale and use a countdown timer combined with attractive markdowns to drive urgency, scarcity and FOMO.
Customer reviews and social proof are valuable assets when it comes to increasing AOV. Positive reviews, testimonials, and ratings build trust and confidence in your products, making customers more likely to spend more. Displaying reviews prominently and utilizing social proof can persuade customers to add higher-priced items to their cart.
Brands like the mushroom coffee company Everyday Dose that go above and beyond to ensure top tier customer service have legions of happy customers who are more than happy to share their feedback. Highlighting real reviews from real consumers is a fantastic way to build trust through social proof.
Who doesn’t love surprises? By offering free gifts or gift cards with qualifying purchases or reaching a specific order value, you create a pleasant surprise for your customers. This unexpected gesture not only enhances the overall shopping experience but also motivates customers to spend more to avail the offer.
Banana Republic Factor sends a post-purchase email offering an immediate $50 off your next purchase. As shown below they couple the discount with a cut off date and a minimum spend of $100. This clever strategic pushes urgency and ensures the customer spends at least $100, which ensures higher AOV and repeat purchases to build loyalty and LTV.
Providing flexibility in payment options can remove barriers to purchase and increase AOV. By offering installment plans, buy now pay later options, or credit card rewards programs, you cater to a wider range of customers who may prefer different payment methods. This flexibility encourages customers to spend more confidently.
Ecommerce platforms like Shopify make it super simple to add ‘buy now pay later’ options at checkout. This added convenience and value for the customer is proven to increase conversion rates and boost the amount spent on each order.
A clear and customer-centric return policy can instill confidence in your customers and increase their AOV. By offering hassle-free returns, free return shipping, or extended return periods, you remove any hesitations customers may have about making larger purchases. A strong return policy communicates your commitment to customer satisfaction, which can lead to higher AOV and customer loyalty.
The athletic apparel brand GymShark has an extensive returns section on their website that gives customers everything they need to navigate the return or exchange process. The inclusion of categorized FAQs keep the content clean, organized and easy to find.
Implementing these 11 effective strategies can help you boost your average order value and drive greater success for your online business. Remember to analyze your results, adjust your strategies as needed, and always prioritize providing value to your customers. With consistent effort and a customer-centric approach, you can propel your AOV to new heights and achieve business growth!