How to Increase Average Order Value? 8 Effective Tips

Loyal customers allow you to increase your sales. However, there are times when you cannot achieve the expected revenue. In this case, you need to increase the average order value. Average order value (AOV) helps you earn more from each transaction.

Thus, you can make your brand more profitable. To increase the average order value in e-commerce, you do not need to find more customers. If you are not satisfied with your business's revenue, you should research ways to increase the average order value.

So, what is the average order value? How is the average order value calculated? What are the methods to increase the average cart amount? Here are the details you need to know about the average order value.

What is Average Order Value (AOV)?

The important metric that measures how much money customers spend on your site over a certain period of time is called the average order value. This term, which stands for average order value (AOV), allows you to make sense of consumers' shopping habits.

It allows you to create customer groups based on spending habits. In other words, it is one of the important metrics to monitor. Therefore, you should make sure you calculate it every month. It also lets you know if your marketing strategies are working.

This way, you get the opportunity to adjust advertising expenditures and product pricing based on data. Therefore, it does not only help you determine the number of products sold.

At the same time, it ensures that expected added values are also determined. It also allows you to increase customer lifetime value.

How is AOV Calculated?

People who want to increase the average cart amount can make calculations on a monthly and yearly basis. AOV is calculated by dividing a company's total sales revenue by the number of orders. This formula simply allows the calculation of the average order value.

For example, let's assume that last year firm XYZ generated 12 thousand dollars in revenue from 900 orders. In this case, we divide 12 thousand USD by 900. The AOV comes out to 13.3 USD.

In other words, every time a customer shops from firm XYZ, they spend an average of 13.3 USD. When calculating AOV, sales per customer are not looked at. Sales per order are looked at.

8 Effective Tips to Increase Average Order Value

Increasing the average order value requires a careful strategy and effective steps. Let's examine 8 effective tips you can use to increase the average order value.

1. Set a threshold for free delivery

If you are wondering how to increase the average cart size, you should set a threshold for free delivery. However, you should act based on the customer's online shopping history. When it comes to increasing the average order quantity, shipping costs are an important consideration for the customer.

In other words, with free delivery, you have the chance to encourage customers to spend more. Thus, your business's average cart amount increases. However, you should keep the threshold for free delivery above the average order value.

Also, this price should not exceed the average order value by too much. In other words, the threshold should be a number close to the average order value. In this way, the customer becomes willing to spend extra.

Aaron Zakowski said that a 30% increase in average order value works best. For example, let's assume your average cart value is 100 TL. In this case, your free shipping threshold could be 130 TL.

So, you offer free delivery on all orders over 130 TL. There may be times when your customers' purchases do not reach the free delivery threshold. You should add a notification for these situations. At the same time, you can also use product recommendations on the cart page.

2. Offer product discount deals

To increase the average cart amount, one must act with tips. Offering product discount deals is also among the tips. However, you should set a minimum spending limit when offering discounts.

For example, you can offer a deal along the lines of "Get a 10 TL discount when you spend 75 TL or more". Some stores offer bulk discounts.

Also, showing customers the monetary savings they gain from their bulk purchases allows you to increase the average order value. On the other hand, "Buy X Get X Free" is commonly used as a type of discount.

3. Show cross-sell and up-sell products

Cross-selling requires you to show products that your customer might like other than the product they are viewing. Suppose your customer is looking at a sweater. You can recommend a skirt that matches the sweater.

Therefore, for cross-selling, it can be a perfect idea to add all the products the model is wearing to the recommended products. For example, McDonald's asks if you want onion rings and french fries with your burgers.

Also, to encourage cross-selling, you should share your customers' social media content. You should try to showcase original content shared by users on your website.

Up-selling requires you to encourage customers to buy more expensive products. For example, let's assume you sell pillows. Trying to sell a more expensive and higher quality pillow is an up-selling tactic.

Instead of showing other popular products in your store, your choice should be accessories that perfectly match the product in the user's cart. You should also take care to offer low-value up-sells.

Let's say your customer is going to buy a product worth 50 to 100 TL. In this case, it would be difficult to persuade your customer to spend another 100 TL. However, you will not have difficulty persuading them to add an item worth 20 TL.

The Apple brand applies the up-selling tactic for the gigabytes of its phones. As the gigabytes of the phones increase, the price goes up. In addition, the up-selling tactic also works in television sales. As the size of the television grows, the price increases.

4. Provide product bundle offers

If you want your customers to buy more products, you should provide product bundle offers. Therefore, you should group products that go well together or are usually sold together. "Buy 3 Pay for 2" is among the most common sales-boosting campaigns.

However, when preparing a product bundle offer, you should price it in a way that does not reduce the total profit margin. Even if there are decreases in profit per product, the profit to be obtained from the process should be within a certain value range.

For example, you should offer product bundles that create an all-in-one solution. Also, if your customer is going to buy a dress, you can create a bundle consisting of different colors. The H&M brand packages different colors of the same model clothing and presents it to its customer. Thus, it gets the chance to increase the average order value.

5. Have a customer loyalty program

Customer loyalty programs provide effective ways to strengthen your brand. You should create a system where your customer will earn discounts or points every time they place an order.

This increases your chance of creating brand advocates. According to Accenture, 57% of shoppers tend to spend more when they feel brand loyalty.

For example, you can create loyalty programs based on points. The Sephora brand does this. In other words, consumers shopping from the Sephora brand earn points they can use later.

In addition, loyalty programs increase your customer retention rate. You should make sure you inform your customers about your loyalty program.

6. Share time-sensitive offers

Time-sensitive offers can increase the likelihood of online shoppers purchasing products or services. For example, make a purchase over 150 TL and get 15 TL.

This offer allows you to make your products and services attractive. So, to increase your average order value, you should try offering 24 to 72-hour discounts. This way, you ensure your conversions increase.

You can promote these offers on social media and in banner notifications on your website. In addition, offering time-sensitive offers helps your indecisive customers make decisions faster. Tempting discounts and promotions allow your offers to turn into sales. Black Friday is among the best examples of this tactic.

7. Distribute gift cards and coupons

Gift cards and coupons help you increase the average order value. Everyone loves gifts and coupons. You should offer your customers gifts or coupons they can use in the future.

This increases your brand's customer retention rate. For example, let's assume your retail price is higher than 50 USD. You can offer your customer a gift card or coupon worth 5 USD.

However, you should not forget to inform them that they can use this gift card or coupon on their next purchase. In this way, you increase their likelihood of shopping from your store again with the gift voucher.

Also, you should determine the gift opportunity in a way that will not cause a loss of profit. This tactic can benefit your business when your seasonal sales are low.

8. Create a flexible return policy

You should take care to be as flexible and transparent as possible towards your customers. Creating a flexible return policy allows you to alleviate the doubts or concerns of your potential customers.

But after creating your return policy, you should clearly show this to your customers. A generous trial period and return policy allow you to increase confidence in the quality of your product.

You must remember that you need time to get the returns of your efforts. Also, you should never stop processing forward with focus and effort. We Wish You Great Sales!