7 Ways to Increase Average Order Value

Whether you run an e-commerce site or a brick-and-mortar store, boosting revenue is key to maintaining good cash flow, keeping your business finances healthy and laying a firm foundation for growth. But there’s more to increasing revenue than attracting new customers. It’s also about encouraging your existing customers to spend more each time they visit your store.

Average Order Value (AOV) represents how much your customers spend when they visit your store, whether it’s online or physical. The great thing about increasing average order value is that it builds revenue with very little expenditure required. By targeting customers who already know and trust your brand, you can save money on customer acquisition costs while adding value for your existing customers. This helps to build loyalty and improve your brand’s value proposition. This enables your business to improve its profit margins and aids operating cash flow.

We look at 7 ways in which retailers can increase average order value and generate the increased revenue and profit necessary to grow their business.

1. Bundle complementary products

Customers will often come to your physical store or online checkout with one particular product in mind. But what if you were able to convince them to leave the checkout with not just that one item, but two or three others?

Product bundles are one of the best ways to increase AOV and provide extra value-add for the customer. For instance, if your store sells shoes, perhaps your customers might appreciate a few pairs of socks thrown in at a reduced cost. Or if your online beauty store offers moisturiser, your customers may also appreciate the addition of a face wash and exfoliating face scrub. While your margin on these ancillary products may dip slightly, you are generating more revenue per transaction.

2. Cross-selling and upselling

Upselling involves selling a premium version of a product that the customer is browsing, or a more expensive equivalent at a slightly higher cost. This can be hugely successful as long as your marketing enables the customer to perceive the added value that the upsell represents.

Cross-selling, on the other hand, involves presenting customers with complementary products to those in their basket at checkout. Food delivery platforms like Deliveroo and UberEats do this very successfully, offering extra sides, drinks and desserts to customers when they order a meal.

3. Solicit and display social proof

Consumer trust and a high AOV go hand in hand. Brands can build trust by leveraging social proof like customer reviews and testimonials prominently featured on product pages. In fact, as many as 35% of consumers would purchase a higher-priced item if it had better reviews than a cheaper counterpart. Make sure that you incentivise your customers to leave favourable reviews on your website and other third-party sites like Google or Trustpilot.

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4. Gamify your loyalty programme

A loyalty programme is not just a great way to keep customers coming back, it can also ensure that they spend more when visiting. Many brands use mobile apps as a cornerstone of their loyalty programmes and this presents excellent opportunities for gamification which can increase average order value. For instance, the supermarket Asda has a rewards app that allows users to earn “pounds, not points”. With every spend, users get closer to milestones that deposit a fixed sum in their cash pot. Some in-store items also add more to this cash pot, which helps to incentivise additional purchases.

5. Implement thresholds for free delivery

Ecommerce merchants will need to incorporate the cost of postage and packaging into their pricing strategy and it may not always be cost-effective to offer free postage for every order.

Instead, implementing spending thresholds can be an effective way to increase e-commerce AOV while also preventing postage costs from impinging on profit margins.

6. Use competitions

Contests can be an excellent way to encourage customers to spend more when they order. Spending a little extra for a chance to win a cash prize or a high-value item of stock can increase average order value while also creating added brand engagement for the customer. For instance, if customers who spend £50 or over get entered into a prize draw, a customer who intended to spend £40 may be more inclined to add an extra £10 worth of items to their order.

7. Offer time-sensitive discounts

Finally, a well-timed discount can encourage customers to purchase items that they may otherwise leave on the store shelf or in their online shopping cart. Single-use promotional codes can be activated within a set timeframe to incentivise purchases with time-sensitive discounts. This can not only increase AOV, but also help conversion rates to soar and prevent cart abandonment.

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