One of the most important metrics we like to keep improving is a client’s average order value (AOV). The higher the AOV, the better when it comes to improved return on ad spend. There are other metrics that come into play like click through rate (CTR) on an ad and conversion rate (CR) of both the ad and the sales funnel of the website.
One of the things I notice when talking with fashion and clothing brands, is that their focus is on driving as much traffic as possible to their website.
Their second focal point is increasing their conversion rate on their website.
No doubt these are important metrics for a brand’s growth goals.
But you need to focus beyond these two KPI’s.
If you have a lot of traffic landing on your site with a high CR, but your product price is very low, you might just be breaking even or losing money. Especially with the rising costs of advertising these days and cost of goods sold.
By increasing your AOV, your revenue will increase.
AOV is such a misunderstood metric and I notice a lot of brand owners underestimate the importance of calculating and understanding the AOV. The more familiar you are with how much your customers actually spend each time they shop at your store, you can adjust your pricing and marketing initiatives accordingly.
The thing is… understanding your AOV will help you to optimise your current business model because you’ll understand your customers’ shopping behaviour and know what to expect. As you understand your customer’s behaviour, you’ll be able to brainstorm ideas to make your product more attractive to your customers, which leads to a higher returning customer rate.
So essentially, your AOV is directly related to your brand loyalty. After the first purchase, paying attention to how much your customers are spending when they return to your store can provide a lot of information about your customer’s behaviour.
What’s the benefit of tracking your customer’s behaviour?
Tracking their behaviours allows you to create personalised offers and marketing to keep your brand fresh.
And since these customers are returning, it’s likely they’re willing to spend more since they trust you and know your brand and products. Understanding your customers AOV is one of the easiest ways to increase revenue for your brand.
To improve AOV, you can do things like –
- Cross selling
- Upselling
- Bundling
- Incremental price increases
- Free shipping on X cart value
With cross selling, if they added a t-shirt to their cart, offer them a matching pair of trousers, hoodie, jeans etc. Complete the outfit for them and deliver a more desired outcome than if they were just to purchase the T-shirt.
Start testing out ways to improve your AOV. Whether you run ads to acquire customers or not, it’s always a good idea to continuously improve this metric.
Once you increase your AOV & profitability, it opens up the door for spending more on your advertising and product development.
Need help increasing profits with your advertising campaigns? Get in touch over at – sean@byrnemedia.co
