It’s something we all want to boost and something we strive for…
What am I talking about?
Increasing revenue for our webstore is top of mind. We pay good money to drive traffic to our stores, so finding ways to generate more revenue per customer per transaction is a smart move to boost revenue.
The problem is that most web store owners instinctively think that the solution to increasing revenue is to simply acquire more customers. This isn’t the only way to develop more income for your store.
What if you could increase the amount of revenue per customer?
Rather than (or in addition to) generating more customers?
Increasing the value from a customer you acquire can increase revenue generated for your store. What’s even more beneficial is that you can grow the business without spending more money on marketing, advertising, and other costs.
And…
When you do retain a customer, they’re likely to spend more and purchase more frequently (provided you are delivering a good customer experience and solving their needs ). Existing customers are easier to sell to — by a long shot: You’re 60-70% more likely to sell to an existing customer, compared to the 5-20% likelihood of selling to a new prospect.
Before we dive into the 8 ways to boast AOV for your ecom store. Lets just define what Average Order Value is –
What is Average Order Value?
In simple terms it basically means that for every order placed by a customer, what is the average dollar amount per order? To calculate your AOV, you simply take your total revenue and divide it by the total number of orders.
Here is the formula –
Average order value = Total Revenue / Total Number of Orders
For an example – $30,000 (revenue) / 1000 (orders) = $30 (AOV)
Make sense?
Now that you know how to calculate your AOV for your webstore. You may be asking…
Why is AOV important?
Let me explain…
The higher your AOV, the more revenue you can earn from the same number of customers. You can increase revenue without increasing marketing and sales costs by the same factor.
Knowing how to optimize your average order value will help you to grow revenue for your ecom store.
Want to know how to boost your AOV?
Lets unleash the 8 tips below –
Free Shipping With Minimum Order Value
I’ll start off with an obvious one. Why not include free shipping to your customers when they place a minimum order value with you.
You can increase your AOV by increasing the minimum order amount customers need to hit in order to get free shipping.
The trick to making this work is to ensure customers are well informed of how much it takes to get free shipping and how near or far their current shopping cart is from that threshold.
Once they are well informed on what they need to do to meet that threshold, it’s most likely they’ll add another $10-$15 item (Whatever the value need be) to the cart and qualify them for free shipping. It’s a small thing, but it works to increase the dollar value of a customer.
Cross Sell Related Products
Another great way of increasing your AOV is to cross sell related products at the checkout page of your ecom store.
The key to implementing cross-selling effectively, is to offer items that will add value to the customer’s experience. An example of this would be, if someone is buying a pair of shoes, you want to showcase an accessory such as socks that match with the original item and add value to the shopping experience.
The important thing to remember is not to try cross sell unrelated items as this will deliver a bad experience for your customer. You are ALWAYS trying to PUSH VALUE to the customer and you don’t want to come across as anything less.
Offer a Payment Plan
For ecom store owners that sell higher ticket items, you can offer payment plans. However, a payment plan means that customers generally pay more for the product or service they are purchasing.
This is a tactic used by credit card companies for decades.
Customers are willing to spend more when they don’t have to pay for the entire product or service upfront. They receive their purchase, but over time they have to pay that bit more for their item as a whole.
By implementing a payment plan on your high ticket items, your sales conversion rate will increase as well as your AOV because you’ll be charging more for your offer.
A simple example of this would be:
Upfront one time payment – $100 for your offer
Payment plan x 3 payments – $110 for your offer using payment plan
3 payments of $36 over 3 months will be the cost to your customer. You earn roughly 10% more on the purchase and the customer gets to receive the offer now without the issue of having to pay the entire $100 upfront.
See how that can increase your stores AOV & simultaneously increase your sales conversion rate?
Next up…
Include a Gift Wrapping Option
Another clever way to increase your AOV is by offering gift wrapping as part of the customer experience. This is a great idea to incorporate where possible.
Why?
Gift wrapping adds more value to items sold. During the holidays, a very high percentage of shoppers plan to buy gifts online.
BUT!
As you well know… holidays aren’t the only time of the year when people buy gifts.
From birthday’s to wedding gifts, retirements and special events. There are lots of different times in the year that gift wrapping could be incorporated into the sale.
On average you could charge $5 for gift wrapping per item. You could even include a deal where you offer $12 for 3 items gift wrapped.
Gift wrapping is very convenient for the customer. Without this option, the customer would have to get the gift sent to their house, then wrap it themselves before delivering it or re-shipping to the final recipient.
That’s added hassle! And many of us consumers know that it can be challenging enough to pick gifts for people… never mind having to gift wrap it also.
If it makes sense for your store, why not test this idea of a gift wrapping service to see how it can increase your AOV. You might even see an increase in sales conversion due to the convenience it offers.
Offer a Discount Based on Minimum Spend
I mentioned earlier about offering free shipping based on a minimum order value. Free shipping isn’t the only way to encourage higher spending.
Why not setup a discount based on a minimum spending amount?
For example…
Offer 25-30% as a discount via a coupon code. But in order to receive the 25-30% off, your customers must meet a minimum order value amount.
You can even test out the idea of adding a deadline date, which can increase the likelihood of sales conversion.
Give Cashback on Purchases
This is a great way of boosting the average order value for your store. What better way to get people spending more on your store, than to offer a little cashback on your customers purchases.
Who doesn’t like getting paid to shop? 🙂
The more money your customers spend, the more cashback they receive. The most common way to offer this is to give a percentage of cashback to your customer on purchases.
For example, you can offer 5% cashback on your store. To make sure you stay profitable on this type of offer, you’ll need to know your profit margin and how much you are willing to give your customer.
Cashback is something you can do seasonally or at competitive times of the year. You can also have an expiry date for this type of reward, which will help to not only increase spending, but to encourage sales sooner rather than later.
Include a Loyalty Program
Loyalty programs are a fantastic way to increase sales for your ecom store. In fact, 82% of consumers are more likely to buy from businesses offering loyalty programs. That tells you how important they are to consumers and their spending habits.
Repeat customers spend more money than new customers.
So you might want to consider including a loyalty program that will help to encourage more purchases from your customers. There are a few ways of approaching a loyalty program. One of my favorite options is to create a program based on spending tiers.
What this means… is the more your customer spends with you, the greater the benefits they receive. As your customer reaches certain tiers based on their spending amount, the rewards received are greater.
By encouraging them to spend more, you’ll increase your average order value.
Upsell Your Prospects
Another popular way of increasing AOV on an ecom store, is to present upsells to your customers. You most likely have seen this happen on other ecom stores.
Successful ecom stores find ways to upsell to their customers before they finalize the purchase. You just need to be careful when using this strategy and here is why…
Upsells shouldn’t take away from the initial purchase intent. When your customers reach the check out page, they have already taken a number of micro commitments when going through your sales funnel.
From adding items to their cart, to shipping and payment info, these visitors want to convert. The last thing you want your upsell to do is be a distraction that eventually stops them from completing the purchase.
So on your cart or even product page, perhaps you could have an upsell system based on what the customer has added (or thinking about adding) to their shopping cart.
With just one click, your customer can add these items to their cart and the system will recalculate the order within seconds. This gives your customer a seamless experience… offering you more opportunity to enhance your AOV.
So to conclude…
To Increase revenue for your store, do so by increasing the average order value of your customers. While it’s great to acquire new customers to boost your revenue. With the methods I have mentioned above, you might find it easier and less expensive to grow your business and achieve new financial goals.
Focus on these strategies that encourage both your existing and prospective customers to spend more money on your ecommerce site. There are other strategies you can use to enhance your AOV, but these are eight solid ways to get started.
