Seven tactics to boost your e-commerce average order value
Whether you run a B2C or B2B e-commerce site, you need to pay attention to your average order value (AOV). In a nutshell, a higher AOV translates into more profit for your business.
The strategies you use to boost your e-commerce average order value will depend entirely on the products you sell. Driving AOV should never impact your customers negatively though, so only implement tactics that will get them genuinely excited about buying more.
Why increasing your e-commerce average order value is important
It’s true that building your business can be hard work. And when your growth is plateauing, it is concerning. AOV is one of the three most important growth levers for an e-commerce business: revenue is driven by the amount of customers that visit your site x the conversion rate (the % of customers that actually buy) x the average value of their orders.
Revenue = Traffic x Conversion Rate x AOV
Focussing on increasing your average order value is easier than drawing up complicated marketing strategies to attract new customers and very often quicker than implementing conversion changes. It also helps compensate for any temporary variations in traffic, and it adds value to your business and your customers on an ongoing basis, building your brand – if done correctly.
Methods to increase your e-commerce average order value
Each of these tactics is fairly simple to apply. The key is to run the numbers to make sure they work for your specific business, as well as for your customers. Also consider which of these ideas could form part of your year-round plan, and which would make more sense over the upcoming festive season. You could also do a trial run now to see how your idea works for you, with a view to fully implementing it later in the year.
1. Offer free shipping over a certain threshold
This method can be highly effective if used correctly. It is more challenging though if you have a broad range of prices and tend to deliver to widely spread areas. Most importantly, you need to make sure the free shipping you offer is offset by the increase in order value you are encouraging.
For example, if your average order value is R500 and average delivery costs R100, you could set your threshold for free shipping at R750. You need to run your own numbers but the extra spend should cover the delivery cost and you would still earn up to R150 more on that order.
Done well, you not only increase your AOV, but you also decrease the chances of customers abandoning their cart at checkout due to shipping costs.
For this method to work, you need to prominently display the offer in several places on your site, for example, on the landing and home pages, as well as on product and category pages. If you can also pop-up a message as the customer’s cart value starts to approach your AOV, encouraging them to add that little bit extra, even better.
Takealot uses this tactic:
2. Add a free gift or a discount at a threshold
Customers love a free gift so why not use that to encourage them to increase their order value? It’s also an effective way to clear some of your old stock, although you do need to make sure the gift is still exciting and worthwhile for your customers. Our ‘free gift’ promotion plug-in makes offering a freebie almost effortless.
Our Comalytics customer, Hannon, does this brilliantly, offering a new and interesting give-a-way every month:
May: Lipstick give-away
June: Scar tissue oil give-away
Another option is to offer a strategically calculated discount of either a percentage of the order value or a fixed amount. Do your homework beforehand to make sure you’re not discounting yourself out of business or diluting your brand.
Again, display this incentive prominently on your homepage, category and product pages, and encourage your customer further with a pop-up just before check-out.
This example shows the discounting method being used very effectively:
3. Cross-sell and up-sell
These techniques leverage the trust your customers already have in you, as well as the psychology of getting a good deal. As a result, they are highly effective.
Cross-selling offers complementary products to a current purchase, for example, suggesting a phone cover when the customer is buying a mobile phone.
Up-selling encourages the customer to buy a better quality product or one with more impressive specs, for example, a TV with a slightly larger or higher-resolution screen.
Either way, the customer spends more with you than they planned to.
Amazon does this exceptionally well. For example, if you want to buy these binoculars for a 6-year-old:
You are also presented with the ‘up-sell’ range, which encourages you to consider whether you, Dad or the other brother needs binoculars too:
And, as binoculars are classified as “outdoor” gear, you are also shown other similar outdoor items that may work for a 6-year-old. This is a cross-sell:
Naturalwise, another of our Comalytics e-commerce customers, uses this method well too. For example, if you want to buy this juicer:
You are also shown another juicer that may be better and costs a bit more (an up-sell):
Along with that, you will see related products you may want to buy at the same time (a cross-sell):
Whether your website software calculates and display cross-sells and up-sells as such or whether it uses words like:
- Related items or
- Correlated items or
- Recently viewed items or
- What others have bought or
- Accessories of your item
Ensure that the recommendations displayed are extremely relevant to your customer. It’s important that you use it correctly from a business perspective. Your customer should be excited to discover an extra or even better deal, and feel almost compelled to add the new item to their cart because it just makes so much sense.
4. Create a sense of urgency
For this technique, you can either cite scarcity due to low stock levels or declare a limited time period during which the customer will receive a discount. Instead of delaying the purchase, the customer is encouraged to buy now before stocks run out and/or to buy more at the discounted price while it’s available.
For example, you could offer 30% off on a specific category of products for 4 days only. Woolworths makes full use of this method to their advantage. Note their scarcity terms in the black strip:
5. Offer e-commerce product bundles
When you group related items together and offer a discount for buying them all vs buying them individually, you are creating a product bundle. Done correctly, it’s a win-win. The customer gets a discount, which feels like a freebie to them, and you increase your average order value.
For example, Incredible Connection offers several related products together with the laptop you were already thinking of buying:
6. Show customers what they’re saving
Never miss an opportunity to show customers how much they are saving by taking advantage of a promotion or discount. When they feel they are getting great value for their money, they will come back for more. Again, make sure you run your numbers to ensure you’re not losing out in the process.
7. Leverage gamification
Gamification leverages the fact that most people love (a) to play games and (b) freebies. A recent McDonalds Monopoly Campaign is a great example of this. With every meal bought, the customer gets to peel off at least one sticker (creating anticipation) that may reveal an instant prize of a monopoly piece. Bigger meals have more stickers, increasing the chances of winning, and by collecting enough pieces, they can win bigger prizes.
This is a triple-win for McDonalds as it:
- Focuses the customer on which meal to buy, rather than on whether they should buy at all;
- Tempts customers to spend more per visit, which results in an increased AOV; and
- Encourages them to come back multiple times.
The bottom line…
It’s not difficult to increase your average order value and the pay-off makes the effort well worthwhile. Don’t overwhelm your website visitor though. Only implement enough ideas to enhance their experience and make them excited about your brand. A few clever strategies will add value for your customers while increasing and stabilizing your income. It’s a win-win all round.