When most e-commerce advertisers try to increase their profit, they usually do so by lowering cost-per-acquisition (CPAs) or improving the number of overall sales they get. However, with positioning on advertising platforms being so competitive, moving the needle on these aspects of your business can feel a lot like moving a mountain.
However, there’s a highly overlooked factor to increasing revenue, and it’s already built right into the sales you’re currently getting. That factor is Average Order Value (AOV).
If a customer comes to your website to buy something, and if we can increase their total checkout amount, then we can increase that AOV. In turn, this increases your top line (gross) revenue, which increases your bottom line (net) profits.
Increasing AOV goes hand-in-hand with increasing website convertibility, and there are numerous benefits to doing so:
- It adds to both top and bottom revenue without increasing advertising costs
- It supports profitability when ad positioning gets more competitive
- It offsets customer acquisition costs so you can focus more budget on product development and expanding your business
AOV is often overlooked because it’s associated with overhauling your website, and if you’re not a web developer — or don’t have one on-call — that can be daunting. However, AOV actually doesn’t require a massive overhaul at all.
Oftentimes, the changes associated with AOV are easy to implement yourself, and the concepts associated with it are not foreign to e-commerce businesses. In fact, about 50% of marketers that successfully boost AOV for their websites employ the same four strategies: upsells, cross-sells, product bundling, and free shipping incentives.
We’ll cover and expand upon these concepts further.
How to Increase AOV Onsite
Familiarizing yourself with the customer journey on your website is the first step to spotting opportunities to increase AOV. Product presentation and setup is one of the factors that will likely catch your eye, but you’ll also probably notice there are things you don’t see: products that are harder to find on the front-end than expected, intuitively related items that are not-so-intuitive to locate, and so on.
Let’s look at a few onsite changes that will boost AOV and require a minimal amount of work on your end.
This one’s pretty much exactly what it sounds like. How can you bundle products in a way that will encourage shoppers to spend more? There are a couple of ways: by quantity and by complementarity.
Bundling by quantity refers to offering bulk discounts. With this, you still end up earning more from a single customer and they end up earning more from you — all while getting a good deal. This is especially useful for commodity items, and less so for products where people might only need one, like a high-end fashion piece.
For example, let’s say you sell some awesome, color-changing RGB light bulbs. Rarely will somebody only want a single one, especially if they’re trying to adorn an entire room. Instead, bundle them in a 3-pack and offer it for the price of two individual bulbs.
Or, if you sell decorative pillows, this might seem like a one-off item. However, someone might want a pair to adorn both ends of their couch. Offer a discount for the pair!
Be sure, however, that you’re not charging shipping per unit. Otherwise, you’ll get ghosted by customers once they reach the checkout.
Rather than bundling by quantity, try also bundling by items that complement each other. What items do customers often buy together? And how can they be packaged/presented as a set in a way that saves them money as opposed to if those items were purchased individually?
Let’s go back to lighting products as an example. Here, however, instead of bundling three lightbulbs, you’re bundling a lightbulb, lamp, and maybe a cool lampshade to go with.
Display these bundle options on single product pages using a Related Products widget.
Enhance Search Functionality
Now that you have some ideas of how to update your product offerings for better AOV, you want to explore how your website itself could better encourage a higher AOV. Having a solid, well-functioning search feature is a great place to start.
Having a search bar that is easy-to-use and has predictive options built-in will go a long way toward getting customers to the products they need faster. They’ll use this feature instead of digging through the main navigation.
What’s more, the predictive feature will ideally display a list of products related to their search that will actually encourage more browsing.
Related Products Widget
WooCommerce, Shopify, BigCommerce, and pretty much any major e-commerce platform offers a Related Products widget that you can easily add into your website. This will allow similar products to the one a customer is browsing to show up on the product pages.
This provides opportunities for cross-sells, and gives a place for those previously mentioned product bundles to reside.
Upselling can be tough, but the key is balance and subtlety. Don’t use pop-ups or other intrusive methods to upsell. Rather, catch them at the end of their browsing. When they go into their cart to prepare for checkout, set up a widget that display premium versions of their preferred item.
For example, if a customer is checking out on small lamp for $20, show an upgraded version of the lamp with a built-in USB port for only $10 more.
Make the upsell offer easy to understand so that it’s a “quick add.” Otherwise, they might begin the browsing process all over again, starting from the bottom of the funnel and essentially distracting them from their purchase entirely as they research versions of the upgraded product.
Free Shipping Incentives
This is probably one of the most popular ways businesses aim to increase their AOV. Offering free shipping above a certain threshold incentivizes people to spend more because… well, why not? Better to get more stuff for the same price — or a little bit more — than pay for shipping, right?
In general, it’s recommended you set your free shipping threshold at 10-15% above your AOV — or whatever it takes to cover your average shipping cost. Test this out for a while until you find the sweet spot, because you don’t want to turn customers away with too high a threshold either.
Incentives for Premium Items
Depending on the caliber of an item a customer buys, you can offer some bonuses. For higher cost items, offer things like:
- Free add-ons & gifts: Let’s say you sell high-end knives. Maybe encourage people to buy a higher-priced set by offering up a free sharpening block with their purchase.
- Financing: Knowing that payment plans are available for more expensive items will remove some of the customer’s hesitation over buying them.
How to Increase AOV Offsite
There are also a few things you can do offsite, in your overall marketing strategy, to increase AOV, such as:
- De-emphasizing low-ticket items: Particularly from your ad campaigns or ad sets. Sometimes this has to do with creating product groups or grabbing onto product feed attributes that would allow that kind of segmentation in ad campaigns.
- Zeroing in on higher-ticket items: Specifically in your email copy, retargeting campaigns, and SMS marketing, it can be helpful to shift focus onto bundles or other higher-value, higher-priced items.
- Running promotions on high-ticket items: Draw even more attention to your pricier offerings by providing discounts for them. You can send these promotions in existing shipments to encourage repeat purchases. The best time to ask for a higher purchase is after a customer has been able to experience your product already.
Oftentimes, improving average order value comes down to knowing the value of your product offerings yourself. Put yourself in the customer’s shoes and think about what upsell tactics would motivate you to spend a little more — even if that “little more” is slightly outside of your original budget.