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What is Average Order Value (AOV)?

The world of ecommerce is a competitive place, and it can often be expensive to produce marketing campaigns to reach more customers in order to increase your sales. So why not consider ways to maximise the revenue you are generating from your existing customer base? That’s where understanding average order value (AOV) can help.

Average order value is the amount of money each customer spends in one transaction at your store. The higher your AOV, the higher your revenue per customer. AOV can be a useful statistic to understand how your store is performing. You can calculate the average order value of your store easily using the formula: 

Average Order Value = Total Revenue / Total Number of Transactions

You can also use tools such as Google Analytics to track the AOV at your store over time. Increasing your AOV can be an easy and sustainable way to increase your revenue from customers you already have. 


Benefits of Increasing Your Average Order Value

Increasing your average order value can directly contribute to increasing your business sales revenue. This can be achieved through making higher value transactions, as well as by improving your customer’s experience, encouraging customer loyalty and making the most of your existing website traffic. 

Your customers may already trust your products and your brand and introducing features to increase AOV such as loyalty programs and flexible returns policies can allow your customers to feel more valued, driving up AOV while allowing you to strengthen your customer relationships. 

Encouraging higher basket values can also streamline your dispatch and shipping processes, making them more efficient and reducing shipping costs. 

Additionally, many methods of increasing average order value can in time, decrease the need for marketing campaigns to reach more potential customers. Making the most of the traffic that your website is already getting, can reduce your marketing expenses while increasing your sales revenue, and widening your profit margins. 


10 Ways To Increase Average Order Value Online

Here are our top tips for increasing your average order value online.

  1. Offer finance options
    Many people may not be able to spend large amounts of money in one transaction. Offering finance options such as buy-now-pay-later or paying in instalments can encourage higher-value purchases. Pay by instalment schemes, such as Klarna, AfterPay and Sezzle can also be very useful for encouraging higher order values, as they can reduce the perceived cost of the item, encouraging customers to buy more.

  2. Recommend products based on browsing or purchase history 
    Recommending products that are relevant to your customers’ taste can be an effective way to encourage higher basket values. Not only does it add an element of personalisation to the shopping experience, but it encourages customers to view more items or consider purchasing complementary items together. Consider adding cross-selling features such as “Customers Also Viewed” or “We Thought You Might Like” to your product pages.

  3. Price anchoring
    This is a psychological marketing strategy that uses pricing comparison between products to influence purchasing decisions. This is often done by surrounding a higher-priced product with similar, lower-priced products to emphasise a good deal on an item and increase the chances of a purchase. If a customer sees an expensive item, they may initially be deterred from buying it, however, if this item is placed in between a more expensive model and a cheaper model with fewer features, the original item now appears to be the best value. This strategy is often used in coffee shops and on some wine lists in restaurants to encourage customers to compare different sizes or different brands and spend more in each transaction.

  4. Upselling and cross-selling related products
    Cross-selling and upselling are popular marketing strategies across ecommerce websites. By increasing the basket size of a transaction, it also helps make the customer stickier.  Sticky customers tend to stay with the brand for future purchases.

    Cross-selling suggests purchasing related products that are not the same, for example, suggesting a particular top that goes with a pair of jeans. Up-selling encourages customers to spend more on a product, either because it is higher quality or in a bigger quantity. For example, offering a “starter pack” containing all the essentials for camping may encourage a customer new to camping, to purchase this pack rather than fewer individual items that are less expensive. Creating a list of comparisons between differently priced products is a popular method of up-selling.

  5. Minimum order value to be eligible for discounts or free shipping
    Another popular method of increasing AOV is to offer a free shipping or discount threshold. Implementing prompts such as “spend £10 more to get free delivery” or “spend an extra £15 to get 10% off” can encourage customers to increase their order value to reach that threshold. Increasingly, online businesses are adding in a calculator that tells customers how much more to spend before getting an additional discount or free shipping.  This encourages customers to make a further purchasing choice to close the gap. Invariably, the spend tends to be more than the gap to be closed. 

  6. Customer loyalty programmes
    Creating a loyalty program where customers can earn points or discounts the more they spend at your store can be an easy way to encourage higher purchases. Loyalty programmes are also a great way to develop customer relationships with your brand and encourage repeat sales.

  7. Time-sensitive offers
    Offering discounts or free gifts with certain orders within a short time frame can encourage higher basket values by creating a sense of urgency. This method can be easily implemented across your site using bold banners, count-downs or social media posts.

  8. Flexible returns policy
    Shoppers may make bolder or higher value purchases if they can be assured that, should they need to, they are able to return their items quickly and easily. Offering a Pay After Delivery product on your website can also encourage a higher basket value, as customers feel they have the option to Try Before They Buy, with the benefit of it being seen as risk-free.

  9. Product bundles/packages
    Creating bundles of related items is similar to cross-selling. Bundles are typically a selection of related products offered as one complete set, such as ‘starter packs’ or ‘the essentials’ bundles. Offering bundles can save customers time while also encouraging them to make higher-value purchases.

  10. Exclusive discounts for first-time shoppers
    Using a pop-up on your landing page can be an effective way to catch the attention of first-time buyers. Many first time visitors to your store may not trust your brand, and therefore need additional encouragement to complete a purchase. Offering discounts can be a good first step to building trust with new customers. Discounts such as these also encourage new customers to spend more to save more.


Conclusion/Next Steps

Taking steps to increase your average order value could be a simple way to increase your revenue and help your business to grow. Many of the methods for increasing average order value also target improving the customer experience on your ecommerce store, which can, in turn, improve your customer relationships and encourage repeat sales 

At Opayo we are dedicated to supporting the growth of your business. Browse our blog for more advice on ways to grow and optimise your online store, or get in contact with our UK based support team to discuss your business’s needs today.

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