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What’s Average Order Value (AOV) and why it’s important

Let’s say you run an eCommerce business. To make good profit, there’re two ways to concentrate:

You can either increase traffic, resulting from ads or SEO. The more people coming in, the more sales you’ll make.

Or you can try to increase Average Order Value (AOV) – the average amount of money each customer spends per order. The more profit from each order, the more money you’ll earn.

In other words, you want a typical customer to buy more items, or more expensive ones.

Too often, store owners overlook the AOV strategy. They’re willing to spend a fortune on ads to attract visitors, hoping many of them will purchase an item and the total profit will turn out positive. On a sunny day, that method works fine. But when you consider the cost of acquiring new customers, you might find it’s irrationally high, especially when more and more competitors are entering eCommerce and dropshipping. You’ll need a large margin to actually make a profit.

We’re all burning cash, to an extent it’s no longer effective.

With AOV strategy, you maximize the amount you earn for every dollar you spend. By encouraging a customer to spend more, you technically have to spend only once on ads to acquire him/her while earning more profit.

In this article, let’s explore 6 tactics to improve your business’s AOV.

Need to keep track of Average order value in real time? Check out our app TrueProfit for Shopify.

How to increase Average Order Value (AOV)

1. Recommendations

Old but gold, product recommendation is being used by most brands and never seems to lose its power.

In many cases, shoppers visit your store to check out a certain item. If they’re too focused on that one product, they may not bother looking around your store. With relevant recommendations, customers can explore other items and end up buying more than expected.

For example, this is how Steal A Sofa displays Related Products on their product pages. Beside product images, they also show prices – kind of a good motive to browse around.

Phrases you could use for Recommendations section:

• Most Popular
• Best Sellers
• Trending Products
• You May Also Like
• Related Items

Our Shopify Apps Picks:

• Personalizer by LimeSpot

2. Upselling & Cross Selling

While also encouraging shoppers to buy more products, upselling and cross selling techniques involve a more or less personalized approach.

With cross selling, you’re trying to sell a complementary product that pairs well with the original item. Whereas with upselling, you’re persuading customers to purchase an upgraded or more expensive version.

The techniques can appear under the recommendation section on product pages, as a pop-up once customers add an item to cart, on cart page or even after purchase.

For example, this is a pop-up upselling a higher version of coffee maker machine, which will eventually raise you order value. A cross selling in this case can be promoting coffee filters – quite a relevant product that a coffee drinker would want.

Remember: The key of upselling and cross selling is relevance. Suggesting a random something just doesn’t work anymore (never worked anyway).

Common terms for Upselling & Cross selling section:

• Frequently Bought Together
• Complete The Look
• Customers Also Bought

Our Shopify Apps Picks:

• Bold Upsell

3. Bundles

Customers might buy more than one product to fulfil their needs – Why not offer them an all-in-one solution? By bundling multiple items, you create a win-win offer where shoppers can save money (compared to the full price of individual items), and you could push AOV to the top.

Bundles can be a combo of complementary product, like a first aid kit; or items from the same product line, like a 3-mug pack in Iron Man theme.

You can either create a separate product page for bundles, like Soundtoys does with their Effect Rack. This package combines 21 items which can be bought separately.

Alternatively, you can lay a Bundle on certain product pages, right under the product description. Amanda Pearl does it perfectly on their website, with a clean and elegant layout. If there’s something to improve, it’s to display the saved price as an incentive for shoppers.

Our Shopify Apps Picks:

• Bold Bundles

4. Free Shipping / Discount Thresholds

Most people are happy with their purchase until shipping cost shows up and kill the mood. For many people, this means they’re more likely to grab an offer that can help them avoid paying shipping fee.

Take this insight to increase your AOV. Offer Free shipping for shoppers who spend a certain amount of money. If your current AOV is around $35, try setting free delivery at $40. Victoria’s Secret does this to improve their average order value.

Beside free delivery, you can offer a discount or free gift. “Spend $50 and get 15% off”, “Only $12 more to save 10%”. Pop-up or promotion bar are needed to tell visitors about this promo.

Note that your threshold shouldn’t be extremely higher than the normal spending in your store, or else people will not bother trying to reach such a distant goal.

Our Shopify Apps Picks:

• SMART Bundle Upsell

5. Quantity discount (Buy more save more)

Much like the previous tactic, quantity or volume discounts will encourage people to buy more. But rather than considering order value, it focuses on maximizing the number of items sold.

Customers sometimes want to buy one product in bulk. Get them an incentive! The more they buy, the bigger the discount.

You can use a Shopify App for volume discount, or simply create a discount code for orders with 2 times or more.

Our Shopify Apps Picks:

• Discounted Pricing
• Quantity Breaks & Discounts

6. Customer Loyalty Program

Although not exactly leading to increased average order value, a Loyalty program is ideal for a long-term strategy to build and maintain healthy relationships with customers. Along the way, it can boost sales by incentivizing your members with points and rewards.

See how Happy Paket runs a Membership program. Once a member, shoppers can earn points by purchasing or referring, and can later exchange those points for discounts. This creates an engaging experience, a goal worth pursuing and more importantly, an opportunity for repeated purchase.

Our Shopify Apps Picks:

• Smile: Rewards & Loyalty

You can also explore our recommended list of automation apps for Shopify here.

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