Improving the number of conversions and the amount of traffic on your website are powerful weapons in your marketing arsenal and imperative when growing your revenue. But more often then not, increasing average order value (AOV) is a weapon that gets overlooked and rejected like an ugly duckling.
Why Should You Try To Increase Your AOV?
For most ecommerce operators, the reasons for increasing AOV are pretty obvious. However, arguments can be made for focusing on increasing your traffic instead of increasing your AOV. These arguments really depend on how far along you are on your business building timeline and probably should be discussed in another post.
On to the reasons why you want to increase your AOV:
- It can be a quicker way to increase your cash flow. And as we all know a healthy cash flow is a sign of a healthy business.
- Considering the increased frequency of search engine algorithm updates these days, betting on the chance that you will be able to increase traffic might prove to be more difficult.
- Acquiring traffic usually has a cost attached to it, where increasing your AOV could be as simple as installing a simple plugin for your shopping cart.
- If any of your traffic sources disappear for any reason, you’ll be in a much better position if you have improved your AOV beforehand.
This post will cover 7 simple tactics that you can implement on your site and also some tips on how to take to these concepts further.
1. Bundles & Saving Packs
Bundles are about providing the user with a bargain for multiple complementary products and to increase the amount spent in one order. Let’s imagine you own a pet store and sell baby kittens (that cost $100) for a living.
You also sell kitten food, litter trays, and food bowls. Imagine all those products add up to $50. Instead of the user going to supermarkets to buy all those peripherals you could just bundle them together for $40 and call it a Kitten Starter Pack.
By bundling our products we push AOV from $100 to $140 and provide a cost saving to the customer of $10, a 20% discount.
Take the concept further: Allow a user to personalise their bundles. For example have a mix and match option providing the user with the ability to choose and select exactly what they want.
2. Free Delivery Thresholds
For most retailers, free delivery can be quite a difficult challenge financially. Setting free delivery over a certain threshold can solve this problem.
For example, if you notice that people on your site spend around $30 and if delivery costs you $3.00, then try setting free delivery at $40. For this to work effectively you need to display the required amount needed to get free delivery.
Going back to our pet store example: if a user adds dog food to their basket worth $33.50 then show a message such as: “spend another $6.50 to get free delivery”. Then combine this with relevant upsells and cross sells that help take the users basket to the free delivery amount and you will see an increase in your AVO.
Active Ride Shop gives a little nudge by telling the customer what they need to spend to get free shipping.
Take the concept further: By packaging free delivery as a product (for example get “free delivery for 1 year only $14.95”). ASOS does this really well. This acts as a bolt on for most purchases. It also increases the likelihood of repeat purchases throughout the year and moves retail sales from a single purchase to an incentivised income stream, as users want to make the most of their free delivery.
Another technique is to donate a percentage of profits to a charity. Show a cost breakdown at the basket page showing how much is donated to charity vs. how much you actually pay. For example, if a percentage of the order went to Cancer Research or Oxfam, people are likely to spend more as they are enticed by the fact that a proportion of it goes to charity.
Toms Shoes takes this donation technique to another level, where donations have been integrated into their business model since day 1.
Take the concept further: Sponsor a charity that is seasonal, for example Comic Relief or Red Nose Day (if those are the trending events). By targeting a charity that is currently trending, we increase the effectiveness of this tactic – i.e. the likelihood to increase extra spend and gain some good PR.
According to PredictiveIntent’s case study, upselling on ecommerce sites perform 20 times better relative to cross selling. However this does not mean cross selling is dead. Cross selling is still a great way to increase AOV and revenue. For example you could offer a user the chance to add a product for another person. Interflora does this really well and also allows users to add extras to their order en route to and from the basket page.
Targeting the relevant cross sells and upsells is imperative when making it a success. For example, beauty retailers such as The Perfume Shop add gift wraps and bags to increase their AOV. By staying relevant they save the user time when looking for a gift bag. Although these are simple techniques, they can be quite effective, especially during Christmas seasons.
5. Cashback Techniques
Cash back in the form of gift cards or vouchers such as “Free $10 voucher on your next purchase when you spend $40” can really boost AOV and repeat purchases. You can also build partnerships with other companies which allow gift cards or vouchers to be redeemed at several companies such as “$50 off at CrazyEgg & KISSinsights”.
(One of the gifts on my birthday wishlist…) * Note: the above gift card is only an example and does not exist.
Refer a friend programs are really good at increasing site conversion. If a user refers a friend they get cash back usually in the form of a voucher and the company gets a new sale.
6. Displaying Cost Savings
Revealing the cost savings on a product when a user buys more than 1 item can boost average order value as there is an incentive to save when purchasing in bulk.
|Buy More||Save More|
If you buy one then it costs you $16.45 as opposed to buying 3 which reduces price to $15.80 providing a cost saving when more than 1 item is bought.
Gamification techniques can be used to increase average order value and a recent example of this is the McDonalds Monopoly Campaign UK.
How it works: a user peels off a prize from their meal to get a monopoly piece/ instant prize and can then collect property sets to win big prizes. McDonalds includes more stickers on their larger meals to entice people to spend extra on larger meals. This increases AOV but also increases the likelihood of a returning visit. This campaign combines a lot of persuasive techniques which unfortunately worked on me.
Take the concept further: By framing the different stickers to the different meals you can increase value of the rewards and move the purchasing decision away from “should I buy?” to “which one should I buy?”
|Medium Meal||Large Meal||Super Large Meal|
|Number of stickers||
|Chance of winning instant prize||
|Additional Cost $||
For example: Ignoring user income levels, the “large meal” seems to offer more value for money. This idea can be applied to almost any product. By combining gamification and price framing techniques we can make additional spending more lucrative and also demonstrate the value to the user.
Implementing these tactics on your site obviously depends on your ecommerce solution. Many shopping cart systems have plugins and add-ons to include these features during the shopping process. However, if you’re cart was built from scratch, you’ll need to reach out to your developers to create the appropriate solutions.
These tactics are also not limited to ecommerce websites. Subscription based businesses can incorporate some of the same ideas to increase their cash flow as well.
Do you have any awesome ideas on how to increase average order value? Please share them in the comments below:
About the Authors:
Sean Work is the Director of Marketing at KISSmetrics. Follow him on Twitter @seanvwork.