5 Ways to Increase Your Average Order Value

Itzel Fonseca

4 mins read

Nobody runs a business with just faith and intuition. While they’re very much important, the choices and decisions you make must be backed up by facts and figures to make sure that you stay on track. In figuring out this information, you can get started by knowing this simple yet very useful metric: Average Order Value, or AOV.

What is Average Order Value (AOV)?

Average Order Value or AOV is one of the essential metrics you’ll first encounter when you enter the world of e-commerce. It measures the average amount of money spent on every order made in your online store at a certain period. If you want to calculate your business’ AOV, simply divide your revenue by the total number of orders.

For example, your online shop fulfilled 100 orders and earned a total revenue of $3,000 for the month of August. To calculate the AOV, divide $3000 by 100, which gives you an AOV of $30.

Why should you keep tabs on it?

Calculating your AOV is a no-sweat method of basic math, but why do you actually need it?

  • It gives you a glimpse of how your business is doing. It’s a good performance indicator that tells you how much your products are valued by your consumers.
  • It helps you picture your customers’ purchasing habits. By comparing your AOVs for different months or periods, you get to see how it changes over time and find patterns. You can also make comparisons after launching a marketing campaign, or when you released a new product during the previous month to see how such factors influence your customers’ purchase intent.
  • It propels you to innovate and think of ways to better market your products and make your customers spend more on your shop.

How do you increase your Average Order Value?

How to increase average order value

Now that you know your AOV, might as well start to grow it too. And fret not! We’ve got you covered with these five effective ways to increase your average order value:

1. Upsell your products

“Would you like to upgrade your fries and drink?”

I’m pretty sure you’ve heard this at least once at a fast-food restaurant. And while you might sometimes find it annoying, it actually does work. That’s because people tend to change their minds when offered a better choice or deal.

Upselling is when you nudge a customer to purchase an upgrade or a higher-end version of the item they’re initially planning to buy. Let’s say you’re selling customized blankets in different sizes, you can try convincing your customizer to get the next size before they check out their order.

2. Add more items to their carts! Cross-sell!

Make your customers buy more by cross-selling. It is when you offer complementary products to the ones they’re intending to purchase.

“Hey, before you check out, you might also wanna get this personalized pillow! Just add $6.5!”

Now, in case you’re wondering how you can offer upgrades and additional products during the checking out phase, here are some applications you can try to use:

  • Post Purchase Promotions
  • Personalizer
  • Frequently Bought Together
  • Super Bump
  • Honeycomb Upsell & Cross-Sell

3. Free shipping, ‘cause who doesn’t like free stuff?

Nothing grabs a customer’s attention faster than a free shipping label. However, free shipping to you, the seller, is never really free at all.

While online marketplaces such as Etsy and Amazon offer free shipping at certain thresholds, you still have to adjust your prices to guarantee that you’ll recover the shipping cost. The good news is these platforms usually have smart pricing tools that can help you decide how much you can adjust your price to be able to offer free shipping.

For items that cost too low, you may offer free shipping when customers purchase a certain number of them or when they reach a certain threshold for the check-out amount.

For example, you’re selling a pack of cartoon washable face masks for $10 each and caps that are worth $15 to $20. You only offer free shipping when the worth of the customer’s purchase adds up to $40 to make sure that you still recover the shipping cost after.

4. Know your consistent shoppers! Offer loyalty rewards!

Offer loyalty rewards, how to increase average order value

Setting up a loyalty program is a nice way to establish a good, trusting relationship with your customers. Its privileges also encourage them to keep buying from your shop. For every product, you may set a corresponding number of points a customer would get if they purchase it. Once a customer reaches a certain number of points, they’re entitled to a discount or a loyalty level.

However, keep in mind that you have to take into account the kind of products you’re selling before you offer generous discounts. Such deals are advisable to those who sell consumables or products that are usually replaced and bought on a regular basis.

Not sure where to start with a rewards program? Read our guide on How to Create a Customer Loyalty Program!

5. Turn every viewer into a buyer. Downsell!

Don’t let a potential customer just walk away! Something is still better than nothing. When a customer seems to hesitate about purchasing products or says that they do not really want to buy them anymore, try offering a more budget-friendly one. This increases your chance of selling them an item rather than letting them leave with nothing.

Before we let you go…

While AOV is already a good performance indicator for your business, you must also check out other metrics before making decisions. To be more certain of your marketing and pricing strategies, consider getting your shop’s Conversion Rate and RPV or Revenue Per Visitor first.

These metrics measure the portion of your visitors who actually buy and the money you get for every visit. You can also identify which products sell the most by getting the mode of your sales or how frequently a certain item is bought.

You can use any of these metrics anytime you see fit. Just remember to make more calculated moves and never stick to just one method if you want the best results.

Want more tips on marketing and managing your POD powered online store? Check out our blog or sign up for an Awkward Styles account today!

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