Average order value (AOV) is one of the most important metrics for an e-commerce retailer to track. It tells you how much your customers tend to spend when they order from you. Higher average order values mean higher profit margins, better customer lifetime values, and a better return on your marketing investments.
The best part is that you can increase average order value for your business — and with less effort and expense than you might think. To get started, you just need to run a promotion that encourages people to spend more.
1. Offer Product Bundles
Product bundling can be a very effective way of getting people to buy more. Basically, you offer them something that they’re already interested in buying, and then you throw in another related product or two. You offer them the bundle of products at a price that’s less than they’d spend to buy each one individually.
Customers love a good product bundle for the same reasons they love bargains in general. A good bundle makes them feel like savvy money-savers, and it makes the original purchase intent seem more “worth it.” They were going to buy Product A anyway, but now they have Product B without spending a lot more money.
Almost any e-commerce retailer can make product bundling work. All you have to do is:
- Choose multiple products that would appeal to the same customers.
- Select a price point that’s appealing for customers but safe for your profit margins.
- Promote your bundles on product pages and in your marketing.
One brand that does this particularly well is Kopari, which makes and sells natural coconut-based beauty products. Kopari has an entire products page full of bundles, including single-product bundles like these:
Image source: Kopari
One of these bundles offers different sizes of deodorant, while the other lets the shopper try different varieties. In both cases, Kopari highlights the value of buying the products together rather than separately. This entices customers to buy more than one version of the product, increasing the value of the individual order.
Kopari also offers multi-product bundles like this one:
Image source: Kopari
This bundle includes a “free gift” of sunscreen, in combination with a skin-care regimen of cleanser, toner, and cream. Again, check out the difference in value. A customer who might not even consider toner could look at this and think: Might as well — I'm barely paying anything more to get the whole bundle.
2. Cross-Sell and Upsell in the Cart
A close cousin to product bundling is the cross-sell or upsell. A customer chooses what they want to buy and then navigates to their shopping cart, where they see an offer to add another item.
That item is usually related to what they’re already buying — or, in the case of an upsell, a popular add-on. Black Rifle Coffee Company does this with every potential order.
The customer will see one of the following:
- Another product they could buy, as in the example below
- The option to add a charitable donation
- The option to add a gift bag or gift message
Here's an example of a typical cross-sell:
Image source: Black Rifle Coffee Company
Here's what the charitable donation cross-sell and gifting upsells look like:
Image source: Black Rifle Coffee Company
Make sure that you cross-sell and upsell products that are priced reasonably. The price point should be high enough that participation will increase the average order value, but not so high that people will get scared away.
You also want to choose products that are relatively self-explanatory. If customers need to read lengthy descriptions, check out sizing or specs, or otherwise do a lot of research before they buy, they’ll be less likely to add the product when they’re already at the cart stage.
3. Sign-Up Discounts/First-Time Offers
If you get a lot of new customers, or if you have a marketing push coming up to target first-time buyers, consider boosting the value of these initial orders with either:
- A special offer for first-time buyers
- A discount for those who sign up to hear from you
Email signup offers are popular. If you’re an enthusiastic online shopper, you’ll see them everywhere. Here’s a particularly valuable example from fashion retailer Tobi:
Image source: Tobi
You can also offer promotions without email sign-up. These can be great opportunities to get the business of more commitment-phobic customers. Popular options include:
- A percentage or dollar amount off a first purchase
- A percentage or dollar amount off a first purchase over a minimum price
- Free shipping for a first purchase
- Free gift with a first purchase
One company that does first-time coupons particularly well is meal-kit provider HelloFresh. Here are two examples that first-time subscribers can choose between:
Image source: HelloFresh
Promotions like these can overcome a customer’s reluctance to buy from a new company. If you tend to get small orders from first-time buyers, consider offering the promotion to subscribers or setting an order minimum.
4. Offer Free Shipping
People love free shipping, and they’ll often buy more to get it. Consumer research shows that:
- Purchases with free shipping have about a 30% higher average order value.
- 93% of online shoppers will buy more if free shipping is available.
- 58% of customers will add more to their carts to qualify for free shipping.
This promotion is easy to implement. All you have to do is add a banner saying that if a customer spends a certain amount or more, shipping is FREE! (Caps optional.)
5. Start a Loyalty Program
Once you provide a great purchase experience to those first-time buyers, loyalty programs can help keep them coming back and spending more. Consider these statistics:
- 49% of consumers report spending more after joining a loyalty program.
- 83% say that loyalty programs make them more likely to buy from a company again.
- Loyal customers are worth up to 10 times as much as their first purchase.
You can set up any loyalty program that works for your customers. Options include:
- A points program, where shoppers earn points for a purchase and redeem their points for rewards
- A tier-based program, where bigger spenders are enticed to spend more
- A fee-based program, where people pay for exclusive access to discounts
- A coalition program, where smaller companies team up to offer a shared loyalty plan
Here’s an example of a successful points-based program from Tarte Cosmetics:
Image source: Tarte Cosmetics
Tarte’s program is engaging because it offers multiple ways of getting points, plus a birthday reward so customers enjoy a guaranteed benefit. They also offer a “sneak peek” of the kinds of rewards you can earn.
Also, note the limited-time bundle offer banner at the top. This is clearly a company that gets the power of promotion.
Now that you’ve learned how to increase average order value, your next step is to start measuring it. Look at what your AOV was before you started running your promotion and whether you see a significant difference afterward. (Start with just one promotion so you can track success more accurately.)
If you can, look at average order value across different audience segments. Do different cohorts respond differently to your promotions? Do you get better responses when you promote across one channel versus another?
Don’t worry — you don’t have to do all of this on your own. With the Peel Insights app for Shopify, you get automated data analytics and business intelligence delivered to your inbox. Peel reports on all of your key metrics including average order value, and it integrates data from different sources so you get the most accurate picture possible.
Peel is affordable for many different business sizes, and there’s a 7-day trial available so you can get your hands on it for free. Sign up today and get started boosting that all-important average order value.
Your bottom line will thank you.