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How To Grow the Average Order Value of Your Online Business

All online businesses want to grow revenue. Most marketers think that the best way to achieve this goal is to find more customers, but it’s not the only approach that can help, and it may not necessarily be the best solution. Online business can increase their revenue by attracting new customers, but customer acquisition requires some investments, and sometimes, it makes sense to approach the problem in a different way. For example, you can also increase revenue by increasing the average order value.

Average Order Value (AOV), also known as Average Basket Value (ABV) is a parameter that has a direct impact on your revenue. If you focus your efforts on your AOV, you’ll be able to get more value from your existing customers instead of trying to get new ones. Therefore, you’ll be able to grow your revenue while also saving costs associated with advertising and marketing. Increasing AOV is a method of sustainable growth. Although this method can be very beneficial for businesses, not all marketers know how to use it properly. Therefore, we decided to create this quick guide that might help you get started.

What Average Order Value Is

Average Order Value is one of the most important metrics for many online businesses, especially those from the eCommerce sector. Basically, AOV is exactly what it sounds like: average money you get for every order during a certain period of time. AOV may vary not only across industries but also depending on the platform. For instance, travel businesses have AOV of $392 from desktop users, and this figure changes to $250 when it comes to mobile. Similarly, fashion businesses have AOV of $109 and $73 on desktop and mobile, respectively.

To calculate your AOV, you should divide your total revenue by the total number of orders. For example, if your eCommerce store’s revenue was $21,000 this month, and you had 1,000 orders, it means that your average order value was $21. AOV is a valuable indicator of business performance that enables you to evaluate your customers’ preferences and purchasing habits. Just like other metrics, you can measure AOV for any period of time. Most online businesses, however, calculate their monthly moving average.

What Makes AOV Important

If you’re still not sure why we decided to dedicate a whole article to AOV, here is the reason. Increasing AOV enables you to get more revenue from the same number of customers so you don’t need to put a lot of effort into acquisition. You can save costs associated with customer acquisition while also growing the revenue so AOV optimization is a great approach that can turn out to be very helpful for marketers that are looking for growth opportunities.

Evaluating your online business’s average order value enables you to evaluate the effectiveness of your overall marketing efforts, as well as your pricing policy. Besides, AOV enables you to measure the value of individual customers in the long term. AOV can also serve as a benchmark of your customers’ behavior so you can use this indicator to set goals, develop strategies, and evaluate these strategies’ performance.

Sometimes, marketers on an online business may choose not the best solutions in an attempt to maximize revenue. For example, marketers often put a lot of effort into driving more traffic to a website, while increasing their AOV would make a bigger impact and enable them to get more profit. You might need to invest a lot of money, time, and effort into increasing your website traffic, while increasing AOV will cost you nothing. Given that each order is associated with a certain transaction cost, increasing AOV enables you to increase your profits and to drive direct revenue because customers are already purchasing something from you.

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How To Increase Your Average Order Value With Your Online Business

There are many strategies that can help you increase your average order value. Basically, all these strategies are aimed at making your customers spend more money. For example, they might buy more expensive products than they planned, or they may also purchase more products. You can optimize your average order value at every stage of your sales funnel in your online business.

For example, you can encourage your customers to purchase additional products related to those they’ve already added to their shopping carts — there are many products people might forget about even though they may need them. If someone purchases an electronic device, you can offer batteries, and if someone buys a lamp, you can offer light bulbs. Besides, you may offer better, more expensive alternatives to the products that your customers choose.

You can motivate your customers to spend more by using different merchandising approaches. You may display a great selection of products in a way that will motivate them to make an additional purchase. Besides, you can use direct incentives, such as free shipping. Most often, online businesses increase their AOV by using methods based on cross-selling, upselling, coupons, and volume discounts. You may also make a donation to a non-profit whenever your customers spend a certain amount of money and offer free shipping or return policy for more expensive items.

To use such strategies effectively, you can segment your customers into several groups. “For instance, some people tend to spend a lot of money every time they visit your store, while others may only make small purchases. Besides, people may order something from you more or less frequently,” explains Ann Tyson, a digital marketer at a writing service review website. You can analyze different customers’ purchase histories and create different offers for each segment. For example, you can use upselling and cross-selling for low-frequency shoppers and offer a loyalty program for those who visit your online business store more often.

Here are some tips that might help you increase your average order value in your online business.

  1. Use a minimum price threshold for free shipping

    A simple yet very effective approach that can help you increase your average order value is to increase the minimum order amount customers need to reach to get free shipping. Most customers will choose to buy an extra item to avoid paying for shipping. It’s a win-win situation because you can maximize profits while your customers can spend money on something useful instead of wasting it on shipping.

The key to using this method is to make sure that your customers are well-informed about how much they need to spend to get free shipping and how close their shopping cart is to that threshold. For example, you can display a pop-up window whenever your customers approach the free delivery threshold.

  1. Add upsells and cross-sells after order completion

    Using upsells is all about giving your customers a reason to spend more and using a sense of urgency. Quite often, businesses redirect customers to order confirmation or a thank you page after checkout, but you can use this opportunity to upsell. Instead of just saying thank you, you can offer a nice discount if your customers decide to buy a better product or extra product right now.

When it comes to cross-sells, you will only be able to use this approach effectively if you offer relevant products. Think of products that will not only complement the items selected by your customers but also improve their overall user experience or make it more complete. You may also want to check out the best ways to optimize your eCommerce checkout to increase your conversions.

  1. Offer inexpensive add-ons

    Imagine yourself staying in a line in your local grocery store. Have you ever visited such a store with the only intention of buying bread or salt but ended up also buying chewing gum, batteries, and chocolate bars? If you have, you’re not alone, and you can use the same approach to increase your AOV in an online business.

“Adding inexpensive add-ons at the checkout will enable you to boost impulse purchases,” notes Martine Arnold, a digital marketer at a reviews on writing services. The lower the price, the more likely your customers will agree to buy add-ons, and the more add-ons you can offer. Amazon uses this tactic by suggesting items with discounts once your cart has reached a certain threshold.

  1. Offer a trial period for more expensive services

    “Mentioning the features of your higher-priced services might be not enough to motivate your customers to buy them. Your customers might be more likely to buy them if they actually try these services and understand what experience they can get for some extra money,” notes Elliott Coles.

Many people who try Spotify Premium or sign up for Apple Music for free keep using these services after the trial period is over because it’s difficult to let something go once you’ve tried and enjoyed it.

  1. Use a loyalty program

    As we’ve already mentioned above, you can also increase your AOV by using a loyalty program. Moreover, it will also help you get more returning customers. For example, you can use a bonus system so that your customers can collect bonus points for each purchase and then use them to buy from you. You may also offer a premium membership so that your customers can enjoy free delivery or other benefits.

Wrapping Up

Increasing your average order value can be a very effective method if you want to grow your online business’s revenue. It enables you to save customer acquisition costs while maximizing the profit you get from your existing customers. We hope that our tips will help you increase the average order value of your online business and boost your revenue in no time.

Melissa Mauro is a self-improvement author who is always interested in new projects. She wants to create her own writer brand, that’s why Melissa is looking for fresh platforms for the implementation of her ideas. Creativity and unique style make it possible to deliver valuable and engaging content to her ideal reader.


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