15 Proven Ways to Increase Your Average Order Value

Every extra penny earned need not come from a new customer!

Sometimes it only takes a few tweaks to encourage your existing customers to spend more on your eCommerce store. After all, they already trust you and are 60-70% more likely to place an order.

For instance, we all have visited some fast-food chains such as McDonald's. Food chains like these boost their sales by offering combo offers (Buy burgers, fries & coke to save ₹89) or small ad-on like french fries.

Essentially 4 major metrics impact your eComm store: Number of new customers (over a period of time), Average order value (AOV), Repeated orders, and Marketing/ retention costs.

Today we will focus on ways to enhance the average order value of your store. Before we jump onto strategies, let us understand what the average order value is and why it is important.

1. Increase Free-Shipping Threshold
2. Cross-Sell
3. Upsell
4. Create Combo/ Bundle offer
5. Offer Discounts on Bulk Orders
6. Loyalty Programme
7. Personalized Experience
8. Time-Sensitive Offers
9. Add Social Proof
10. Free Gift
11. Incentivize First Purchase
12. Build Trust and Authority
13. Flexible Return Policy
14. Coupons (Product Discounts)
15. Downsell Add-ons

What is the Average Order Value?

The average order value is the average amount spent on your store by a customer that purchases from you. For instance, in a month, your store gets 500 orders and generates ₹50,000. Then, the average order value is ₹100 for your store.

Average Order Value= Total revenue/ Total number of order

How would you feel if a customer enters your store looking for a ₹200 purse But, then purchase a purse and other accessories worth ₹1500.

So, an increase in the average order value helps in:

1. More revenue without extra marketing spent
2. Increasing customer lifetime value (LTV)
3. Recovering customer acquisition cost
4. Increasing profit
5. Clearing out inventory

Generally, eComm store applications, such as Shopify, provide AOV on the dashboard. Nonetheless, you can easily calculate it with the formula. More the AOV, the better it is.

The average order value increases when a customer places an order of a higher amount. No one wants to buy more. Your offering should have a higher perceived value to encourage buyers to spend more on your store. Note that just increasing customers will not boost your AOV. Here are 15 strategies to incentivize the customer to splurge a little extra. After all, a store earns 40% of its revenue via repeated customers.

Now, let us look into 15 ways to increase your average order value.

1. Increase Free-Shipping Threshold

One of the easiest ways to increase your average order value, almost instantly, is by increasing the free shipping threshold.

For instance, if you offer free shipping at ₹500, increase that to ₹600. Make a leap of about 20-30% of the current average order value. So, if your current average order value is ₹780. Then, increase the free shipping threshold to ₹700.

In case you do not offer free shipping, we highly recommend opting for it. It helps a lot to move the AOV high. In alternate cases, people place small orders as they have to pay for shipping either way.

Also, highlight this limit on the cart or at the top of the website. Let customers know that they are ₹x away from availing of free shipping.

A great example of the same is the classic ₹500 free shipping base on Amazon.

2. Cross-Sell

Cross-sell means recommending and selling complementary products. They are not similar products but products related, such as toothpaste and brush. The aim is to prevent the buyer from purchasing items from different stores and provide it with all in one place.

You could display these related products on:

• Home page
• Product page
• Cart
• Check out

In this case, Amazon offers the option to add a tempered glass, warranty with the mobile phone.

You can take this a step further by providing what other buyers pair the product with and personalized recommendations based on user history. Another effective way of cross-selling is by recommending a product after the order confirmation at a limited time period discount.

3. Upsell

Upsell means selling an upgraded version of the product. It can mean recommending a higher version of a product or a larger size.

For instance, you can recommend a more expensive camera model for added features and better utility.

Upselling occurs in two ways: upgrading to an expensive model or high-profit margin services such as an extended warranty.

You can offer a comparison chart like this on the product page itself. It should clearly communicate why the upgrade is worth those pennies.

4. Create a Combo/ Bundle offers

Let us say you enter a store to buy a printer. What if the seller offers you 4 cartridge ink and printing paper all together at a discounted rate? Would you not be tempted to buy it all?

Similarly, you could create bundles or combo offers with related products to make a higher value sale. You could also provide custom combos/bundles to make it more engaging and relevant.

These bundles really work well in case you see multiple small purchases in the store. This one again ensures the purchase of related items all from your store instead of different stores.

5. Offer Discounts on Bulk Orders

One of the best ways to increase basket size is to offer great discounts on bulk orders.

Display clearly the savings on placing a bulk order. It is similar to wholesale orders where customers get an added discount due to bulk purchases. These bulk orders could be customizable, which would further enhance the ROI of the strategy.

Here is a WooCommerce plugin to add discounts to your bulk orders.

6. Loyalty Programme

Many brands have loyalty programs for their customers. It aims to encourage regular customers to purchase from the brand in exchange for various perks.

They work great to increase repeated orders. Also, repeated customers tend to spend more on the store compared to new customers.

You could offer benefits such as a lower free shipping threshold, early access to sales, 24/7 customer support, cashback, bonus points, free samples on each purchase, and much more.

7. Personalized Experience

A personalized shopping experience can enhance the customer's experience via curated recommendations. It generally eases the process of navigating through the website.

You can personalize product recommendations based on their search history. You can offer custom bundle offers depending upon their activity on the website. You could also recommend product refills and repeat purchases based on the order history.

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8. Time-Sensitive Offers

Provide limited-time offers to create a sense of urgency among the buyers. Time-sensitive offers combined with dedicated product discounts could boost the average order value.

Offer product discounts, remove the free shipping threshold, provide discounted bundles, or any other incentive to encourage people to purchase.

Highlight special offers on the product page, homepage, and cart to make sure that people know about the limited-time deal.

9. Add Social Proof

Social proof is crucial to stimulate sales for any store. But, how would it impact the average order value?

Add customer reviews and ratings to the complementary products while cross-selling and upselling. Also, add pictures and other social proof on your website to ensure trust and build credibility.

There are many products on Amazon that do not sell only due to the absence of reviews and any other social proof. Hence, testimonials and social proof are really important to encourage sales and average order value.

10. Free Gift

Offering gifts to your customers can be a great incentive. You could offer free samples or gift cards at a certain threshold. This would increase the average order value. Free samples, as well as gift cards, could also stimulate future purchases.

Keep in mind your margins decide the value of the gift. You do not want to bear the cost of free items.

For free samples, pick items or variants that don't generally perform well to keep the inventory running. You could also give special offers on special occasions and boost sales.

11. Incentivize First Purchase

For a new eCommerce store, it is crucial to get the first hundred/ thousand purchases. You can motivate people to make their first purchase by offering them discounts, offers, and other perks on their first purchase.

Most of the stores offer a 10 to 20% discount on the first purchase from the website or their application.

In this image as you can see, Amazon goes a step further and offers free shipping on the first order but in a particular category. This would motivate customers to purchase from different categories. It's a great strategy in case you do not see sales in a particular section of your store.

However, ensure to promote the offer to your customers effectively to ensure order placement.

12. Build Trust and Authority

Building trust and authority is crucial for eCommerce stores. People might avoid placing orders or not come back if they do not find your store reliable.

Mention the policies very clearly and have FAQs in different sections of your stores. Use live chatbot and other customer care services to ensure credibility and security. These things do not affect average order value directly but play a major role in impacting customer psychology.

Simple things like a dedicated domain name, customer reviews, and contact details make a huge difference.

13. Flexible Return Policy

For the longest time, people did not purchase from online stores due to a lack of trust and quality assurance. People prefer offline stores as they can return the items in case of defects or any other discrepancy.

Offering a flexible return policy helps your store build that trust and encourages people to make their first purchase.

Today, most eCommerce stores offer a return policy of 15-30 days. As a result people also purchase more products as they are assured that they can return the products if something has to happen.

14. Coupons (Product Discounts)

Buy 2, Get 2 Free!

We all get tempted to buy 2 products and pick 4 products in total to avail of such an offer. It helps companies clear the inventory, increase order value and enhance brand image.

Coupons that offer product discounts are well received. Offers such as:

• ₹500 off on the purchase of ₹2499
• Buy 3, Get 1
• Flat 20%
• 25% off on purchase of ₹3599
• Cashback of ₹350 on purchase of over ₹2499

These offers encourage customers to increase their order value automatically. All these discounts need to be tactfully placed to ensure margins and sell off more products.

15. Downsell Add-ons

We do not think twice before picking up chocolate or candy at the checkout counter of a supermarket. Why? Because it is cheap.

Similarly, you can increase the average order value by offering a complementary product that is inexpensive. It becomes a no-brainer to add a product that doesn't cost much and pairs well with the item purchased. For instance, offering batteries with the clock.

It is easier to incentivize the customer and at the same time increase order value.

All of these strategies would enhance the ROI and get more profit. However, ensure to implement one strategy at a time and not all together. This way you can track which ones are the most beneficial and double down on those tactics.

Also, you should clearly communicate these offers and discounts to your customers. What’s the benefit if your customers are not aware of these incentives?

These strategies would have different effects on different stores. Hence, you need to do an A/B test and find the right way to promote the average order value.

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3 Bonus Tips to Increase Average Order Value

The average order value impacts your profit and your revenue. More AOV implies more profit without having to spend more. Apart from trying to sell more and encouraging customers, here are some simple ways to enhance your average order value.

Firstly, take an analytical approach to the average order value. This involves segmenting your audience based on the amount spent by them. Start by cross-selling to the customers that spend less.

Alternatively, customers that spend more would find loyalty programs appealing. Further, you could move on to free shipping, providing coupons, and other incentives.

Secondly, ensure to provide a smooth website experience. A website with a lot of pop-ups, slow loading speed, lots of lag, or frequent crashes would negatively impact customer experience. In this case, you might not be able to sell at all and drive customers away!

Lastly, understand your audience to provide a relevant and personalized experience. Consider what your audience needs and map out the customer journey. Find the motivation points for your customers by talking to them, looking at competitors, and analyzing past campaigns.

Conclusion

So, It all narrows down to understanding your customers, segmenting them, and providing suitable incentives to increase average order value. It acts as a window into the purchasing behavior of the customers. Hence, a higher average order value can attract added profit and revenue without extra cost.

FAQs

How do you increase the average value of a basket?

Upsell your products, provide free shipping, keep time-sensitive offers, personalise customers' experience, and provide bundle offers.

How is the average order value calculated?

You can calculate your average order value by simply dividing total revenue by the number of orders. For instance, in a month, your store gets 500 orders and generates ₹50,000. Then, the average order value is ₹100 for your store.

How can I increase my eCommerce AOV?

Provide bundle, provide limited time offers, offer free shipping on minimum orders, and keep a flexible return policy.