Like most businesses, you’re always looking for ways to boost your profits.
While your sales are good, you’re wondering what you can do to make more money on each transaction.
Understanding how to find — and increase — average order value may be just the nudge your business needs.
This article will explain how to find average order value in ecommerce and how you can use it to increase your profits.
What Is ‘Average Order Value’ in Ecommerce?
Like most businesses, you’re always looking for ways to boost your profits.
While your sales are good, you’re wondering what you can do to make more money on each transaction.
Understanding how to find — and increase — average order value may be just the nudge your business needs.
This article will explain how to find average order value in ecommerce and how you can use it to increase your profits.
Why Is it Important to Track AOV?
Like most businesses, you’re always looking for ways to boost your profits.
While your sales are good, you’re wondering what you can do to make more money on each transaction.
Understanding how to find — and increase — average order value may be just the nudge your business needs.
This article will explain how to find average order value in ecommerce and how you can use it to increase your profits.
Inspire and Engage
At Pretty-Impressive, each client is unique. Which is why we create strategies tailored to the needs of each company. Reach out and we’ll help you get your brand exactly where it needs to be — ahead of the rest.
How to Find Average Order Value: An Ecommerce Metric Calculation to Remember
Total revenue divided by the number of orders = AOV
It’s important to note the average order value is determined by using the sales per order.
So …
Even though an individual customer may come back to make multiple purchases, each purchase is factored into AOV on its own.
An Example of Calculated Average Order Value
Let’s take a look at average order value by industry by examining the AOV of an online shoe store.
This online retailer is selling three similarly styled pairs of tennis shoes priced at $49, $56, and $69 — with an AOV of $51.
This information tells us two important trends in their customer buying patterns:
- The majority of their sales are on low-end shoes; and
- Customers are not purchasing multiple items
Presuming that the higher-priced shoes come with a higher profit margin, this online store has the information they need to improve their marketing efforts for that product.
How Often Should Average Order Value Be Tracked & Calculated for an Ecommerce Business?
AOV should be monitored regularly — preferably daily or weekly, at the very least.
If and when there are any variations, business strategies should be closely examined to understand why that particular trend occurred.
Depending on your research, you may want to …
- Implement new campaigns
- Restructure buying seasons; or
- Make cosmetic changes to your site
… to positively affect your AOV.
Looking for more ways to boost your marketing? Pretty Impressive can help. Schedule your no-obligation FREE strategy session today and prepare to be impressed.
Inspire and Engage
At Pretty-Impressive, each client is unique. Which is why we create strategies tailored to the needs of each company. Reach out and we’ll help you get your brand exactly where it needs to be — ahead of the rest.
Once AOV Is Calculated, What Can You Do With the Results?
Understanding how to find average order value for your ecommerce business is great.
But now what?
The next step is to maximize each customer’s visit to your store and encourage them to purchase more by using the following proven AOV boosting strategies.
How to Increase Average Order Value: 6 Methods
Now that we’ve covered the basics of AOV, let’s take a look at six methods for how to increase the average order value used by top businesses.
1. Create ‘Order Minimum’ Incentives
Minimum order incentives can look a couple of different ways.
For example …
You may consider offering:
- Free shipping on orders over a certain dollar amount.
- A set discount for orders meeting a minimum price, such as 10% off all orders over $60.
- In-cart promotions that ask the customer if they would like to purchase a specific product at a slightly discount price.
2. Cross-Sell and Up-Sell
Another option for increasing average order value is to upsell or cross-sell complementary products.
While certainly not new tactics, cross-selling and upselling are great methods for nudging your customers to buy additional items that complement their pending purchases — or upgrade the versions of products they already have in their carts.
3. Create Product Bundles
Product bundles are another way to encourage customers to purchase additional items.
Bundles can be put together in several ways:
- Create product bundles that offer a slightly discounted rate as compared to if the customer purchases those same items individually.
- Assemble the all-in-one solution for an “experience” or certain type of product.
- Allow customers to create custom bundles.
What are some benefits of bundling?
- It alerts the customer to complementary products.
- Bundling increases the customer’s perceived value of their purchase.
- It allows the customer to save time when they are shopping since they don’t need to browse your site to locate a particular complementary item.
- Customers tend to make more impulse buys since the bundled items have been discounted.
4. Establish a Customer Loyalty Program
Who doesn’t love a customer loyalty program?
Customer loyalty programs are great for:
- Building a relationship with your customers
- Encouraging loyalty to your store or brand
- Providing an incentive for them to continue to shop with you
When you provide customers with an opportunity to earn points with your loyalty program, you can expect to see your AOV rise significantly.
One recent analysis revealed that a 5% increase in customer retention resulted in a profit increase of 25 to 95%. Additionally, 65% of a company’s purchases are made by returning customers.
The importance of building solid relationships with your customers cannot be understated — and loyalty programs are a great way to increase average order value.
5. Offer Discounts on Volume Purchases
While it may not seem like the best idea at first glance, offering volume discounts can be a great tool if you’re wondering how to increase average order value.
Discounts on volume purchases may take on several forms, such as:
- Save 30% if you purchase 4 or more items
- Get $10 off when you spend $60 or more; or
- Receive $10 off when you spend $65, get $15 off when you spend $95 and get $25 off when you spend 135 or more
6. Gift Cards to Incentivize Future Purchases
Offering gift cards is a great way to increase average order value.
For example …
If a customer purchases $35 worth of products, they’ll receive a free $5 gift card that may be used on their next purchase. With a gift card in their purse or wallet, they’ll be likely to shop with you again.
Gift cards are beneficial because they:
- Encourage repeat purchases
- Help reduce future ad spend
- Can be used to encourage customers to purchase during seasons when sales are traditionally lower
Inspire and Engage
At Pretty-Impressive, each client is unique. Which is why we create strategies tailored to the needs of each company. Reach out and we’ll help you get your brand exactly where it needs to be — ahead of the rest.
Increase Average Order Value and Profitable Sales With Pretty Impressive
If you’re serious about increasing your AOV, Pretty Impressive is ready to get the job done.
We don’t waste your money on marketing that doesn’t produce results. Our focus on your ROI and everything we do is designed to help you generate more money – and get more back than you put out.
At Pretty Impressive, we:
- Help you build a growth marketing foundation
- Work with you to create a strategic vision
- Increase your sales through user-centered strategies; and
- Take a data-driven approach to your business
Growth marketing is our passion. Try us out with your free 30-minute strategy session and let us help you get the results you deserve.
