How to increase average order value

March 5, 2019

How to increase average order value

The purpose of every business is to make money, and e-commerce is not an exception. How to earn more? How to offer a customer so he wants to spend more money? These questions are always bothered, online entrepreneurs. In fact, there are 3 main ways to grow the business:

  • Customer acquisition (more traffic)
  • Customer retention (the frequency of purchase)
  • Average order value (to get customers to buy more).

And today we will look more closely at the third method.

What is the average order value

Average order value is one of the e-commerce metrics which tracks the average total amount of every order placed on your site. The formula for calculating is not very hard: you should divide revenue by a number of orders in a certain period of time.

the formula

Average order value formula

Take into account, that this metric is determined using sales per order, not per customer. If you calculate order per customer, you will get the customer retention but not an average order value.

Knowing the average order value, you can develop the right marketing pricing strategy and evaluate your performance. Maybe to increase the profit rate you should change your attention and efforts to increase the customer’s AOA and not web traffic.

How to improve average order value (AOA)

And now we will look at the main tips for increasing the amount people spend on each purchase. I could be:

  • Cross-selling
  • Upselling
  • Volume discounts
  • Free shipping
  • Return policy.

Cross-selling

Cross-selling is a tactic when you softly sell complementary or additional products. For example, when a customer buys an iPhone, you can offer earphones or a case.

To make it, go to your WordPress admin panel and navigate to WooCommerce -> Products. Then, choose the item and scroll to the Product data block. Choose Linked Products.

cross-sell

Cross-sells

Up-selling

Up-selling is another technique to persuade people to spend more. If a user is eyeing that 32GB iPhone 8, just put a photo of that 64GB iPhone 8 on the side. In other words, upselling is offering similar items but more expensive. You can also implement this trick in your admin panel, just under the Cross-sells field.

upsells

Upsells

Volume discounts

Online retailers very often offer some discounts when people buy several amounts of the same product.

Volume discount

Volume discount

Or you can offer a discount if the customer purchase this product and complementary.

Discount for buying complementary products

Discount for buying complementary products

Free shipping

People go online for purchasing because they needn’t go out from their home, and all orders also will be shipped to home. Therefore, the shipping conditions really influence a customer’s decision to place an order or not. According to BI Intelligence, 58% of shoppers abandoned their carts because of additional costs related to the sipping.

Top reasons for abandoning shopping cart

Top reasons for abandoning shopping cart

How we can use this fact to increase the AOA? One of the possible ways is to offer free shipping on orders which cost slightly more than you AOA. It is interesting fact, that 40% of shoppers tend to buy more products if they qualify for free shipping.

Return policy

Sometimes people do not purchase something costly or in big amount because they afraid of its quality or something others. The great way to fight this fear is to provide them with the returning policy. Place it on the visible place, as such people can notice it.

 

So, each business has a unique set of shoppers and products, therefore, you couldn’t know exactly what will work and what not before trying!

 

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