No matter the niche or market, almost every eCommerce company aims to boost its bottom line and revenue. While growth-oriented strategies are abundant, one of the most proven methods to confidently increase revenue is to increase average order values.
As one of the most common eCommerce tracking metrics, AOV or Average Order Value dictates the average total of how much customers spend on each order. The higher the AVO, the more customers spend, and the greater your profits will be.
As a direct result, AOV helps to negate the cost of advertising, media production, and supply chain management so that every order is as profitable as it can be for you. While each brand has tried and true methods for increasing average order values, some of the most common tactics include implementing customer loyalty programs, minimum order requirements to qualify for free shipping, and limited-time offers. That said, working to routinely increase AOV is no easy task.
As a result, the following post will touch on some additional techniques that have proven to increase AOV, especially in a growing and extremely competitive eCommerce market.
Study and implement goals based customer purchasing habits
Analyzing AOV is an integral part of better understanding customer preferences. Average Order Value is a benchmark metric in evaluating the effectiveness of marketing and advertising campaigns. Knowing where and how your customers spend time online can aid in streaming pricing structures, product volumes, and targeted marketing initiatives.
The following strategies outline some of the most common and effective ways to increase average order values based on detailed consumer trends.
Primary and secondary research
The first integral step in understanding customer purchasing habits involves gathering and synthesizing as much data on your customers as possible. Take advantage of whatever resources are available, like detailed website analytics, recommendation quizzes, focus groups, and surveys. Rather than making mass assumptions about a vast target audience, group and funnel trends into mock customer persona segments.
Once you have a better idea of customer habits, beliefs, and preferences, tailor content, website flow, and marketing initiatives, so customers receive a personalized experience when shopping with you. According to a 2018 Accenture survey, 91% of customers prefer to shop with brands that give personalized (and relevant) product recommendations, so it pays to find what they are looking for.
Implement the optimal free shipping threshold
Once customer trends and purchasing habits are gathered and synthesized, implement and adjust policies like free shipping above an optimal threshold to capitalize on customers who have already taken the steps to add items to their cart and begin checking out. Oftentimes, customers are more inclined to add additional items to their cart to qualify for free shipping if possible. As a rule of thumb, target incentives around your most common order type and values.
Adjust product volumes to meet consumer demands
Adjusting product volumes to meet consumer demands will also significantly increase your AOV. The majority of consumers prefer buying one larger item with higher volume rather than multiple small items that add up to the same or similar total.
A prime example would be if you are in the cosmetics industry selling hair and makeup products. First, analyze which sizes are the most popular. If a customer is buying multiple 12 OZ bottles of conditioner it’s safe to assume that buying a single 24 OZ or 32 OZ bottle set at a higher overall price is more lucrative than making multiple purchases at a lower price. In this example, adjusting product volumes to meet consumer demands will result in a higher average order value.
Develop a brand identity rooted in conscious consumerism
By definition, Conscious Consumerism is an umbrella term used to define the act of shopping in ways that make a positive social, environmental, or economic impact. While it can manifest in different ways, conscious consumerism often involves an intentional choice that elevates one product or brand over the other.
Voice corporate social responsibility
As of late, and with a rise in millennial consumer preferences, now is the time to advertise your responsible goods and services. Now, consumers expect brands to take a stand on important social and political issues. Almost 75% of Millennials regard environmental impact as a key variable in making a purchasing decision. As a result, almost $300 billion per year is spent on responsibly-made products and brands that donate a portion of their profits to a good cause.
While a crucial part of becoming a consciously minded brand is making choices to align your values with those of conscious consumers, finding organic ways to highlight and present these efforts in a digestible way is another challenge. Consumers need to be motivated and capable of understanding the efforts put towards being a more sustainable and ethical brand. An example of this would be transitioning from product-focused messaging to impact-focused messaging. From a customer’s perspective, knowing that a portion of their purchase is going towards a charity or other powerful cause helps them feel more comfortable. This will eventually lead to higher average orders and enhanced customer loyalty.
Bundle, package, and upsell
One of the most effective methods to increase average order values is to apply a curated kit or bundling option. In action, this means grouping naturally cohesive products or complimentary items together and upselling these packages to customers. Not only does this work to increase customer spending, but bundling products will improve your inventory turnover rate and lower your shipping costs.
Offer bundle and gift options
Bundling and gift options are most effective when items are directly related and used in harmony. For example, if you are in the business of selling hygiene or personal care products, creating a special offer by bundling a shampoo, conditioner, and a hair mask all together can do wonders for customers looking for more than one product at the same time. Reassessing customer preferences and past order history should illuminate the most effective items to bundle. In any case, the More products sold in a bundle = the higher AOV.
Allow custom bundling options
Another effective bundling strategy, especially when your logistics permit, includes letting customers create their own set or bundle. This custom approach to freely bundling products together can deliver valuable insights directly from customers on which products they purchase together, in addition to increasing average order values and sales. To make the offer irresistible, add a custom discount on the total price. With Drive Fulfillment capabilities, offering customers the freedom to purchase what they want together has never been easier.
Almost every strategy to increase AOV revolves around the principle of better understanding customers and tailoring your online store to them so that they comfortably spend more on each order than they normally would. That said, allowing custom bundling options, adjusting product volumes to meet consumer demands, and implementing an optimal free shipping threshold all come back to working with a proficient fulfillment provider like Drive.
With years of custom supply chain and logistical experience, innovative warehouse management software, and a skilled group of professional staff, the days of constantly worrying about customer satisfaction are over. Get in touch for more information or to schedule a tour of our Utah-based Drive Fulfillment Centers today.