7 Ways to Increase Average Order Value

7 ways to Increase Average Order Value

Every brand wants its customers to shop more. When they will shop more, you will have more sales, and hence more money. This will ultimately result in a higher average order value.

Online businesses often look for ways to increase the average order value on their store. There are some smart tactics which we will discuss in this article that will help you generate more sales from an order.

What is Average Order Value?

Average order value is defined as the average amount spent per order on your website/store.

How to Calculate the Average Order Value?

To calculate your store’s average order value, you simply divide the total revenue generated by the total number of orders. For example, a shopper purchasing three pieces of denim worth $12, $18, and $21 will set the average order value to be $17.

How to Increase Average Order Value?

Let’s try to understand what steps you can take to increase the average order value on your website.

1. Set a Free Shipping Threshold


Free shipping threshold is one of the best and the popular ways to increase the average order value on your store. For example, free shipping or orders above $100.

How to get benefited from this? Okay, once you have calculated your average order value, increase the bar. Let’s say the calculated AOV is $85, set the value to $100 for a customer in order to get free shipping. A 15-25% increase is considered to be ideal.

Now imagine, a shopper comes to your store, adds the product worth $85 or nearby to his/her cart, at the checkout, he/she will be encouraged to shop for extra $15 to avail the free shipping facility.

With our One Page Checkout module, you can place a free shipping barrier on the top of your checkout page, set a threshold from the backend configurations, following which shoppers would be displayed how much more do they need to spend to receive free shipping on their order.

2. Increase Average Order Value by offering Discount


This might put you in confusion at first as to how offering discount can lead to an increase in the average order value when it actually reduces the price.

So, the tactic here is whenever you are offering a discount to your customers, set a minimum spend limit such that the AOV after discount remains more than the current calculated AOV, and at the same time, your profit margin is not much compromised.

For example, if the AOV is $50 currently, offer a $5 discount on orders above $65. You can increase the discount value for higher value orders.

3. Upsell and Cross-sell

E-commerce businesses rely mostly on Upselling and Cross-selling to increase their store’s average order value. You should replicate the same.

To be specific about these two terms, cross-selling involves products that complement the existing product (the product which the customer is buying). For example, if a person is purchasing a smartphone, a mobile case and a screen guard would fit well with the purchase. So, instead of just buying the phone, the person would most likely purchase all the three, and hence the order value will go up.

Upselling, on the other hand, involves products that are either a better version of the current product or has more benefits, which obviously means it would come at a slightly higher cost. People do not hesitate to spend a bit extra if they can get more features and better quality, ultimately resulting in the higher-order value.

Many popular eCommerce brands use terms like “Frequently bought together”, “Related Products”, “Similar Products”, “You may also like”, etc. to represent cross-selling and Upselling.

Related: A complete guide to Cross-selling and Upselling in eCommerce

4. Offer Bundle Deals


Providing a bundle of products is also one of the smartest ways to increase your average order value. For example, you can run deals like buy 2 and get 1 free or something like if a shirt is priced at $40, you can offer- buy 2 at worth $75 or buy 3 at $110.

When shoppers see that they can get a bundle of three at a lesser cost than the sum of their separate individual cost, they are likely to spend on buying the package. Just make sure that you are still able to make some profit out of it.

5. Launch a Loyalty Program

Customer loyalty programs can be very effective when it comes to increasing the average order value on your website.

The benefit of having a loyalty program is that it ensures repeat purchases. Besides, you can also improve the customer retention rate on your store.

Every time you reward something to a user on their purchase, you encourage them not only to return to your store but also push them to spend more.

It is very obvious that when customers have loyalty points in their wallet, more often than not they will spend or redeem them on higher purchase.

6. Provide Gift Cards

Gift Cards are a valuable asset for your brand and can help you achieve more sales and higher average order value.

If the AOV is $50, you can offer your customers a gift card of $5 on orders above $70 or $80. Besides, you can also set the gift card threshold, which obviously should be more than the current AOV. For example, shoppers can redeem the gift card on a purchase made over $80.

In this case, setting a minimum spend amount also becomes important because it can make customers purchase a product of the same amount as that of the gift card, which will give you no profit.

Well, even if you decide not to set the threshold, it is commonly seen that the customers usually spend the gift card amount on purchasing an expensive product.

Related: Why Digital Gift Cards are important to your eCommerce Business?

7. Run a Limited-Time Deal

Limited-time deals not only create urgency but provide you with an excellent opportunity to increase the average order value on your website.

For example, you can run a limited-time offer on your website where customers would be able to claim a few benefits like free shipping, a gift card, a coupon code for next purchase, or anything that is beneficial for them.

But for that to happen, customers would have to shop within that limited time and also match the terms and conditions defined, which could be anything like shopping for a certain amount, certain quantity of products, etc.

When shoppers know they have limited time to shop and avail the benefits, they act quickly.

Final Thoughts

That’s it. These are the seven best ways to increase the average order value on your website. High average order value is an indication that your business is performing exceedingly well. It also reflects higher revenue.

Taking a quick look back, it includes setting a free shipping threshold, offering a discount, encouraging Upselling and cross-selling, offering bundle deals, launching a loyalty program, providing gift cards, and running a limited-time deal.

Were these tips helpful for you? Do let me know in the comments below, and if you have some more points to add, do not forget to mention them.

Manish Barthwal

Manish Barthwal

Following his passion for writing, Manish has been providing value to his readers through his write-ups. He predominantly writes for the e-commerce industry. Apart from writing, Manish's love for cricket is unmatchable. He is an ardent cricket fan.

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