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Increasing Average Order Value in 2020: 5 Effective Strategies for eCommerce Stores

by Jon Taggart

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Is your customer acquisition strategy paying off and more customers ordering from your website every month? While attracting new customers is great for your business, you don’t want to leave it at just that – customers need to be motivated to spend more, per order.

In this guide, we’ll go over what average order value (AOV) is, how to calculate it, why it’s important, and 5 effective strategies to increase your average order value in 2020 and beyond.

What is Average Order Value?

Average Order Value is the average dollar value of an order. Simple. 

This metric indicates how much money a customer spends on an order, on average and gives business owners key insights into their marketing strategy. 

Here’s how to calculate average order value:

Divide your total revenue by the number of orders.

For instance, if your total revenue for the month was $40,000 and the total number of orders was 200, the average order value would be $200.

That’s it! But why is knowing the average order value so important?

Why Is Calculating Average Order Value (AOV) Important?

AOV is an important metric for eCommerce stores because it provides insights into the effectiveness of your website’s marketing and pricing strategy. 

For instance, a store with a low AOV will not benefit much by doubling down on marketing efforts and increasing website traffic when each new customer makes a small purchase. But by increasing AOV, the store will see a much better ROI on marketing. 

Similarly, the AOV says a lot about your customer base, their buying habits, purchasing power, and trends – all of those metrics are crucial in developing an effective sales and pricing strategy and optimize advertising spend.

5 of the Most Effective Strategies to Increase AOV in 2019

There are some great ways to improve the bottom line of an eCommerce store, but when it comes to increasing profitability with the least amount of effort and often at zero costs, increasing average order value is the way to go. AOV can be increased in a few ways but keeping in mind the current trends, here are 5 of the most effective strategies to increase average order value (AOV) in 2019.

#1: Upselling (and Cross-Selling) Before Checkout

The practice of suggesting better and more expensive products to the customer before they pull the trigger on the purchase is known as upselling. Similarly, urging them to buy additional products, complementary to what they’re already buying is called cross-selling. Every successful retailer employs some form of upselling and cross-selling but online stores have two big opportunities to upsell to customers – before and after checkout.

Note: Upselling and Cross-selling are often used interchangeably and both tactics work best when executed together.

A great way to upsell is to include a “Before You Buy” or “You Might Like” page right before checkout with some product recommendations. It’s also crucial that the recommendations are relevant (very similar while not being too expensive), something Amazon has nearly mastered (they earn 35% more just because of cross-selling).

It’s also quite common to show a “Frequently Bought Together” tab before checkout. 

But make sure that this additional page doesn’t alter the buying process too much otherwise customers might get frustrated and click “Skip” right away. 

In essence, the page needs to be as fluid as possible, quick to load, and relevant.

#2: Minimum Order Value for Free Delivery

For 55% of online shoppers, free delivery is the most important purchase driver. So important in fact that the vast majority of them are willing to pay a bit more extra if they can save on delivery costs – so why not use this to your advantage?

Make orders with a set dollar value eligible for free delivery and consumers will buy more. The psychology is simple. To them, they’re substituting the delivery costs that they would’ve had to pay with a, basically free product. 

Of course, let shoppers know about this minimum amount beforehand for two reasons:

  • No one likes surprise charges. In fact, more than half of online shoppers will abandon their carts at checkout due to shipping costs.
  • If they know in advance, they’re more likely to shop around and fill their carts. 

#3: Discounts on Bundled Items

Selling in bulk is a common purchase strategy for companies because they can enjoy economies of scale as the more they manufacture, the cheaper it gets. Similarly, if you can sell chunks of inventory to the same buyer, it will be cheaper for you. So why not incentivize them to do so?

Selling products as bundles or packages and then offering a quantity discount means consumers can also better justify paying the upfront price.

#4: Offer Gift Wrap Option 

52% of consumers say gift wrapping takes too much time and 22% say it’s too difficult.

And yet, 82% of consumers plan on shopping online during the holidays. Can you see an opportunity here?

Offering an option for gift wrapping at checkout is extremely effective at driving up AOV because shoppers are willing to pay for convenience. 

#5: Offer Incentives

Average order value and even revenue can be increased significantly if you can incentivize your buyers. Here are a few tactics that store owners can employ:

Cashback

If the order value reaches a certain amount, give shoppers some of their money back – a well-known strategy that can be implemented in two ways. First, you can simply discount their order if it meets the threshold e.g. spend $200 and save 10%. And secondly, deposit the cashback amount into an electronic gift card that can be used to make future purchases exclusively on your store.

 

Promo Codes with Minimum Order Value

“Use code NEW20 to get 20% off on your next 3 orders above $200”.

A great way to encourage customers to buy more at a time. Of course, be sure to add a max discount.

 

Buy x Get x Strategy

“Buy 3 and Get 1 Free” 

Another common strategy that is exceptional at increasing AOV and also works very well for a large number of product types. 


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About The Author

Jon Taggart

Using best practices, practical experience and creative passion, we use the most cutting edge strategies and tactics in Web Design, Development and Conversion Optimization to make sure that your business is found online, high quality leads and sales are generated at a profit. We're serious about results and ROI because at the end of the day, that is all that matters.