All online retailers spend a great deal of time thinking about how to attract more traffic to their sites. No doubt, feeding the top of your funnel is essential to your long-term success. But that’s just the first step. There are many things you can (and should) do to encourage your visitors to spend more money when they make purchases. In short, increasing your average order value (AOV) is an equally worthy goal.
Generally speaking, there are two ways to go about boosting your AOV:
1. Encourage visitors to add more items to their carts than they intended to buy
2. Prompt them to upgrade to a higher-priced product
This post offers ideas for doing both.
Free Shipping/Expedited-Shipping Threshold
Offering a free-shipping threshold is a big driver for increasing AOV (assuming you don’t offer free shipping automatically). Here’s how it works. Let’s say your AOV is $50, and you want to increase it by 10 – 15%. You can offer free shipping on any orders that are $65 or more.
If you already offer free shipping you can prompt customers to spend a little extra to get expedited-shipping, such as next-day delivery for all orders above $65.
We find these tactics are incredibly motivating to the consumer for a very good reason: more of their dollars are spent on actual products, not shipping. As an added bonus, these offers give you another opportunity to reach out and touch your customer, which is always a good thing to do. Emails announcing such promotions tend to deliver the best conversion rates.
Promote Product Discovery of Complementary Items
Another approach is to create bundles or kits of products that are complementary to one another (e.g. KitchenAid stand mixer + spiralizer attachment or printer + color ink cartridges). Your AOV will go up if customers buy accessories at the time they purchase a particular item.
One way to sell complementary products is increase product discovery (think Amazon’s Frequently Purchased Together functionality). You can do this is a number of different ways. For instance, you can have a physical kit that, when purchased, comes with a discount on one of the items, such as, buy this printer + color ink cartridge and get paper at 50% off.
Or, you can bundle complementary products across multiple categories — workout DVD, exercise pants, and protein shakes — into a kit that’s presented to consumers who came to your site to purchase, say, a work out DVD.
You can also incentivize these promotions and increase product discovery at the same time. Let’s say you have an area of your catalog that doesn’t see a lot of sales. For the sake of this example, let’s say it’s your outdoor gear category. And let’s assume that the items in your outdoor gear section have a higher price point. To promote product discovery and increase AOV, you can run a promotion that says, ”Take 10% off all outdoor gear when you purchase a pair of shoes (or other categories your site is known for).”
A word of caution, use AOV promotions sparingly. Free-shipping thresholds and buy-one-get-one-free offers will eat into your profit margins. Worse, you may inadvertently turn a loyal customer into a less frequent one, and if that happens, you risk losing that customer to a competitor. In other words, offering three months worth of vitamins at a discount will certainly increase the AOV of that particular sale, but now your customer has no need to return to your site for 90 days. In the meantime, a competitor’s site may catch his or her eye.
AOV strategies work best when you encourage customers to buy items they didn’t know they wanted via cross-category promotions. This approach ensures you don’t trade in long term value for short-term success.
Long-Term Ways of Boosting AOV
The promotional route for incentivizing AOV plays to a customer’s sense of urgency. There are other tactics that don’t rely on promotions. Top of the list is to re-evaluate the way you categorize your products and highlight product discovery.
Earlier I mentioned kitting or selling complementary products in bundles. In my opinion, this should become your everyday, de facto, merchandising approach because it more closely resembles a physical retail store. Brick-and-mortar stores present a lot more items in your field of view, which is why we often go to the pharmacy for shampoo but walk out with bags full of additional items. You can increase your AOV by mimicking that in-store experience of presenting consumers with products they wouldn’t typically search for themselves.
Of course, you can’t stuff too many products onto your homepage or landing pages, so you need to find creative ways to present customers with items they wouldn’t have previously considered.
One way to do that is through a product-based Welcome Series, which are non-promotional emails that help customers better understand the products they’ve already purchased and are likely to be actively using. Let’s say I purchase a workout DVD. The first day I may receive an email that describes strategies for making time in my day for a daily work out. On day 5 I may receive another email discussing the effects I may be feeling by working out daily, and suggest, in a non-promotional way, a complementary product, such as an elixir for achy muscles.
Welcome Series emails can work as long as content is journey based, highly relevant and engaging.
Create Good, Better, Best Option
Another way to increase AOV, especially for retailers that manufacture their own products, is to offer products at a range of price points so that shoppers who buy more higher priced items will have a reason to shop from you. We see this in retail all the time. For example, Converse makes low cost sneakers for Target shoppers, as well as high-priced custom-collaboration shoes that sell for hundreds of dollars. It’s the same brand creating products for a range of people who have different sensibilities and expectations.
If you’re a large enough company, you can boost your AOV by offering good, better, best type options. This approach allows you to offer a catalog of products that appeal to the upper end of the market, as well as give people the option to buy up (assuming you can provide a compelling story as to why they should do so).
Finally, If you offer live chat on your site, consider deploying your chat specialists to upsell orders. For instance, you can deploy automatic invitations to chat with a product specialist on your high price point product pages (e.g. “Not sure which laptop is right for you? Our laptop specialists can help.”) The specialist can assist the customer in selecting a laptop, as well as suggest additional accessories, such as a laptop case and spare battery, to increase the value of orders placed.
Need help increasing your AOV or looking for new ideas to get that higher AOV? Contact us and let SD help you!
Written By: Phillip Jackson, Ecommerce Evangelist