Increase eCommerce Average Order Value

In April 28, 2015
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We all want more money, but without good tactic this could be frustrating. Here are 8 Ways to increase eCommerce Average Order Value for your business:

1) Set free shipping threshold

The first tactic is to offer free shipping on orders which are a slightly more than your current AOV. I say ‘slightly’ because free shipping is a tricky subject. You’ll end up increasing the AOV, but the additional shipping charge could reduce total transactions. Did you know that 40% of customers are willing to buy more items if they qualify for free shipping? Also the lack of free shipping is the biggest reason for cart abandonment.

My solution would be:
A/B test between completely free shipping and one that is free after a minimum order value. The metrics to watch closely are AOV, number of sales, revenue and cart abandonment rate.

2) Offer discounts on minimum purchase

Give some, take some. Instead of giving your customers 20% flat discount comunicate that they will get the discount on a minimum purchase of $50 or $100 or whatever figure sufficiently makes up for your lost margins in giving that discount.

3) Always give limited period offer

Adding a limited duration to the offer can create a sense of urgency among visitors and encourage them to buy more in one go. For example, ‘Get 40% off on all products’ might motivate the visitor to browse the products. But when you say ‘Get 40% off on all products for next 2 days’, it compels them to act right away.

4) Try volume discounts

Offer discounts on bulk purchases of the same product. But before you get carried away, a word of caution. You have to determine the right discount value that attracts customers and at the same times doesn’t throttle your profit margins.

5) Upsell Upsell Upsell

Upselling, if implemented intelligently, is a great way to increase the value of an order. If a visitor is eyeing that 320GB Windows 7 laptop, just throw in the gleaming photo of that 500GB Windows 8.1 laptop on the side. Simply put, upselling is offering a similar but more expensive variant of the product to the buyer.

Don’t try to maximize every transaction and throw in random products just because you have them. Don’t be like one of those aggressive salespersons trying to sell the entire catalog to someone who hasn’t even made their first purchase.

6) Show them cross-selling options

Purchasing that 500GB Windows 8.1 laptop? Would you need a laptop bag with it? Or perhaps a USB drive?

This is precisely cross-selling. Soft selling complementary or additional products to a customer. While cross-selling has always played second-fiddle to upselling , its virtues can’t be ignored. What you need to keep in mind is that the suggestions need to be relevant. A person buying a laptop will need a laptop bag, not necessarily a DSLR.

7) Package deal

A package deal or a combo offer is a cool way of selling two or more related products at a discounted price. It’s convenient for the customer, a great way to move your slow moving goods and mostly importantly increases your average order value.

 8) Incentivize the purchase

Always give something to the customer and they will merrily return the favor. Whenever they make a purchase, either give them reward points through a loyalty card, gift vouchers or a cash back offer. Anything that is redeemable on their next purchase of a minimum order value.

An example would be offering a $5 cash back offer on their next purchase worth $40. Or giving a free gift voucher worth $10 on an order above $60. This way you will ensure a second-time visit and foster customer loyalty,thus increase average order value. The customer tends to buy more in order to experience that all-important gratification that comes after having bought something for free.

Do’s and Dont’s

  • Don’t implement all these tips at once.
  • Do A/B test these strategies to find out what works the best for you
  • Do strike a balance between discounts offered and your profit margin

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