9 Tried-and-Tested Ways to Increase Average Order Value

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Did you know that you can quickly increase your cash flow by simply giving your average order value a lift?

Of course, generating more traffic to your site and improving your conversions are part of the job, but more often than not, these are efforts that have significant costs attached to it. Add to it the fact that search engine algorithms are changing way too often and betting on the possibility that you will increase your site traffic by 50% at the end of the month can be difficult to prove with certainty.

Average order value (AOV) is a direct indicator of what is actually going on with your revenues and increasing it is a simpler and less complicated way to boost your bottom line.

Learn the nine ways to increase average order value that you can apply to your own business today.

How do we calculate AOV?

Average order value is the average dollar amount spent each time an order is made. This can be segmented according to different channels which you can do with your data if you have an ecommerce website and a mobile website or app.

To calculate AOV, divide your total revenue (a) from a particular time period by the number of orders (b) made in the same period.

For example, your total revenue for month X is 50,000 dollars and you received 100 orders.

Following the formula AOV = a/b
AOV = 50,000 / 100
AOV = 500 dollars

AOV is a popular metric because it helps you understand your customers’ purchasing behaviors. You can choose to calculate AOV monthly, weekly or annually depending on your requirement.

1 – Bundle up products together

To get your customers spending more on your products, increase the number of items you are offering them with a special discount attached to it. Strategic volume pricing is a great way to increase average order value and there are plenty of ways you can implement this.

Savings packs is a good way of encouraging your customers to buy more of the same product they are interested in. A type of savings packs is giving your customers a “Buy One, Get One” promo. But if you really want to increase order sizes, go for the bolder and harder-to-resist “Buy Two, Get One” offers.

Bundle up products in savings packs

Putting together items in kits is also a good strategy of placing different items conveniently in a pack. While it is similar to bundling, the use of kits is giving your customers a grouping of individual items they would normally consider buying separately. Examples of kits are medical supplies (putting gauze, bandages and ointments in one pack) or a kit containing shoe cleaning items similar to the example below.

Bundle up products in kits

Complementary products in a bundle is similar to kits, but these are normally for products you will normally use together like a bottle of shampoo and a bottle of conditioner. Try to think of your products that will go well together and offer a special discount. Gift packs are common executions of bundling complementary items and you can consider offering this during the holidays.

2 – Establish a free shipping threshold

Offering free shipping to your customers is a huge conversion advantage. In fact, customers are more willing to shift to another retailer if shipping is not offered to them for free.

However, not all ecommerce businesses are the same. Others may find it difficult to scale just to accommodate shipping costs, but there are certainly plenty of ways to make it possible without hurting the bank.

A free shipping threshold or providing free shipping only when the minimum order amount is met or exceeded is one of the best ways to make free shipping profitable for you. As it helps increase your minimum order value, make sure to test the improvements in your margin.

Flat rate offers are helpful too and is a popular tactic among big box retailers. Flat rate offers work by offering free shipping on the first purchase and establishing a flat rate for all succeeding purchases that will fall below the established threshold.

Free shipping for eligible products is also great way to make free shipping profitable on your end. Apply it on your bundled promotions! This “forces” your customers to purchase the bundled item so they can enjoy free shipping. This strategy is helpful for big ticket items.

Offer free shipping on limited-time offers. Use this tactic for your seasonal promos or whenever you want to clean out your inventory of last season’s products.

Try applying any of these free shipping strategies and you might be surprised how this simple offer can change your AOV dramatically.

3 – Give away discounts at particular dollar thresholds

Like free shipping at a threshold, consider giving away discounts when particular dollar thresholds are met.

Similar to the retailer offering the discount below, you can offer 25% discounts on purchases worth 100 dollars and above.

discounts at particular dollar thresholds

A coupon that shaves 10 dollars off on any orders amounting to 50 dollars or higher can typically generate an AOV of more than 80 dollars. This can be a significant boost in your business’ regular AOV.

4 – Offer discounts to first-time shoppers

It is a fact that it is less expensive to nurture relationships with your current customers. But you can also acquire new ones without spending too much by giving away first-time shoppers special discounts on particular product bundles.

For instance, you can send your first-time customer a discount coupon if they purchase three pieces of a particular item instead of just one. You can also offer a discount at a certain established price point.

Aside from increasing AOV per newly acquired customer, they can also help you get new customers if they share their discount coupon on their respective social media accounts. Make your discount offers shareable to encourage others from checking out what you have to offer.

5 – Personalized merchandising

Many online retailers turn to advertising as a means of boosting AOV. But instead of spending all advertising budget on general campaigns, you can focus your efforts on customers who are already shopping on your site and leverage on personalized product recommendations to nurture their repeat purchases and AOVs.

The premise of personalized suggestions is it can encourage your customers to add these relevant items in their shopping carts, and therefore, increase their order size.

If there’s one ecommerce retailer that has pioneered personalized merchandising, it has to be Amazon.

Personalized merchandising

According to a study by MyBuys of more than 100 top online retailers, suggesting products to customers based on their browsing behaviors resulted in a 915% increase in conversions.

With personalized merchandising, recommended products are purely based on data. You can sell more to your customers with certainty, which in turn can result in larger order volumes. Higher-margin products can be recommended too without a customer feeling pressured into buying it.

Aside from displaying related items on your customers’ browsers, you can use the same data when sending out relevant marketing emails or when you are retargeting them with ads.

6 – Upsell to your customers

When done correctly, upselling can help you increase the value of a single order significantly. If your customer is eyeing on a 1,800-dollar laptop, throw in its more expensive competitors in the list of choices. Show off its “better” set of features and some great deals (like financing) that will give your customer a better value for their money.

Upsell to your customers

While upselling can be done conveniently (all you need is to display more expensive choices related to the product your customer is currently interested in), it does not mean you have to seize the concept in every possible opportunity. Remember, you do not have to sell your entire product category to someone who may not even made their first purchase yet.

Aside from upselling, cross-selling can also help you lift your AOV. If your customer is still shopping for a laptop, then they might need a laptop bag or a USB. A thoughtful suggestion can go a long way in making an order more valuable for you.

And while it is found that upselling is 20 times more effective than cross-selling, it does not mean it is useless to your cause. Just keep in mind that your suggestions need to be 100% relevant.

7 – Reward referrals with gift vouchers

Aside from boosting average order values, rewarding customers with gift vouchers for every referral they make is also a great way of encouraging repeat purchases. Other techniques like “Get 10 dollars off on your next purchase when you spend 40 dollars” also work the same way.

Cashback techniques work like a charm in attracting and retaining customers. Online stores are filled with ads and vouchers waiting to be redeemed only after a certain amount is spent.

Leverage on this tactic successfully by establishing your spending threshold first. Once you determine and establish that amount, format it well and market it aggressively so everyone knows about it. Place it as a banner ad all throughout your site and even on your shopping cart page where customers are more likely to add extra products just so they can meet the cash-back minimum.

Consider building alliances too with other companies which allows gift vouchers to be redeemed in other shops and stores. It does not only nourish repeat purchases, but fosters customer loyalty as well.

8 – Show the many ways your customers can save

There’s more to displaying discounted products on a dedicated page on your site that can boost your AOV; display the cost savings too whenever your customers buy more than one item of the same product. This gives your customers the incentive to buy products in bulk in a single checkout.

For instance, an item retails for 20 dollars a piece. But if five pieces of that item will be bought, a piece will now cost 18 dollars, resulting in a savings of 10 dollars.

There are many ways you can display your customers’ cost savings – as a feature on your product page when bulk orders are suggested or on your actual shopping cart where savings are dynamically calculated when the quantity is increased.

9 – Make your discounts available on a limited time only

When customers know that an opportunity to save is always available, they will procrastinate and delay making purchase decisions. But when a scarcity factor is added, it makes them act immediately and buy more of a product in one go.

make discounts available for a limited time

Adding a scarcity component in your ads will motivate your customers to act faster and eventually fill up their shopping carts with as many products as they can while it can still be bought at a cheaper price.

In conclusion

While these nine ways are all known to increase average order value, do not implement them all at once. Apply these strategies from your arsenal one at a time and split test them to find out which one works best for your revenues.

Depending on the shopping cart system you are using, you can implement these tactics as a plug-in or as an add-on. Otherwise, work with your developer to create the appropriate solution so you can implement your AOV strategy immediately.

After you calculate your AOV, remember to strike the balance between all the discounts you offered and your current revenue. Plan your AOV strategy well and focus on how high your numbers can soar higher.

What about you – what other strategies have you tried to increase average order value?

About the Author

John Komarek is the founder of Pixelter. He helped over 63 e-commerce businesses boost their mobile sales by up to 183.5%. He uses advanced UX research, A/B testing, and AI-driven personalization to deliver the results. Learn more about how he can help you grow your sales.

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