KEY TAKEAWAYS:
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Creating personalized product recommendations and rewards programs will help increase your AOV, because returning customers will spend more than new customers.
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Calculate and determine your free-shipping thresholds using AOV and median order value. Understand how much customers and clients are spending and incentivize them to get to free shipping.
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Using bundle, bulk recommendations, or package deals can influence buyer decisions in emphasizing their overall savings to value ratio.
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Upsells offer users the chance to purchase upgrades, including the more expensive or luxury version of their current purchase selection to increase the average order value, maximize the value of the purchase, and get the most money from the sale.
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Cross-selling offers the option to buy related, complementary, or associated items along with a purchase to maximize the value of the purchase.
At this point, you have already invested the time and money into driving traffic to your website. Whether through paid and organic advertisements, campaigns, email sequences, social media, you have the web traffic, but now what? Now you can maximize your investment by increasing your average order value. But how?
We have prepared a quick guide to understanding 6 keys that will help you improve the amount your customers spend per purchase, driving up your ROI. For more help in driving conversions, read the article here.
Research can help you understand which products and offerings to spotlight and which to skip, especially when focused on personalizing the experience to increase your AOV.
Average Order Value = Total Revenue / Number of Orders
Before putting any tools or tips in place, you must first understand your target customer. Creating well-researched target personas for your marketing team can help them focus the language, content, and campaigns in more focused ways. Understanding your customer can provide a better overall strategy for how to market products and services, increasing your AOV.
Below, find some of our favorite methods for doing so.
Design and implement appealing incentives around research.
1. Personalized Product Recommendations
Creating personalized product recommendations will help increase your AOV, because returning customers will spend more than new customers.
Your loyal top 10% spend 3 times more per order than the lower 90%, and your top 1% of customers spend 5 times more than the lower 99%.
Making your loyal customers feel important will push them to spend more.
In fact, Amazon generates 35% of its revenue through its recommendation engine, which uses prior purchases to tailor suggested items in multiple genres.
Some of the ways to increase repeat buy sales include giving discounts to your full time buyers, introducing loyalty programs, and improving customer support.
80% of your future profits will come from 20 percent of your existing customers.
When customers feel loyalty to a brand, they are 397% more likely to spend money with you than newcomers. Customer retention strategies are far less expensive than trying to gain new customers.
2. Rewards Programs
Loyalty and rewards programs have become an expected part of e-commerce. Just offering a rewards program may not be enough; it needs to offer compelling benefits.
68% of millennials report that they will not be loyal to a brand if that brand does not have a good loyalty program.
Creating an effective loyalty program will increase revenue, save you money, make repeat customers feel appreciated, and generate valuable buyer data.
69% of consumers say choice of retailer is influenced by where they can earn customer loyalty/rewards program points whereas 57% of consumers join loyalty programs to save money, 37% to receive rewards.
By encouraging your customers to fill out information or profiles as as part of your loyalty program, you can access the data to help personalize the customer experience and to create targeted marketing campaigns. The more data, the more you adapt to ensure your strategies are effective. It can even be a great incentive for first time shoppers.
You can also factor customer milestones into your rewards program, such as a birthday or anniversary, the anniversary of the customer’s first purchase, the date they joined your customer loyalty program, when spending a certain amount of money, and more.
Check out CBDMall’s Loyalty Tiers and the appealing benefits they offer below. Perks and bonuses make customers feel special, increasing brand loyalty and conversion rates, in addition to boosting that AOV.
Another way is to place targeted product recommendations on your Product and Cart pages, so when shoppers are evaluating items, they are more likely to check out those additional products.
Last-minute additions strategically placed in the buyer’s Cart can also increase AOV from impulse buyers. You can even use product recommendation widgets to help automate this process.
Using tools like Google Analytics can help you see which products people are buying. Then, you put those products in better locations, front and center, where the eye is naturally drawn, and you will see your AOV go up.
Product recommendation techniques can increase conversions by 550%.
That research can also tell you which products people are buying together and you add those to cross-sells. More on that soon.
3. Free Shipping Threshold
You can use free shipping to drive higher conversions, but you can also use this strategy to increase the AOV at the same time.
79% of consumers say they’re more likely to shop online when free shipping is offered.
Create the incentive for your visitors to get to free shipping. Only $5 more, $15 more, $50 more. How do you know what to charge?
Research and understand the average order value and the median order value to calculate and determine your free-shipping thresholds. Understand how much customers and clients are spending and incentivize them to get to free shipping.
48% of consumers will add additional items to their carts to qualify for free shipping.
Look at how much people are spending and make it $10 more to get free shipping and you will see your average order value go up. Shipping perks increase average order value. If you spend XX amount and will get free shipping as a result, increase average order value.
Establishing reasonable shipping amounts, like the above Macy’s example, will give skeptical customers that extra push into adding that additional item to meet the free shipping threshold.
4. Bundle, Bulk, or Package Deals
Using bundle, bulk recommendations, or package deals will appeal to buyers if you display their overall savings to value ratio in an obvious way. Instead of focusing on their guilt, people focus on how much value is in the combination and how much money buying more saves them over time. And it’s way more convenient to complete the process in one simple step.
Reminding them of the retail price amount for the total package’s contents or offering and how much was saved provides high value to the customer. If visitors are already making a purchase, they are more likely to add items to their shopping cart.
Bundles like this CBD pet bundle from Diamond CBD work because they emphasize the overall value of the bundle and the total savings from the purchase.
5. Upsells
Upsells are a perfect way for business with e-commerce sites to increase the average order value and customer lifetime value over time. Upselling increases revenue by 10-30% on average. Upsells offer users the chance to purchase upgrades, including the more expensive or luxury version of their current purchase selection to increase the average order value, maximize the value of the purchase, and get the most money from the sale. It is far more expensive than to retain an existing one.
Upsells are 68% more affordable than acquiring a new customer.
You are more likely to upsell to a person already completing a purchase, so this is a great tool. Why not upgrade your existing purchase?
When companies like Adobe offer upgraded versions of programs, like investing long-term in an annual plan, they highlight the money saved by doing so, generating more profit for each purchase.
You can even think of it applied in a much more basic example. Fast food giant, McDonald’s, has mastered the art of both the upsell and cross-sell.
The layout even on McDonald’s mobile view focuses on the incredible discount and appealing product images, so it seems illogical to refuse spending only $0.30 more for twice the product.
Feature upsells on product pages and in cart. You can even add tools like exit pop-ups reminding visitors one more time that adding the upgrade to their cart would be 50% off. You can also add urgency with specific language and countdown timers.
6. Cross-Sells
Doesn’t everyone need batteries when they buy a remote? When featuring a product with specific items or features, make sure that all appropriate add-on items, extras, tools, or accompanying products are featured on the right pages in your website.
Companies like Adobe use cross-sells with their Frequently purchased with feature below the cart summary. Note that they highlight what is included, some basic advantages, quick information, and an easy-to-use button that makes adding it to cart simple and effective.
You can feature other popular best sellers, like these delicious example add-ons from McDonald’s. “Would you like fries with that?” is a prime example of why cross-sells work so frequently.
Think about the checkout area of your local Target or Walgreens and how it is catered to adding those last minute items impulse buyers forgot. Cross-sells can be the digital equivalent.
Amazon attributes up to 35% of its revenue to cross-selling.
Both upsells and cross-sells aim to increase average order value, but unlike upselling, cross-selling is the sales technique of offering the option to buy related, complementary, or associated items along with a purchase. It is an attempt to maximize the value of the purchase, hoping the likelihood of related purchases will increase with the original product.
Your company is more likely to sell to an existing user, one already in the process of making a purchase, than a new prospect. It can help to consider target audience when choosing which products to market for cross-sells.
Summary
In conclusion, good research and understanding your customer can provide a better overall strategy for how to market products and services, increasing your AOV. Creating personalized product recommendations and rewards programs will help increase your AOV, as returning customers will spend more than new customers. It is far less expensive to market to existing customers than new ones.
Research and understand the average order value and the median order value to calculate and determine your free-shipping thresholds. Understand how much customers and clients are spending and incentivize them to get to free shipping.
Using bundle, bulk recommendations, or package deals will appeal to buyers if you display their overall savings to value ratio in an obvious way.
Upsells offer users the chance to purchase upgrades, including the more expensive or luxury version of their current purchase selection to increase the average order value, maximize the value of the purchase, and get the most money from the sale. Cross-selling is the sales technique of offering the option to buy related, complementary, or associated items along with a purchase to maximize the value of the purchase.
Overall, it is critical to keep your audience in mind and tailor your marketing efforts and content to that end. Need help with your landing pages? Read more here.
