Worried that your average order value is lower than your competitors'? You might tell yourself that any sale is better than no sale, but if your average order value is low, your online store won't be earning up to its true potential.
Here, we'll be sharing the importance of increasing average order value with live chat and other proven, effective methods.
- Average order value is a measure of the average dollar amount spent per customer on every purchase.
- AOV varies between industries, but a good average order value is between $54 and $286.
- It's critical to increase your average order value to boost your overall sales revenue and increase the lifetime value of your customers.
- Some of the best ways to boost average order value are by offering free shipping for order minimums, using live chat to upsell and facilitate engagement, and offering limited one-time promotions.
What is average order value (AOV)?
Average order value (AOV) is a metric that measures the average dollar amount of each transaction on your app or mobile website. Average order value is calculated by dividing total revenue by the number of orders.
Here's an example of how to calculate average order value. If your business made $20,200 in store sales in January, and you had a total of 650 orders, you would use the following calculation:
$20,200/650 = 31.08 AOV
Here, the average order value is $31.08.
Why increasing average order value is critical
Increasing your average order value is critical because it determines how much revenue you earn from the same amount of customers. Online stores with a higher AOV earn more from their customers without increasing the costs of sales or marketing.
Ultimately, boosting your average order value helps you to better offset customer acquisition costs and become more profitable or invest more money into products and advertising.
14 methods to increase average order value
These 14 methods should encourage your customers to spend more and add more products to their carts.
1. Use live chat prompts
Live chat is so much more than being there for your customers when they need your help.
A clever way to encourage your customers to spend more per order is to use live chat prompts at the peak of their buying journey, as you can see in this short video.
At eDesk, we can help you to use chat prompts as a strategy by setting up automated messages to send to buyers, with offers or social proof related to where they're from and what they're browsing.
The best live chat experiences create positive interactions, which incentive customers to add more products to their order.
Some good examples of live chat prompts are:
- "Add $16 more to your order to qualify for free shipping."
- "These shoes are on our bundle deal. Want to find out more?"
Even simply having a live chat feature should contribute – either directly or indirectly – to increased AOV. By offering live chat, you show your visitors that you're prepared to offer great customer service by helping them with their potential issues or questions in a timely manner.
Buyers, who visit your website with the intention to buy something, will appreciate being able to ask specific questions to gain the confidence to make a purchase.
Considering that 79% of customers say that they use live chat to get immediate responses to their questions, offering live chat may help you to secure a sale in the first place – before you even start thinking about AOV.
2. Offer a free shipping threshold with order minimums
Customers love free shipping – around 80% of buyers expect free shipping when they order products in a certain dollar amount – so incentivizing customers to spend more to save on shipping fees is a great way to increase AOV.
To work out your ideal free shipping threshold, look at your current average order value. If your AOV is about $30, offer free shipping on orders over $35. If your AOV is $120, incite customers to spend $150 or more to avoid shopping costs.
Make sure your free shipping threshold is clearly displayed throughout your website, including on the homepage, product pages, and checkout page. You can also send an automated live chat message to your customers, telling them how much more they need to spend for free shipping, after they add an item to their cart.
3. Share time-sensitive promotions
Customers love a good deal, and evoking a sense of urgency encourages more leads and more sales. Data from Experian found that marketing emails had a 41% higher clickthrough rate when they included a dynamic countdown clock — a visual that adds a sense of urgency to sales campaigns.
When prompting customers with a short-term deal or discount code, focus on promoting the need to buy multiple items at once. Try offering one-to-two-day discounts for certain product ranges or niches, incentivizing customers to add more items to their carts.
To temporarily boost purchase values, consider implementing the following popular promotions:
- Multi-buy discounts, such as 10% off for customers who buy two products costing more than $20, or 15% off for buying three products over $20.
- Percentage discounts for reaching certain thresholds, such as $25 off orders over $100.
Evoking urgency with time-sensitive promotions is one of the best psychological triggers to influence your customer behaviours and buying habits.
4. Offer reduced prices for product bundles
Customers are more likely to buy multiple related products together if they're offered as a discounted bundle.
Selling product bundles will encourage customers to spend more with the incentive that they're saving money because the cost per product is lower than if they were to buy each product separately.
This is an easy way to increase your average order value. If you're an Amazon seller, be sure to take advantage of Amazon's "frequently bought together" feature.
Also, consider offering small discounts for customers that buy more than one of the same item. This is especially effective during prime buying seasons, like Christmas, when people may buy multiple items of the same kind for gifts.
Bulk-buy options are good for certain products. For instance, if you own a fitness supplements website, and you notice that customers buy multiple 1-pound bags of protein powder per month, consider offering larger bags at a slightly discounted price to boost the cost per purchase.
5. Upsell and cross-sell products
Be conscious about what you include in your product listings. Cross-sell products where you can by making it clear in your messaging that certain items are more valuable when paired together.
Upselling is another easy way to boost average order value. Use your store layout to encourage customers to upgrade the product they were originally planning to buy. For instance, if a customer clicks on the cheapest power drill in your online store, make sure that the product page for this item features images and links to a couple of more expensive, better-quality "upgrades".
Be a customer-centric eCommerce business by being intentional about the products you recommend and offering a tailored shopping experience to an individual customer. When done properly, providing more value leads to higher sales and average order values.
6. Offer a customer loyalty program
An effective way to drive traffic to your Shopify store or website, improve customer retention, and increase average order value is to offer a customer loyalty program.
When customers know that they'll be rewarded to shop in your online store, they're more likely to shop across your range of products, coming to you for multiple needs in one.
For instance, customers might visit your hardware store to buy a single product: a power drill. But if they're signed up to your loyalty program, they may return to buy paint, hooks, hinges, and plumbing supplies, rather than buying these products elsewhere.
A clever way to use a customer loyalty program to increase average order value is to offer double or triple points when customers pay for product bundles or if they add a certain number of items to their cart. Rewarding customer loyalty makes your buyers feel important – a key part of a good customer experience strategy.
7. Invest in targeted email marketing
Targeted email campaigns involve sending personalised messages to particular customers on your mailing list. These emails are highly customised and deliver unique value to each of your subscribers.
You can use targeted email marketing to promote products that resonate with specific subscribers based on customer behaviour and spending history in your store. For example, if a customer buys plant pots from your gardening store, send them targeted emails offering discounts for large orders of compost, gardening supplies, pesticides, seeds, and grow-your-own starter kits.
The more targeted your email marketing to your existing customer base, the more likely your customers are to spend more money on their next purchase – and the more successfully you'll increase average order value.
If you don't already have a customer mailing list, building an email list is an essential place to start.
7. Use social proof to gain customer trust
An estimated 72% of customers will only take action after reading positive reviews. Using social proof to gain trust is essential to encourage new customers to buy multiple products on their first purchase.
Make sure your customer reviews section is easy for new visitors to access on each of your product pages. Automate your website to show "top reviews" or "featured reviews" first, showing your new visitors that you have loyal customers who are happy to spend money on your products.
You don't need tens of customer reviews to gain customer trust. Even one satisfied customer is enough – as long as they leave a review that can be used as a testimonial on your website. Encourage buyers to review their customer experience by offering incentives like free gifts and discount codes for their next purchase.
If your reviews could be better, don't panic. There are plenty of ways to improve your reviews.
8. Offer flexible payment options
If you only offer the traditional upfront payment option on your online store, your customers' spending habits will be limited by their budget. Offering flexible payment options encourages buyers to spend more and increases average order value by making your online business more "budget-friendly".
Buy now, pay later tools like Klarna split purchases into small, manageable, interest-free instalments or allow customers to pay for purchases at a later date. This gives customers more freedom and flexibility over their spending, at no risk to your own business – you still receive the payment upfront.
If customers have the option to pay for their purchase over time, they can spend more upfront without having to worry about budgeting.
9. Establish a good returns policy
Until customers know that they can trust your eCommerce store, with every purchase they make, they feel as if they're taking a small risk. You can reduce this feeling of risk and motivate customers to spend more on every order by offering flexible returns policies.
A good returns policy reassures customers that they're covered if a product doesn't live up to their expectations. By spelling out exactly what a customer can expect from you when they make a purchase, you can ease their anxieties and hesitancies about spending a lot of money on your eCommerce website.
Display your returns policy clearly across your website, including on product pages, website banners, and purchase confirmation emails.
Alongside a good returns policy, make sure you have customer email templates set up to respond quickly to customers who have bought items on your website. This saves you hours of time responding individually to customers and reassures customers that you're on hand to professionally and respectfully resolve their potential problems.
10. Offer a free gift of gift card with purchases
Want to encourage more customers to buy from your store, boost average order value, and increase customer retention? Offer a free gift or gift card for each customer's purchase.
Consider offering store gift cards to customers that spend over a certain value on their order, redeemable on their next purchase. Not only will this drive customers to add more items to their cart on their initial order; it'll also give customers an incentive to return to your store in the future. Offering gifts or discounts to returning customers is one of the best customer retention strategies.
Add an expiration date to your offer to evoke a sense of urgency, further encouraging sales.
11. Give out first-time offers
Incentivise your first-time customers by offering first purchase deals in your online store. This is especially worth implementing if you're a new brand (under six months old) and most of your customers are likely to be new.
Provide first-time offers for customers who buy multiple products in the same category, or exclusive bundle deals for new visitors to your website. Focus on offers that incite customers not only to spend, but to spend more.
12. Create a game or contest (gamification)
A fun way to increase average order value is with gamification. This is a particularly popular eCommerce marketing tactic in the food industry (a classic example of a highly successful contest is McDonald's Monopoly), but all almost all online businesses can benefit from games and contests.
Games and contests encourage customers to associate your name with fun and excitement, and they increase customers' fondness for your brand, which means they're more likely to become long-term buyers.
Good ways to use competitions to boost customer engagement and incite customers to spend more money are:
- Share quizzes and puzzles on social media, with store vouchers as prizes
- Encourage customers to create inventive or humorous videos that promote your products, and reward them for doing so.
- Use gamified features on your website, such as a "spin to win" wheel with various discount codes to use on all purchases
To really focus on increasing average order value, enter customers into raffles and prize draws if they spend a certain amount of money (such as $100 or more). Make sure customers are aware of your raffles before they hit "buy" to incite them to add more items to their cart.
13. Create eye-catching website displays
To draw customers to expensive or high-end products, make them your website's main focus. Customers will spend more on a product if that product is presented as the best-value, worthiest, customer-approved item in your online store.
A good way to catch your customers' attention is with "best-selling" and "trending" pages that can be accessed from your website's homepage.
Use short, snappy, informative video content to promote your most expensive or popular items. Customers are more likely to make a big investment if they know exactly what they're putting their money into.
Also consider using client testimonials to further offer social proof. Whatever you do, remember to remain authentic and keep your promises – it's one of the most valuable customer service tips we've received.
14. Offer small add-ons to purchases
Think about add-ons you can offer that provides real value to your audience. For instance, if you sell a lot of products that your customers often give as gifts, consider offering gift wrapping or several choices of birthday cards that add less than $5 to the order total. This will increase your cart value and give customers the satisfaction of ticking off multiple errands in one.
Offering small add-ons to purchases is a great way to increase average order value among customers with tight budgets. This is a great move for profitability, too, because these add-ons are low-cost to you.
How do you interpret average order value?
Average order value is interpreted as the average total of every order placed within a set period of time (such as one month, one year, or the holiday season). This eCommerce metric can be used to analyze how the value of your sales impacts your revenue growth. Average order value is calculated by dividing the total revenue by the number of orders.
What does high AOV mean?
High AOV, or high average order value, means that your customers are spending a higher-than-average amount of money per purchase on your online store. The higher your average order value, the more money you receive from your sales on average, and the more you get out of your investments in customer acquisition.
What is a good average order value?
According to littledata.io a good average order value is between $54 and $286. If your AOV is $286 or higher, you're one of the top 20% of stores based on data from 3,013 stores.
Keep in mind that there are disparities in AOV between industries based on product cost and what the customer expects to spend. Average order values are typically higher at certain times of the year, such as the holiday season, when customers prepare to spend more money (the average cost for Christmas gifts is $648) and are more likely to buy multiple items in the same order.
What influences average order value?
The biggest factor that influences average order value is the methods you use to encourage high spend per order, and the effectiveness of these methods.
Your AOV is likely to be higher than average in your industry if you incentivize customers to spend a lot of money per order by using live chat prompts, order minimums for free shipping, upselling, and more. Monitor your average order value weekly or daily to continuously assess the impact of your efforts to increase customer spend.
Increasing average order value is one of the most effective ways to bring in more revenue from your online store. Using the methods outlined in this article, you should successfully boost your AOV and earn more from your customers without needing to make additional investments in sales and marketing.