Do you know the exact impact of your average order value (AOV) on your overall revenue?
For example, if you managed to increase your average order value by just 10%, how would it affect your monthly revenue?
If you know the answer, you must already be excited. If not, here you will find it out, plus:
- The importance of average order value,
- The best practices to increase your AOV (with real examples),
- How to see your AOV in GA4
and a lot more insights to help you improve the performance of your ecommerce business and increase your conversions.
Average Order Value: What It Actually Means
Tracking your average order value (AOV) is essential for scaling your business.
It is one of the most important ecommerce KPIs you should look to improve so you can increase your revenue and enhance advertising efficiency.
Let’s go back to our question and find an answer to better understand the actual impact of your AOV on your total revenue.
At this point, we should take a look at an example:
You have a Shopify store called “Trendsetters Boutique”. It specializes in contemporary fashion, offering a range of products including casual wear, formal attire, accessories, and footwear.
Accordingly, you target fashion-conscious individuals aged 20-35.
Let’s shed some light on the initial situation and then what happens after you try to improve your AOV by 10%.
Current Situation:
- Average Order Value (AOV): Initially, the AOV at Trendsetters Boutique is $50.
- Monthly Sales Volume: Your store averages 1,000 orders per month.
- Monthly Revenue: $50 (AOV) × 1,000 (orders) = $50,000.
Strategy to Increase AOV:
- Bundle Offers: You introduce attractive bundle deals, such as “Buy a dress and get 20% off on matching accessories.”
- Upselling Quality Products: You offer higher-quality items or additional pieces that complement the customer’s choice, like a premium belt to go with trousers.
- Loyalty Rewards: You have a loyalty program that encourages higher spending to earn points, redeemable for discounts on future purchases.
- Free Shipping Threshold: You set a free shipping threshold slightly above the current AOV, for example at $55, encouraging customers to add more items to their cart.
Once Strategies Applied:
- Increased AOV: Through these strategies, Trendsetters Boutique successfully increases its AOV by 10%, bringing it to $55.
- New Monthly Revenue: $55 (new AOV) × 1,000 (orders) = $55,000.
Basically, this results in a $5,000 increase in your monthly revenue. According to that, the 10% increase in the AOV amounts to an extra $60,000 a year.
This exemplifies how a modest increase in AOV, by just 10%, can lead to a significant improvement in a Shopify store’s performance.
Through targeted strategies focused on increasing the AOV, Trendsetters Boutique effectively boosts its revenue without needing to increase traffic or customer count.
While results might vary, it shows how optimizing your AOV can be game-changing for your business.
12 Actionable Ways to Increase Your Average Order Value
Increasing your average order value (AOV) is a powerful lever to increase revenue without the need for a proportional increase in customer traffic.
Here, we share some actionable strategies that are grounded in real-world practices and carefully curated to provide you with a comprehensive toolkit for boosting your ecommerce performance.
Let’s focus on 12 proven ways to improve your average order value, along with examples:
1. Cross-Sell Your Products
Cross-selling is a strategic approach to increase your average order value by encouraging customers to add additional, related products to their cart.
This strategy is not only effective in boosting sales but also enhances the customer experience by providing complementary products that meet their needs or interests.
By carefully selecting items that pair well with the customer’s initial choice, you can increase the perceived value of the purchase, leading to higher customer satisfaction and loyalty.
Example: Here, you can see that Motel includes a “Complete the look” section to encourage customers to add more products that could match with the initial product.
2. Upsell Higher-Value Products
Upselling is a technique you can use to inspire customers to purchase a more expensive or premium version of their chosen item.
This strategy is crucial as it not only raises the average order value but also introduces customers to higher-quality products, potentially enhancing their overall satisfaction with their purchase.
Upselling, when done right, can create a win-win situation where customers feel they are getting better value for their money, and your business enjoys increased revenue.
Example: In the example below, you can see that Victoria Beckham offers a different tote bag of a higher price under “Why not add”.
3. Offer Volume Discounts
Volume discounts reward customers for buying more.
By utilizing volume discounts, you can create a sense of urgency and encourage customers to make purchases they might otherwise postpone, especially if the deal is time-sensitive.
Example: Lovepop provides an “unlock products…” section where customers can get discounts by adding 5 products to their carts in total.
4. Incentivize with Free Shipping
Offering free shipping for orders exceeding a certain amount is a proven method to motivate customers to add more items to their cart.
This works as customers perceive free shipping as a significant value addition, often preferring to buy more products rather than pay for shipping.
It stands out as a psychological trigger that can effectively increase the average order value, as customers are more likely to meet the minimum threshold to qualify for free shipping.
Example: Gymshark offers free standard shipping for overs that cost more than $75.
5. Utilize Coupons
Coupons are a powerful marketing tool to drive up repeat purchases and increase average order values.
By offering a discount via coupons, you can let customers return to your store and spend more.
This strategy helps build customer loyalty and can drive long-term revenue growth, as customers are more likely to return to a store where they feel valued and can get a good deal.
Example: Chi Chi invites customers to sign up for their newsletter and earn a further 10% off via a special coupon.
6. Make Charitable Donations
Linking purchases to donations is an innovative way to increase average order values while also showcasing your brand’s commitment to social causes.
Customers today are increasingly looking to support businesses that contribute to the betterment of society.
By donating a portion of sales to a charity, especially for orders above a certain amount, you can encourage customers to spend more, knowing their purchase contributes to a good cause.
Example: KraveBeauty promises to donate a certain amount to support the Women’s Earth Alliance.
7. Implement a Decent Return Policy
A customer-friendly return policy is essential in building trust and encouraging larger purchases.
By offering hassle-free returns, you can let customers feel more confident in making purchases, especially of higher-value items.
This also reduces the perceived risk of online shopping, leading to increased customer confidence and a willingness to spend more.
Example: French Connection introduces the Returns Portal to provide a seamless experience.
8. Optimize Your Product Page Designs
The design of your product pages plays a pivotal role in influencing customer decisions.
A well-designed product page with an intuitive layout, appealing color scheme, and clear graphics can significantly enhance user experience and conversion rates.
By incorporating attractive product bundles, discounts, and varied pricing tiers, you can create a visual and psychological appeal that resonates with shoppers.
An optimized design, especially at checkout, is crucial as it can substantially increase the likelihood of converting browsers into buyers.
Example: Beekman 1802 provides a perfect example of a good product page design including all the essential elements.
🎉 Bonus Content: You can discover the top Shopify checkout customization apps to personalize your checkout experience without coding.
9. Personalize the Shopping Experience
Personalization in ecommerce is key to building customer loyalty and increasing order values.
By analyzing customer order histories and preferences, you can tailor the shopping experience to individual tastes.
Personalized marketing campaigns and product recommendations based on this data can significantly boost customer engagement and spending.
10. Create Time-Sensitive Offers
Time-sensitive offers create a sense of urgency that can effectively increase the average order value.
By introducing limited-time discounts or special promotions, you can motivate customers to make quicker and often larger purchases to capitalize on the deal.
This approach is particularly effective during slower business periods, encouraging customers to add more to their carts before the offer expires. It’s an excellent strategy for accelerating sales and increasing transaction values.
Example: Killstar presents a special section in which they present a limited time offer for a significant discount.
11. Provide Exceptional Customer Support
Decent customer support can significantly influence purchasing decisions.
Implementing tools like live chat provides immediate assistance, helping to resolve any doubts or questions customers might have.
This level of support not only improves the overall shopping experience but also helps establish confidence among customers, making them more likely to commit to higher-value purchases and thus increasing the average order value.
12. Offer Engaging Prizes/Rewards
Prizes & rewards are an innovative way to boost customer engagement and increase average order values.
By offering customers the chance to earn rewards based on their purchasing frequency or order value, you create an exciting incentive for them to shop more.
Example: Saint Bernard offers a special rewards programme that allows customers to earn 5% back once certain conditions are met.
How to Find Your Average Order Value Using Google Analytics 4 (GA4)?
Effective use of data analytics is a game-changer for ecomemerce businesses.
The tracking & reporting capabilities of Google Analytics 4 not only simplify monitoring Average Order Value but also help you make data-driven decisions.
For example, once you set up GA4 for your Shopify store with the right settings and optimize for ecommerce, you can track crucial ecommerce events along with important KPIs for your business.
To find your Average Order Value using GA4, you can create a custom exploration report and add the ‘Average purchase revenue’ metric to your report along with related dimensions.
If you want to see all the steps to creating a custom report, you can take a look at our detailed article on the Average Order Value in GA4.
Frequently Asked Questions about Average Order Value
Q: Why is average order value important for ecommerce businesses?
A: Average Order Value (AOV) is an important KPI for ecommerce businesses because it reflects the average spending per customer. A higher AOV indicates effective sales strategies, like selling higher-priced items or successful cross-selling.
Q: How do you measure AOV?
A: To see your average order value, you can divide your total revenue by the number of orders within a given period. Basically, the formula is: Total Revenue / Number of Orders = AOV.
Q: What affects average order value?
A: Several factors influence AOV, including marketing tactics, pricing strategies, customer segmentation, the range of delivery options, and the degree of customer loyalty.
Q: How can I increase my average order value?
A: You can increase your average order value by implementing some strategies as cross-selling, upselling, and more. Please refer to the dedicated section above for more details.
