In order to keep the referrals coming, set up a graduated program where patients get a bigger reward when they reach certain referral milestones. Give your patients a chance to earn a free fitness item after their fifth referral. Make the incentives fun, wellness related and valuable to match the value of patients bringing in new patients. In order to boost your store’s average order value, you need to convince your customers to increase the number of items in their shopping carts before they checkout. Check out the tips below to learn how you can actually encourage your customers to spend more on your online store.
The key benefit of increasing average order value is that you make more money from each transaction. Thus, making your store more profitable. Often, when a customer shops online, they’ll only buy exactly what they’re looking for. However, with some of the average order value strategies that we’ll share in this article, you’ll learn how to present more great products to customers to generate more sales from each order. In this article, you’ll learn what average order value is and how to increase it. So, let’s dive into it.
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- Average Order Value (AOV) is defined as the average dollar amount that a customer spends when placing an order, either via a conventional website or a mobile application. AOV is one of the most important metrics in eCommerce. It can provide insights into your customers’ buying behavior and preferences.
- Sharing your Reel to both your feed and the Explore Page is an incredible way to increase your reach way beyond your followers — and possibly go viral doing so! There are so many creative ways you can use Instagram Reels for your business! If you’re in need of some inspo to get started, check out 15 Reels ideas here.
- Jun 14, 2016 Average Order Value = Total Revenue / Number of Orders. Besides the fact that higher AOV raises overall revenue, another reason to support customers increasing their order value is by reducing your order execution cost. 6 Tips to Increase Your AOV Create a Threshold For Free Shipping.
- 10 Ways to Increase Average Order Value
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What is Average Order Value?
6 Useful Tips How To Boost Your Average Order Value Formula
Average order value (AOV) is the average dollar amount a customer spends when placing an order on your store.
You can calculate your store’s average order value by dividing your store’s total revenue by the number of orders taken. This formula is the easiest way to calculate it. Keep in mind that it doesn’t take into account marketing costs.
Benefits of Increasing Average Order Value
- Increase revenue and profit: When the average order value rises, you’ll see an increase in revenue and profit. The more you earn per order, the more your business makes altogether. If you can see a positive change in average order value, you’ll be able to reinvest more money into your business’ growth and pocket more too.
- Cost-effective marketing return: If you spend $20 on marketing and the average order value is only $50, you haven’t earned much after you deduct product costs and taxes. However, as you see a positive change in average order value, your marketing spend becomes more profitable. Thus, why it’s crucial to have an average order value strategy in place.
- Sell more inventory: This doesn’t apply to dropshippers. However, if you own stock for a brick and mortar store or even an online store, you can sell more of your inventory by executing a proper average order value plan. By making changes to see a boost in AOV, you’ll be able to sell more of the products you carry.
10 Ways to Increase Average Order Value
1. Offer a Free Shipping Threshold
The easiest way to increase the average order value is to offer a free shipping threshold. For example, free shipping on all orders over $75.
Once you’ve calculated your average order value, add 30% to it. For example, if your average order value is $100, with the 30% increase, it becomes $130. This new number is what you’ll set your free shipping threshold at – for example, free shipping on all orders over $130.Aaron Zakowski found that a 30% increase to your average order value worked best as a free shipping threshold.
You can also add a notification when customers check out and their purchase doesn’t add up to the free shipping threshold. By having this notification, you’ll be able to help increase average order value. You can easily do this using apps from the Shopify App Store.
2. Give Product Discounts
While it seems counterintuitive, providing discounts can help change your average order value. However, when offering discounts, be sure to add a minimum spend. For example, get $10 off when you spend $75 or more.
Some brands also have volume discounts. This is when specific order value brackets result in a particular discount. For example, get $10 off when you spend $75, get $15 off when you spend $100, and get $25 off when you spend $150 or more.
3. Provide Bundle Deals
Providing customers with bundle deals can affect average order value. For example, your offer might be a buy two and get a free gift or buy three and get a fourth free promotion.
As products on AliExpress are affordable, you’ll need to ensure you choose free gifts that won’t impact your product margins too much. For example, if you sell women’s products, your free gift might be a $2 bracelet. If you offer a buy three get a fourth free deal, you need to make sure you price your products in a way that you can afford to cover the costs of the fourth while still making more profit from the bundle deal.
4. Give a Gift Card
Gift cards are a great way to increase average order value, even when giving a small one away for free. For example, if your retail price is $35 or higher, you can offer a free $5 gift card for a customer to use with their next purchase. Since they have a gift card, they’ll be more likely to spend again.
However, you need to make sure that your product prices are high enough that your gift card doesn’t result in a free purchase for your customer, as that would cause a profit loss. Also, remember to make sure that customers know they can’t use the gift card on the current purchase or shipping (if you offer free + shipping on certain products).
Lastly, offering gift cards encourages future purchases, which helps reduce future ad spend. It’s a great bonus to give customers when sales are seasonally lower. Don’t offer this deal year-round as it can lose its effectiveness over time.
Keep in mind that even if you don’t give a free $5 gift card, gift cards still help increase average order value as most don’t spend the full card or end up paying much more than their card provides them.
You can offer a gift card to customers directly from the Shopify admin.
5. Execute First Time Offers
If you’re a relatively new brand, under six months old, most of your customers will be first-time visitors. Offering deals to new visitors can help increase average order value. You can provide this particular audience with a one-time discount when they buy multiples of a popular product or exclusive bundle deals just for people who haven’t shopped with you before.
If your customer orders several items and loves what they receive, it’ll be even easier to entice them to shop again. They’ll already have experienced shopping on your site first hand. Thus, you have a better chance of turning them into repeat customers.
6. Show Cross-sell And Up-sell Items
A cross-sell is an item that a customer may like that’s different from the product they’re viewing. For example, if your customer is looking at a dress, you might have a recommended product of a pair of earrings that pair with it.
An excellent idea for cross-selling is to add the products the model is wearing to the recommended products. For example, if the product photo is selling a tank top, you might add the skirt as a cross-sell. Since the customer sees the two together, they’ll be more likely to purchase them in combination.
An up-sell is when you encourage customers to buy more expensive items or additions to increase average order value or profit. For example, if you sell pillows, you might up-sell with comforter sets, a duvet, or other items.
An effective way to upsell products is to sell more of the same product. For example, if you sell essential oils, you would upsell by recommending the same scent and a couple of other popular scents to the customer. The reality is, people are likely to buy more of what they love, especially if it’s likely to run out at some point. This works well for beauty products as well.
7. Have a Loyalty Program
Having a loyalty program in place can help increase average order value. Each time a customer orders, they can earn points or discounts just for being loyal customers.
The benefit of having a loyalty program is that it helps build brand evangelists, customers who keep coming back to your website to shop. According toThe ROI from Marketing to Existing Customers report, 40% of a store’s revenue comes from repeat customers. Only 8% of all store visitors are repeat customers. Repeat customers are more likely to buy more from your store than people who are unfamiliar with your brand.
By encouraging repeat sales, you help create a more massive fanbase who will likely order larger quantities of products. They’re also cheaper to advertise to via retargeting, social media, or email marketing. Thus, these evangelists help increase average order value.
8. Offer Time-Sensitive Deals
You can offer a time–sensitive deal to help increase average order value. For example, you might have a 48–hour deal where someone gets a free gift or a special discount when they’ve ordered a specific quantity of products.
While it might not increase the average order value for a long duration, urgency helps increase conversions. Time–sensitive deals are great for boosting average order value during slower periods. And they’re relatively easy to execute. You can promote them on social media or include a banner notification on your website.
9. Show Savings With Bulk Orders
People love saving money. However, when your customers order large quantities, they sometimes feel guilty about it. You can maintain a high average order value from a customer through the display of overall savings. This can prevent abandoned carts or cart modifications, which can lower the amount they planned to buy.
However, if you show customers how much money they’re saving per item with each addition, they’ll feel like they’re scoring a deal. Showing people the monetary savings they get from buying multiple items can help increase average order value, even if it acts as a preventative measure.
10. Creating A Game Or A Contest
The food industry often creates games or contests to increase average order value. For example, McDonald’s has the Monopoly Game, where customers are incentivized to order more frequently and upgrade their meals to get more game pieces. With the game pieces, they have a chance of winning big prizes.
In ecommerce, you can also run contests where customers have a chance to win prizes when they buy often. You can let customers know that if they’ve made a purchase, they enter the contest where they can win one of several prize packs. Then, you can search the Shopify App store for the contest app that works best for your campaign.
Conclusion
Calculating your average order value can help you understand how well your store is performing. After you’ve calculated your average order value, you can try executing some of the strategies in this article to increase it. Whether you create bundled deals or create a free shipping threshold, you’ll be on track to seeing higher order volume on your online store. So are you ready to see those sales rise? Then, it’s time to get started on implementing some new changes.
Want to Learn More?
What have you implemented to help increase average order value? What’s your average order value goal for your store? Let us know in the comments!
The Average Order Value (AOV) is the average money amount that a customer spends an order on your Prestashop website with you.
The average order value, with the conversion rate (CR) & revenue per visit (RPP), is the most important value a Prestashop-based online store needs to increase to be profitable. Want to calculate the gross revenue? It's here: Traffic x Conversion Rate x Average Order Value.
Although growing AOV doesn't factor into your profit margins or gross profit, merchants should first try to improve it, which is the process through which each consumer makes more money. It's a very important KPI (Key performance Indicator) for any business, including Prestashop E-Commerce Stores, that informs you on your pricing strategies.
Increase this value to a point where it's the maximum it can be for your business based on your own data and industry benchmarks, then let it work on its own while you continue to focus on other important areas of boosting sales and revenue like acquiring new customers and increasing the customer lifetime value of eCommerce businesses.
What you have: You launch an eCommerce business to consistently market and sell your products.
What you do: You try many ways to get more traffic. For example: spending thousands of dollars on Google Ads or Facebook Ads, focus much of your energy on writing articles, and optimizing your website.
In fact: more traffic does not equal more success.
Increasing Average Order Value does not cost money, but increasing traffic does. Encourage your customers to buy more expensive products and more products!
You know What does Average Order Value mean. Next questions: How to calculate AOV and especially How to increase the average order value?
This Prestashop tutorial will show you 6 tips to increase your AOV easily.
You will learn about:
I. How to Calculate Average Order Value?
Here is the simple formula to calculate the average order value: Average Order Value = Total Revenue / Number of orders.
Let's look at a hypothetical situation in which Carol, a beautiful woman from Paris, spent £6,000 on a total of 3 orders. This means that, on average, Carol spent £2000 for each purchase from your store.
Another example:
Let’s say that on the day of the week - Tuesday, you have a total of 2000 orders. If your site's sales were £100,000, that meaning the AOV for Tuesday is £50. Since there's a transaction cost related to each order, increasing your AOV may be a thanks to drive direct revenue and increase your profits.
II. 6 Highly-Effective Tips to Increase AOV.
6 Useful Tips How To Boost Your Average Order Value Cost
Here is the most important question: How to increase Average Order Value? There are 6 tips that may increase your average order value, and they are essentially different ways to get your customers to check out with larger carts.
1. Upsell or Cross-sell to Increase Basket Size.
What is Cross-selling: You invite customers to buy a related or a complementary product to make a profitable sale. It is a marketing strategy.
In contrast, upselling is when you promote more expensive items or other add-ons. They are pretty magical. They both focus on providing additional value to customers by adding more products to the shopping cart.
Here’s how Jimmy (Atalanta) uses OPCS module to deploy a cross-sell tactic on his Prestashop website. This Cross-Selling tip increases Conversion rate & the AOV by up to 15%.
2. Setup Quantity Discounts.
Setting up a quantity discount is easy on Prestashop. Quantity Discounts (Volume-based pricing) also is a very handy tip. You could see it not only from the physical store but also from the online store. A customer buys a lot at once to get a lower price per unit.
Might someone be tempted by an offer for 3 snack bags for the price of 1.
£5 each or 3 for £10?
First, quantity discounts help you to close your first deal. And because you continuously want to beat the competition, you want a specific customer who seeks the lowest price. So, this is an excellent way to go to get the customer and a large order – for a smaller margin.
It is a strategy that provides discounts for purchasing a product or service in high volumes.
There are many formulas companies use to promote buying larger quantities.
For example, on orders over £100 or 10 per cent on orders over £200, you might give 5 percent off. That may be either a discount based on a percentage, or a monetary discount.
You should create some quantity discounts for Manufacturer Specific Price Lists:
You can not only generate the quantity discounts by using the ConvertWhale module but also display the promotion message on the product page, with a timer countdown to make it clear that you are offering the quantity discounts.
Perfect your volume-based pricing strategy to make it profitable for every single deal.
3. Make Better Product Recommendations.
Shows the smartest product recommendations to your product pages or checkout page.
Your store sells some slow-moving stock, provide recommendations based on the product's attributes and price chosen by the buyer or your own business priorities. Believe me - this strategy will boost your sales in seconds!
4. Next Order Coupon.
This unique way of after-sales marketing will give your customers with dynamically generated coupon codes while they place the orders.
By this way, you encourage them to buy more by providing offer codes to their next order. A lot of online businesses have succeeded with this strategy and you should adopt it now.
ConvertWhale module allows you to define a discount amount as a percentage of the order that triggers the coupon or when the voucher will be sent: while a customer places an order or after order completed.
5. Set Order Minimums for Free Shipping.
You can also increase the average transaction value by incentivizing customers to spend a minimum amount for free shipping.
Your offers can be viewed on the sales page or on the checkout page to ensure customers don't forget to purchase additional products that suit the requirements.
Ex: providing free shipping on any orders above £100 or providing just free shipping on those goods that is simple to set up in Prestashop through ConvertWhale.
6. Sell more to loyalty customer.
Creating a customer loyalty program helps you increase the average order value and motivate your customers to keep coming back to your online store.
Loyalty customers spend 70% more than new customers as a result of they know your brand and believe in you.
And last but not least: They tell their friends regarding positive experiences. Word-of-mouth marketing is simpler at driving new customers than advertising. Let's start to set up a campaign to loyal customers.
New groups for loyalty customer
- Create new groups: Back Office → Shop Parameters → Customer Settings → Groups.
- You may want to set up a discount for this group, but this option is not recommended because it doesn't make a profitable sale.
On the next step: Reward loyal customers by providing combined discounts on selected lines or give away free products for a limited period of time with multiple purchases (using ConvertWhale).
Select customers for these group
- Option A: Select some specific customers based on their purchase history.
- Option B - the better way: Sell the membership subscriptions and select these customers who bought the subscriptions into the loyalty customer groups.
ChargeMe helps you power a subscription business to increase customer loyalty & focus on Customer Retention on your Prestashop website for secondly. You can easily download ChargeMe from Prestashop Addons Official page or from PrestaSOO App Store.
Reward Loyalty Customers
Now you have a list of the most valuable customers. Give them some best offers, and you'll be able to expect to visualize the Average Order Value increase considerably. ConvertWhale allows you to apply the Volume-based pricing for customer groups.
6 Useful Tips How To Boost Your Average Order Value Calculation
Conclusion.
The key point: focus on your customers.
Learn 2 fly 3clout games. Rather than prioritizing client acquisition, you ought to specialize in ways that encourage each loyalty client and prospective customers to pay extra money on your online website.