How to Increase Your Average Order Value

Most eCommerce leaders believe that average order value (AOV) is the top key performance indicator (KPI) to measure. It’s getting more expensive to attract customers to sites; so, once customers are there and interested in buying something, it is crucial to maximize the value of their purchase. What exactly is AOV, and how can brands increase it? 

What is Average Order Value? 

Average order value for eCommerce is calculated by dividing the total amount of revenue accrued from your site and/or app by the number of orders placed. For example, if your online business made $50,000 in revenue from 1,000 orders last month, your AOV would be $50.  

Why is AOV such an important metric?  

With an estimated 12 million to 24 million eCommerce sites worldwide, there is no question that the competition for consumers’ attention is high. With that, customer acquisition costs are also rising. So, when you successfully get a customer to your site or app, you want to make sure you’re doing everything you can to increase the value of their order. Merchandising products that complement the main product that shoppers are browsing to increase the value of each transaction — and their (loyalty) lifetime value.  

So, what can you do to start increasing your AOV? Here are some pro tips:  

Create order minimums 

Whether you’re offering free shipping or any other kind of perk, it’s a good idea to create an order minimum. Offering free shipping makes merchants far more competitive, with 75 percent of consumers even expecting it, but it comes at a significant cost. Adding a minimum keeps your orders profitable even in the face of perks and discounts. 

Here is how Amazon does order minimums:  

Or beauty brand Ulta, which offers shipping minimums and gifts with purchase: 

Implementing order minimums also reduces cart abandonment rates, boosts profit margins, and drives customer lifetime value — so give it a try! 

Bundle. Bundle. Bundle. 

Bundling is the strategy of selling various products together at a combined price. Bundling might seem like an obvious way to boost AOV, but there are many ways to do it (and different benefits to each). Here are some strategies to consider: 

• Bundling your fast-selling items with slow-moving ones. This is a great way to upsell your most popular items as well as clear out inventory that might not be selling as well. 
• Pre-selected bundles vs. custom bundles. Some customers like to choose their own adventure, while others prefer to save the time and energy of creating their own bundle. Both are an easy way to increase your overall AOV. 

• New product bundling. Kill two birds with one stone by bundling your new launches with complementary products in your inventory. Not only will you see increases in your overall AOV, but your buyer will also be compelled to try your latest releases. 

Add a customer loyalty program 

Once you’ve drawn customers to your site, create incentives for them to keep coming back, which is where customer loyalty programs come into play. Customers enrolled in a loyalty program spend on average 12%-18% more than their non-enrolled counterparts, according to Accenture. So, investing in a loyalty program is a great way to optimize your efforts. If you’re just getting started, here are some steps to consider:  

• Leverage data intelligence and strategy to evaluate your existing customers. What is the current AOV? What are your customers buying and what is the frequency of their purchases? How satisfied are they with the company overall? If you have the data and strategy in-place to answer these questions—you can create a loyalty program that is tailored to your customer’s needs. 
• Pick a customer loyalty program that works for your business. Based on the information you’ve collected, decide what kind of program will be most attractive to your customers. For instance,  loyalty members might want to collect points that are then cashed in for gifts (think Sephora’s Beauty Insider program). Purpose-driven customers might want their spending to go towards a certain cause. Other customers might prefer getting exclusive access to certain products or experiences?  REI’s co-op membership, for example, gives members discounts on rentals and nationwide adventures:  

• Stay up on the trends. Consumer preferences on how they like to be rewarded change over time. For example, in 2018, when research firm Gartner asked people about their top five customer loyalty benefits, only 37 percent of respondents answered “freebies.” But in 2022, 52 this number jumped to 52 percent. 

Make sure to seize all upselling and cross-channel sales opportunities 

We’ve covered order minimums, bundling, and loyalty programs—but there are an infinite number of unexpected ways to increase your average order value. Choosing the best strategies for your business starts with comprehensive research and consumer data. For example, if you go onto Home Depot’s website to buy a drill, you will also be presented with accessories that pair well with your drill: 

Or. . .you can look at what other customers are buying: 

You can even browse related searches and products:  

Suggestions like this are user-friendly, make it easy to upsell, and utilize a cross-channel data and analytics strategy centered on the voice of Home Depot’s customers. In other words, upselling like this only works if you have a deep understanding of what your customers are buying, what they’re buying it with, and what they could be looking for in future purchases. 

Take a Connected Content approach 

A successful approach to maximizing average order volume means creating and sharing several optimized content assets rapidly. For instance, successful bundling means coordinating more personalized visual assets with the right offers at the right time. A successful loyalty program means creating compelling sign-up offers and publishing them at strategic points in the customer journey. None of this happens without the creation and publishing of content assets. Connected Content is an approach for creating and sharing content assets in nimble fashion. Its components include a content taxonomy (reusable assets for each audience); a repository to reuse assets at scale across all channels, platforms; and governance to manage everything across your enterprise brand experience.  

Contact Investis Digital 

If increasing average order value is a priority for your business, we can help you get there. Click here to learn more about our approach to commerce growth or book a meeting with one of our experts.