Many eCommerce brands and store owners have a big focus on acquisition and CAC. Of course, acquisition and CAC as one of the focuses for growth absolutely matters. However, too many eCommerce companies and marketers place such a big emphasis on this metric over other metrics, where these other metrics can play a large role in determining your margin and revenue performance (for better or worse).
As we all know, paid ad channels can fluctuate (more than ever before), which affects your CAC performance and growth revenue targets. Hence, relying so heavily on paid media as a focus to do the job in regards to growth is not the single answer to success.
If you’re serious about growth, you have to get your ‘house in order’ and do better at controlling what you can control.
So, what is the key metric that more eCommerce marketers/brands need to pay attention to and can have more control over? Yep, it’s paying attention and working on improving your average order volume (AOV).
So, what is AOV exactly? AOV is the average dollar amount each customer spends on your online business during a given period. To calculate AOV, grab your total revenue for a specified period, say a month. Next, divide that amount by the number of customer purchases during that same period to get that period’s AOV.
AOV = Revenue Earned in Period/Number of Orders in Period
Simple enough, right? Well, chances are, you probably got all that figured out. Not to mention, if you use Shopify (and most CMS or eCommerce analytics platforms provide this), you should be able to easily access AOV metrics (and toggle between time periods to identify trends).
Now, you’re here reading this as you’re looking for some effective AOV growth strategies to increase your margins and revenue.
Before we dive right in, let’s look at some of the key reasons why you must stay on top of this crucial eCommerce KPI:
- It gives valuable insights into your customer’s behaviours and lets you see how much they spend on your products.
- Improving AOV positively impacts your revenue, profit, and overall eCommerce financial performance.
- When you increase your AOV, you improve your ability to offset CAC, and can accelerate your path to further profitability, which helps fuel growth faster - i.e. reinvest back into more marketing to capture and ramp up acquisition.
- Understanding and improving your AOV can help formulate better pricing strategies, CRO tactics, and marketing campaigns.
You’ve now got a pretty good idea that measuring this metric/KPI really matters when it comes to sustainable and scalable growth.
So without further ado, I’m excited and pumped for you to read these top strategies I’ve used (both for my own projects and with clients), and that I’ve seen in action from other top eCommerce brands, that you can learn from and consider implementing, or improving, to help with your store performance.
1. Provide Bundled Products and Deals
Ever wondered why McDonald’s ready-to-order bundles always do so well? Or perhaps why they continually market and position bundles? Well, bundling similar products together and offering them at great prices is a time-tested strategy that many direct-to-consumer household brands around the world have used over decades, and it’s no different in the world of modern-day eCommerce.
Incorporating bundles is a win-win for both customers and yourself as store owners/marketers, as bundles encourages customers to buy ‘more’(or add more to their cart) of your products as they’re getting more ‘bang for their buck’. In other words, customers know they’re getting a great deal, or they know that a bundled offering will provide more value for their purchase. Then, on the other hand, eCommerce brands win because they can sell ‘more’ as part of a single transaction, hence a higher AOV. The clear benefit for most cases with bundles for brands is that it results in better margins rather than selling items individually (where margins are typically tighter).
How product bundling works
- Bundling works by grouping similar products into one “item” and selling them all at once at a discount. These “bundled deals” are attractive since they let customers pay less to get more of what they want.
- There are several ways to execute a successful bundling strategy, including; offering a fixed promotional bundle, where customers can only purchase each product as a package. Or, you can do a mix-and-match where customers choose the products to include in their bundle. There are a few other bundling methods too worth considering, such as gift sets, BOGO (Buy One, Get One Free), cross-sell and upsell bundles, and others - to be honest, you can bundle almost anything, as long as it makes sense and customers perceive that it’s a great deal worth getting.
Quick Inspo: To see some epic product bundling in action by top brands, I put together this huge guide of awesome product bundling examples, which is full of inspiration and learnings that you can apply to your own store marketing/product strategy.
Why having bundles as part of your strategy increases your AOV
- You can motivate customers to spend more on your store by offering alluring bundle deals. If people feel like, or see an opportunity to get more for their money, they are more inclined to seriously consider it as part of their buying/decision-making process.
- Bundling also increases the sale of individual products, especially for products that aren’t as popular in terms of volume. Just by bundling low-selling products with popular ones can also improve single purchase counts. In fact, with many stores I’ve worked with, there are instances where a business sells more of a particular product in a bundle than as a standalone.
- Additionally, bundling is also great for products that don’t generate a healthy profit margin %. If you’re selling products that cost quite a bit to produce, and then add shipping on top of that, and then you also add the cost of marketing on top overall, it often doesn’t equate to a good profit-generating strategy. Hence, bundling any low-margin products is a great way to increase order value and produce better profits.
- In relation to profit margins, having bundles also help you with logistics/shipping costs since you’re shipping multiple products for a single order.
- Then finally, another key benefit of bundles is that you can also increase/return a better ROI figure from your paid media/marketing ads spend and costs. There are two things I mean by this - Firstly, especially when marketing to cold audiences on Facebook, you typically have to spend quite a bit in order to acquire a new customer (especially with higher CPMs across the board, regardless of what industry/category you’re in), which then affects your ROAS number. By having bundles, you may sell less than single items, but your margin should be greater, which in turn means you have more ‘wiggle-room’ to convert customers and generate a positive ROAS/ROI. For example, you’ll get a better ROAS from selling a $120 special offer bundle compared to selling a single item which costs $30, where CPMs already ranging on average from $20-$30 (if not more, depending on your niche). Without having to explain myself further, you can already work out the math with CPMs/ads network costs, and why bundles makes sense to run. Then secondly, you can market bundles to existing customers by email or even SMS marketing, which doesn’t cost much to run at all.
Quick tip: If you go to the Facebook Ads library and type in some of your favourite brands, there’s a very good chance they’re running bundle ads. If they aren’t right now, check back later during busy seasonal or special holiday campaigns, such as Christmas, Black Friday, or Easter.
2. Make Personalised Product Recommendations
When you personalise your buyer’s journey, you’re setting them up for a better shopping experience. And when you provide customers with great experiences that feel personalised and contextually make sense with their behaviour, they’ll have more reasons and become more likely, to purchase from you. So, one of the ways to personalise a customer’s journey is by offering tailored product recommendations based on products they’re viewing, add to their cart, or have some sort of engagement ‘behaviour’ (e.g. added to a wishlist).
Here are some great product recommendation examples in action.
A nice “you may also be interested in” section by LKSD.
I like the layout below from the team at Gymshark, who’s done a great job of including items that go well with the item (“wear with it”) that I’m viewing at the time, as well as recommending similar products that are close to the current item I’m viewing. The toggling between the two is slick as well.
And staying with the theme of fashion stores here (which is a category that always is forward-thinking when it comes to eCommerce and innovation), ASOS has done a great job with recommendations based on visitor behaviour and highlighting related items based on what item the visitor is browsing at the time.
Based on my browsing activity and the item I’m looking at when doing this example, I can see below three key sections - “what you might also like”, “buy the look”, and “recently viewed”. Really big fan of how ASOS have designed this experience, as it doesn’t feel intrusive, and it’s genuinely quite helpful knowing what items go best with others. Of course, as consumers, many would consider quickly adding another complementary item.
I have no doubt ASOS have done lots of testing over the years to try to increase their AOV, so as eCommerce marketers and any founders reading this, there are some good lessons and takeaways here to consider.
How product recommendations work (personalised and general)
- If you go to your favourite online store or marketplace and search for an item, you’re bound to see recommendations right below your search results, or even when you view various product pages (usually towards the bottom) - similar to the examples we’ve already highlighted. It’s a great way to show relevant products that are complementary and make contextual sense for the buyer at that particular time.
- In addition, having personalised product recommendations on your store is already a proven way to increase overall customer experience and conversions. This case study of Pushy’s increasing revenue by +158% proves just that (Barilliance is the software provider in this case).
- Personalised recommendations are tailored to each unique user’s behaviours, like search history, viewed products, or products previously added to their cart. Of course, any recommendations based on someone’s behaviour is more likely going to lead to an improved engagement/conversion result.
- In terms of platforms and tools to help serve product recommendations, there are a few that exist. A lot of these are referred to as product recommendation engines, which consist of AI-based algorithms that you implement on your website. If you’re looking for some recommendations, some of the best engines you can implement into your store include Barilliance, Qubit, Dynamic Yield and Kibo.
- Whilst these are great platform choices for those on Shopify and other eCommerce CMS’, I also really like Wiser AI, which is a really nice platform for AI-based recommendations, AI-upsells, and other smart personalisation and advanced targeting products.
The widgets they have are really clean (I love the UI), and installing, especially on Shopify, is fairly straightforward.
They have some great case studies, including this awesome case study on Last Object, an eCommerce brand that achieved a 24% increase in AOV, with attributed $20k+ in sales using this tool.
Just by installing a platform like this means that you can extract more from your existing customers you’ve worked hard to acquire, increase your CLTV, and even achieve a better ROI for new customer acquisition (especially if you’re primarily using paid channels as an acquisition source).
Why personalised product recommendations improve AOV
- Well, as mentioned, improving the buyer’s journey yields more conversions. Customers become more engaged when you make it easy to find the products they’re looking for, otherwise, they might go to a competitor or someplace else.
- You’ll also be more likely to upsell and cross-sell when providing tailored offers and products to customers based on their behaviour. Even if the recommendations are not as relevant at the moment of their purchasing decision process (i.e. they’re looking for something specific at that present time), the recommendations you serve up can very well remind customers of the items they’ve previously viewed or placed in their cart, which they can then consider as part of a future purchase.
- Plus, if they don’t take up your recommendations at the time on your site, you can send them automated email campaigns based on their viewing behaviour, which you can do in the likes of Klaviyo with their product suggestions feature.
- In addition, product recommendations can save your customers time looking for complementary add-ons.
3. Use 1-Click Pre-Purchase Upsell Experiences
Upselling is a marketing technique that is used to help increase average order value by persuading customers to add items (such as ‘add-ons’ for that particular item) or recommendations of product(s) that is similar to the original item that has been selected, to their existing cart items or as they begin their checkout.
What makes or breaks an upsell strategy, comes down one major factor - having a frictionless user experience for people to select add-ons, which go straight into the cart or as part of checkout.
That’s where 1-click upsell experiences come in. In my opinion, having a 1-click upsell experience is honestly one of the best investments you’ll make as a brand.
I mean, 1-click upsells can increase revenue by 35%. This stat alone hardly needs more convincing, right?
Just before we get into how it works, there are two 1-cdlick upsell experiences/strategies (and where they are triggered), which are:
- Pre-purchase upsells - before checkout
- Post-purchase upsells - after checkout
First, I’m going to show how 1-click pre-purchase upsells work and why it’s an effective strategy to adopt. Then, underneath tactic/strategy 4 (just below), I go into more detail about post-purchase upsell experiences.
How pre-purchase upsells operate
- In eCommerce, a 1-click upsell is an effective method to encourage add-on purchase decisions than your typical upsell experience (where typically there are a few more steps for people to add items to cart - such as going to another page to select ‘add to cart’).
- With the 1-click experience, products/offers that have been selected are immediately activated and placed into the cart - all in a single click.
- Just like with any upsell, the UX does matter as we’ve spoken about, but to increase your chances of an upsell happening, you have to make it worth your customer’s while. That’s when discounts and product deals come in, and they’re often enough to entice customers to choose the upsell.
A really nice example of a pre-purchase upsell experience is with this store DFTBA, where they managed to add an extra $6300 in 3 weeks by using this upsell software.
(image credit: Digismoothie)
Why 1-click pre-purchase upsells increase AOV
- Having this upsell experience makes it easy for customers to save time when all it takes is a single click of a button. It means your customers don’t have to visit multiple pages to add something - this is particularly crucial for mobile experiences (where most store traffic is from mobile).
- 1-click upsells, in conjunction with appealing offers and discounts often do the trick when convincing customers to spend more on upgrades or add-ons.
Note: In terms of tools/apps I recommend for pre-purchase upsells, check this next tactic for post-purchase, where I suggest software providers that can do both.
4. Post-purchase time-sensitive offers & discounted products
In conjunction with pre-purchase upsell strategies being a good strategy to adopt, a clever tactic to increase AOV that I’ve seen a lot more eCommerce stores adopt lately is post-purchase offers when someone is completing a transaction.
It’s an effective strategy to implement as selling to existing customers, and those who are in the mindset of purchasing (as they’ve just completed their initial transaction) is a great way to bump up AOV.
How the post-purchase upsell experience operates
- A post-purchase offer is normally a special deal that ‘pops up’ after a customer completes a transaction. They’re served a deal that is normally discounted and is related to the product(s) that they just bought.
- The UX should be a “1-click” experience where all the customer needs to do is simply accept the offer and pay instantly. Then, the product is simply added to the initial order for shipping.
What does a 1-click upsell experience look like exactly in action? Not every store adopts this tactic (although I highly recommend they should), so it’s understandable if you haven’t experienced one yourself before.
As mentioned just above, one of the best 1-click upsell apps available on the market for Shopify stores, Carthook. Here’s an amazing example of their app in action and what a 1-click upsell experience looks like after someone has made a purchase. Make sure to check out the link and article, which includes a great demo video of how it works and how to integrate Carthook into a Shopify store.
(image credit: Carthook)
Why it Improves AOV
- Having a 1-click post-purchase upsell is a frictionless experience and is definitely low-hanging fruit. The customer is ‘hot’ at this point - why? Because it’s fresh in the customer's mind that they’re making/made a purchase, so why not sweeten the deal for them? It’s easier to do it at this point than trying to upsell/cross-sell through other channels later (although, you should still do this too regardless).
- In relation to the previous sentence, it’s also a great way to boost revenue and AOV, without the extra effort - you can almost ‘set and forget’ after you’ve set it up. Just change up the deal/offers from time to time.
On another note, implementing this strategy also helps improve your CAC numbers if the source of the visitor/customer is from a paid channel like Facebook Ads. Just by having a customer add extra complementary products to that transaction process means a better overall return from the initial ad spend, because the total cart value becomes higher.
In case you’re not already convinced about 1-click upsells, just take a look at this amazing case study by the app Aftersell Feastables (a.k.a Mr Beast’s company) added 80k more bars (yes, more on top of original sales transactions) in 3 weeks.
(image credit: Aftersell)
What are the best pre-purchase and post-purchase apps, and how easy is the implementation process?
In terms of implementation, it depends on the CMS you use. If you have a custom CMS, there are 3rd party solutions out there by requiring some configuration and technical expertise. If you use Shopify, I’ve got some good news. There are some epic apps I’ve loved using. I recommend these three that I’ve had good success with.
- Carthook - Probably up there as one of the best in terms of UI customisation and how it seamlessly integrates with Shopify (and Shopify Plus). The pricing plan is pretty decent too, and definitely worth it if you do high-volume transactions. Has some nice analytics/insights, and you can create multiple funnels based on certain products and offers you want to run.
- Zipify - Another awesome option is from Zipify, who have a few apps for various eCommerce initiatives as part of their product suite. Great UX and targeting capabilities.
- Aftersell - The other main recommendation I have that’s worth checking is Aftersell, which has some awesome features, and huge clientele - including the likes of Miami Heat (fav basketball team), Good American and Feastables (as mentioned in the case study above).
- Then finally, the other awesome option to consider, which is mentioned a couple of times in this guide, is CandyRack. They’ve got some amazing reviews, and the UI modal experience is something, in particular, I’m a big fan of.
Reminder: Also, as a heads up, the apps for Shopify I shared are all cost-effective, which means that you should easily get an ROI from paying for the software with the extra sales from the 1-click experience.
5. Highlight “Buy Now, Pay Later” Options for High-Value Products
Customers have access to more financing options now than ever, and it’s now become a universal expectation that eCommerce stores have a BNPL (Buy Now, Pay Later) payment option for any customers that want to split payments.
This is a particularly key factor for any eCommerce stores that have product lines that include expensive products or premium items. By offering customers an opportunity to BNPL an item, it can help increase conversion rates or sales, compared to not having this as an option.
Implementing BNPL as a conversion strategy has already been battle-tested - just check out all these case studies of retailers using Afterpay.
How BNPL operates (at a high-level)
- A “Buy Now, Pay Later” incentive and plans are as it sounds. You let customers purchase your products with an upfront downpayment, and customers later pay instalments (typically over 4 separate payments every 1-2 weeks) to a financing service provider. The good thing here for eCommerce brands is that it helps with cashflow - the only cost in most cases is typically a small monthly subscription free + % of sales. It can add up for large stores doing high-volume orders/transactions, but typically you get better conversion rates and overall ROI. Just take a look at the likes of Afterpay and their case studies to read why many brands benefit from their program. In addition, BNPL options are a great option and makes the most sense for high-value purchases (items above $100).
- There are many BNPL solution providers out there, as I’m sure you already know, like the most popular ones being Klarna, Afterpay, and Sezzle. Each service has its unique requirements before you can integrate them into your store, so you’ll need to dive deep into their fees structure and policies before choosing.
- After integrating a BNPL option into your store, let visitors know immediately, as it’s now become a universal expectation that stores have a BNPL option as part of checkout. You can place it on your homepage to let customers know right off the bat, as well as place these logos on product and checkout pages. Additionally, include the logos in your email automation campaigns to remind people that it’s an option.
- Also, a few BNPL solutions offer simple instalments with interest-free repayments. This perk entices even more customers to spend more if they’re confident of paying within the certain time period setup by the BNPL and their repayment terms.
Here are two nice product page examples (lots of top examples I put together in this guide) with the logos nicely positioned with supporting copy that highlights how much customers can pay over a defined period.
Intu wellness using Afterpay.
And here’s an example of a product page from Great Jones using BNPL provider Affirm.
Why BNPL programs helps with AOV
- Adding BNPL payments as an option to your online store can help motivate your customers to make purchasing decisions faster and help with improving your conversion rates. It’s a no-brainer to consider since you’re offering an easy solution for customers to choose their preferred flexible payment options.
- By making it easier and more accessible for customers to purchase your higher-valued/expensive products, not only does with help with conv. rates as we know, but also it ultimately impacts AOV positively because they’re more inclined to get higher-valued items because they can over a period of time.
6. Set Up Discount Thresholds or Offer a Gift
You see this strategy often in eCommerce, and there’s a good reason as to why. Implementing discount thresholds is one fairly easy way to get customers to increase their total cart value. Offering a good deal when a customer hits a specific purchase “threshold” can be a surefire way to convince them to add more to their carts.
As for adding free gifts as part of a purchase, it follows the same principle as discounts, as it’s another incentive type to try persuade visitors to add more to their carts.
How discount thresholds and adding gifts work
- You can offer amount-based discounts in several ways, and the way you’ll do it might depend on your business or the products you’re selling. Regardless, the idea behind why discounts are effective remains the same. Yet, when it comes to AOV and discounts, setting up a threshold amount that customers must hit to avail of a deal or a discount is even more effective (and is better for your margins).
- Of course, customers have to be motivated to hit thresholds, so make sure that they feel like they’re getting a good deal when add enough to the cart and hit your specified threshold. Otherwise, increasing their cart value wouldn’t make sense for them if it’s not ‘too beneficial’. Consider volume discounting and/or tiered pricing discounting strategies are closely associated with this discounting thresholds.
- When it comes to adding gift incentives, that’s pretty much self-explanatory. However, one piece of advice I would say to remember though is that the gift itself has to be perceived as of great value. For example, if you’re selling a $100 item and want to offer a free gift instead of a discount, the gift, in terms of value, should be perceived to customers as greater than a discount value that you may set (or have across your site as an offer), for example, 10% off. In this particular example, the free gift should be seen as more than $10 in value if you’re doing a gift with a $100 item.
--> Discount threshold examples
At the time I published this guide, Shein was running a special Christmas promotion, where they utilised discounting thresholds, where they incentivised customers who end up spending more, would in turn get a larger discount off their order.
Another good example by Birchbox where they offer 40% off and even free shipping when you spend a decent amount on the site, in this case it was $125. Combining both incentives together is certainly compelling for anyone visiting.
(image credit: Debutify)
I really think this combination in particular is something more eCommerce marketers and online stores should be considering. Not necessarily site-wide like this example, but for special promotions on certain products.
--> Free gifts example
Big fans of an Aussie company I like called Pet Circle, where they’ve added a BOGO deal combined with a ‘free’ add-on gift for one of their popular dog food products.
By the way, Pet Circle is a really great store to keep an eye on for innovation and best practices for driving conversions.
Why discount thresholds and gifts help AOV
- Threshold discounts are a practical way you can increase AOV and aligns with having great offers/deals. The more enticing you make your deals, the more you can encourage customers to hit a set threshold amount. Keep this going, and you’ll see a considerable boost in AOV.
- With many consumers taking deals and coupons into account before jumping in to make a purchase (check out these stats), it means with a threshold strategy in place, you can provide customers with an option to take advantage of getting a discount if they meet a certain amount you set. Then, of course, that means customers/visitors will add more to their overall cart value.
- Providing amount-based discounts not only increases AOV, but it also attracts and encourages customers who may come across your brand for the first time when they’re actively searching for a solution/product. If they see they see they can receive a discount on something if they spend ‘X’ amount with your store, there’s a chance you can get them over the line.
7. Set Up a Free Shipping Threshold
In relation to discount thresholds, offering free shipping is one of the best ways to drive more conversions. It’s one thing to offer this perk to your visitors, but just offering free shipping all year round as a standardised offer (i.e. not with thresholds or special promotional deals) means you most likely have to raise your prices, and we know that’s not ideal in an already existing competitive landscape.
One clever way to provide free shipping without eating too much in your margins is to set threshold amounts that requires customers to reach a certain cart value in order to qualify for free delivery/shipping.
How shipping thresholds work
- 80% of consumers expect free shipping thresholds for more products they add to their cart when shopping online (and 66% expect shipping fees removed generally, regardless of the amount). Many eCommerce sites are willing to absorb shipping costs just to provide a great customer experience (and increase customer shopping carts).
- Simply put, in terms of how it works (although it’s pretty self-explanatory), you offer a complete slash in shipping costs for orders above a certain amount. Like discounting strategies, you’ll have to ensure that your threshold offer isn’t too low, which affects your margins.
- Finding the sweet spot for your threshold is critical, and it depends on quite a few factors, but basically, in simple terms, you’d want your threshold not to be too low or too high. Too high of a threshold can discourage customers and increase cart abandonment.
A great example of prompting a ‘free shipping threshold’ to convince customers to add more to their cart is Rare Beauty.
As you can quickly see here below, they’ve absolutely nailed the UX, CRO psychology triggers and tactics to try to convince and get visitors to add more to receive free shipping. Honestly, it’s one of the best I’ve seen, and I really rate the whole site in terms of CRO and UX.
Even these examples in their cart experience with “choose free samples” and “we think you’ll also like”, are just superbly done. I talk about product recommendations and free samples as tactics further down in this guide.
Why it Improves AOV
- As mentioned above, with the 80% stat, people are more inclined (and encouraged) to buy more products if you offer the option to waive shipping fees. It helps encourage customers to increase their cart size if they know they can get more product(s) without having to pay for the shipping fee. It’s a little psychology trick thinking they’re getting a better deal (which, in many cases, they are), and in return, you get higher margins and AOV.
- Offering a free shipping threshold is also, in many ways, a universal expectation for customers now, as so many stores offer this incentive. Having it as an option means you’ll meet customer expectations (especially new customers), driving more loyalty and repeat business. Plus, if other stores adopt this tactic for a good reason (as clearly, it’s something that works), so it’s certainly something to consider if you currently don’t have a free shipping threshold strategy in place.
8. Use Time-Sensitive Offers for Scarcity and Urgency
We all know the power and effectiveness of creating a sense of urgency with scarcity and how it is a timeless tactic that you can incorporate into your marketing to boost sales. For those who may not know reading this guide, the idea behind scarcity/urgency is simple; if something has demand but is short in supply or limited in supply (as it may be a special offer), you can expect people to place more value on it and a fear of missing out (FOMO).
How it Works
- When people come across great offers, and they know the product well or can relate/understand the offer, they naturally place more emphasis on the value of the product offering, such as limited-time deals, special discounts or limited stock - hence, the scarcer it becomes because they know the deal won’t last forever, the FOMO effect kicks in. When FOMO is in the works, it creates a level of urgency in the decision-making thought process of visitors, which is then hopefully enough to convince people to add products to the cart and convert. That’s why you often see brands you subscribe to constantly sharing awesome deals (if you’ve signed up for a few of your favourite brand's newsletters, you know exactly what I mean).
- A popular approach of FOMO is by using time-sensitive offers. There are several ways you can do this, such as putting up time-limited sales, like a Black Friday sale or perhaps a 48-hour weekend flash sale. Or, you can implement limited-stock product offers where you place the number of stock left on a product page.
--> “Last chance” - urgency email
Here’s a nice email marketing example from Bellroy (one of my favourite brands).
(image credit: Really good emails)
--> End of season sale - urgency for promo before sale runs out
This is a nice ‘end of season’ sale example (which you see a lot in fashion especially) by The Iconic.
--> “Limited edition” special items - scarcity in action
Here’s a nice example of ‘limited edition’ items found on the ‘shop all’ by one of my favourite eCommerce store references, Frank Body (seriously, these guys are amazing). They are very impressive overall when it comes to CRO, and this reference below is a smart way of highlighting scarcity with an offer, in this case being higher-value kits, which as we know helps increase AOV.
There are many other examples/references I can show you, but you definitely would have seen others around - make sure to note/take screenshots of ideas overtime that you can add to your own swipe file.
Why it urgency and scarcity offers are effective
- Using time-sensitive offers creates a sense of urgency, increasing your product’s perceived demand. It gives customers the impression that your time-limited promo is more valuable and exclusive. Pair that with discount strategies and see your AOV soar throughout your promotions.
- When induced with urgency, buyers tend to fear missing out on opportunities. If your product has current demand, all you’ll probably need is to attach it to a time-sensitive promotion. People avoid the feeling of regret, especially when they see others jumping on the hype train.
- Scarcity also lets you engage with your audience in a brand-new way. If you have a unique story or background behind the reason for the shortage, you’re likely to capture attention. Just think about all the attention those “limited edition” products get.
9. Add Customer Loyalty Program Incentives to Encourage More Purchases
If you want more loyal customers, you need to set up (if you haven’t already) a loyalty and rewards program and incentivise your repeat buyers with awesome perks and deals.
However, you may be wondering how loyalty/rewards programs ties in with AOV. Well, I’m going to share the reasons as to how and why.
How loyalty/rewards programs operate (and how it helps AOV)
- A loyalty and rewards program, as we know, is a marketing initiative that helps increase loyalty and lifetime customer value, where you typically reward your most loyal customers based on specific requirements or events you set - for example, rewarding those who frequently purchase from your store or do your other desired actions, such as referring their friends.
- There are different kinds of loyalty and rewards programs you can use, such as a point-based system where customers collect points for every purchase. Or you can even offer tiered rewards that increase every time customers hit a price range. Make sure to check the below resource guide I wrote with top loyalty/rewards programs by top brands.
- In relation to AOV and perks/rewards, you can offer your customers special deals, such as limited-time offers on higher-valued products, discounts on special product bundles, or perhaps BOGO (Buy One, Get One Free) deals exclusively for those signed up to loyalty/rewards program. These are only a few examples of what you can offer, which is of reasonable price and value - and of course, higher prices and bundled products lead to higher AOVs. Additionally, loyal fans already love and know the quality of your products, so there’s a higher chance these customers actually convert on the deals/offers you provide.
So, who does a great job with running these types of programs to encourage customers to make more repeat sales, with incentives to do more high-value transactions?
I actually put together this large guide of loyalty and rewards programs examples, which feature some of the best brands nailing their loyalty strategy.
Out of the above loyalty/rewards programs examples guide I put together, two particular favourites of mine you need to check out are and.
As you can see with both, the more you spend, the more points you receive - plus, when you get more points, you unlock more perks/rewards. Naturally, customers are more inclined to spend more if they know they can collect more points.
Why running a customer loyalty program can attribute to improving AOV
- As you know by now, loyalty programs promote loyalty (it’s right there in the name). By letting everyone in your audience know that becoming a loyal customer has some sweet perks, like special deals on expensive products, you’re more likely to encourage them to opt-in and engage further with your brand.
- Having a program like this in place helps encourage more engagement. The more engaged and raving customers you have that love your products, the likelihood of them spending more again on previous purchases, but also an increased likelihood that they will convert on higher-value transaction offers/products (such as bundle deals).
- Plus, as an added bonus, customers that enjoy engaging with your brand are more likely to put up a good word through referrals and user-generated content. You’ll attract more public reviews, which in turn attracts more customers, which in turn increases your chances of others taking up on offers you provide.
10. Strategic design and product placement of higher-valued items on your site
Yes, how you design your site and how your products are displayed to visitors across various pages certainly plays a role when it comes to first impressions, engagement/overall user experience and how visitors perceive your brand.
This strategy in my view is low-hanging fruit, and it’s something that doesn’t cost much investment aside from time, and can provide some quick wins when it comes to persuading visitors to add more to their carts.
This falls into the realm of conversion rate optimisation, but improving your conversion rates is one thing, and improving your conversion rates for higher-valued items being added to the cart, is another thing all together, that can really fuel growth for an eCommerce brand.
How the strategic design and placement of products can help with conversions
How you design and display your products can play a role in how users engage with your site in terms of brand and product exploration. Some ideas of what this looks like in action include:
- Highlight your best sellers above the fold on the homepage, or even certain collection pages
- Display trending products on specific pages - homepage, products, collection pages, and even blogs
- Highlight top-rated products across various elements across the site
- Sort items on collection pages with factors that play in favour of high-valued items, whether it be by product reviews, by price, specific product types (e.g. bundles, special offers, limited-edition, etc.)
- Highlight great-value bundles/offers on the homepage before single items
- Display high-valued products with a special deal on the homepage and other converting pages - whether it be free shipping, BOGO, or limited edition
- Or, even strategically display products that you know have a good chance of having upsells added to carts (i.e. recommended/complementary products).
You can be strategic about design in conjunction with special promotions, just like this reference I’m about to show you.
--> Gift sets (i.e. bundles) alongside a special promo
The team at Bite Toothpastes ran a promotional deal during the Christmas period to show off their gifts and sets as the main CTA above the fold. And like we’ve talked about already, they’re doing this as they know gifts, sets, and bundles are a great way to increase AOV.
--> Top products/packs display on homepage as first items you see
With a site I found called Lil Bucks, what they’ve done on their homepage underneath the head fold, is that they have this section where they highlight their bundle packs, alongside their individual USPs, as well as stating a headline saying “Fan Favourite Bundles”.
This is a great example of what I mean by strategic design and product placement. As a first time visitor, I already know what their top items are, and for me to experience the most value, I should be considering one of the packs (rather than just going for a single item).
Here’s a quick gif of what they’ve (chances are they will change their homepage layout, so I did a quick screenshare).
--> Top-rated reviews and packs just below the fold
Another quick example here is from Buoy, where they highlight their top-rated packs. Smart placement, and also reinforces trust and credibility to new visitors that people are loving their products.
--> High-valued items/products first in order for collections
Then the final quick reference I wanted to share with strategic order of products and placements on a collection page is from Character (one of the coolest stores I’ve seen - tell me one that’s a better design for selling tools haha).
When you go onto their ‘tools’ collection page, you will see the head fold, and then underneath, you will see in order their kits and bundles coming first, and then their single items.
By the way, these filters are automatically here and nothing selected from my end.
Plus, smart idea of including a discount promo for their two primary products.
What I’ve stated in this example reference isn’t anything genius, but it certainly helps persuade visitors to consider which product(s) will help solve their particular need.
Plus, this order renders nicely on mobile, with their kits/bundles coming first.
Why strategic design and placements on your site can influence AOV
- A key reason why this strategy proves to be effective is especially tied to new visitors and new potential customers. As we’ve spoken about and emphasised, suppose someone is yet to experience your brand and the product you have to offer. In that case, you have an opportunity to guide them to purchase something that you know they’ll extract further value from - for example, a welcome kit/bundle, rather than just highlighting a single item.
- Not only welcome kits/bundles, but also highlighting best-sellers (and other key filters such as ratings, ‘most popular’, etc.) front and centre for people to clearly see, increases the odds that consumers may buy multiple of them - especially if you order your best sellers by the most product reviews/ratings.
11. Automated remarketing via email marketing & ads of complementary products based on previous purchase data (or viewed products)
I’ve spoken a lot in this guide about AOV for both new visitors and returning customers, but this particular strategy I’m referring to existing customer behaviour. Remarketing ads (which can also be dynamic) on FB/IG, as well as automated remarketing emails, can play a significant role in getting customers to add more to their carts in the future (which in turn also helps increase their overall CLTV).
How automated remarketing campaigns can work
- Run remarketing ads to a customer who’s recently made a purchase, where you can share other products related to the items they’ve bought, whether it be complementary items or perhaps any special deals that are currently in your store.
- For Shopify and Klaviyo users, there’s an integration between Facebook Ads and Klaviyo worth looking into, where you can sync your post-purchase email flow audience with a dedicated FB ads audience.
- For those not on Shopify or Klaviyom, there are plenty of email marketing tools that can integrate with your CMS or customer CRM, where you can set parameters and campaigns based on certain behaviour and segments.
The good thing about implementing this strategy is that you don’t need a big budget to do this, as the audience size is usually (unless you're a big store) on the small side. Then, you can set parameters of when users see ads depending on when they made the purchase (e.g. target recent customers <7 days).
Why automated remarketing campaigns can be effective for AOV
- Having automated remarketing campaigns based on certain purchasing behaviour is a great way to increase AOV without having to run expensive campaigns, or ‘work harder’. Plus, it’s also effective as you’re promoting/highlighting products or offers that make contextual sense (and feels personalised) for customers, which in turn may persuade them to come back and spend.
- When you run remarketing campaigns shortly after their purchase, you’re already top of mind and in most cases, customers have quickly experienced the value and ‘aha’ moments with your product(s), so it’s a good time to remind them what else you have that they may like.
- Also, definitely consider ads in conjunction with your automated email sequences. Whilst you will normally have your usual post-purchase emails firing, running accompanying ads is a great way to highlight to users who have just purchased your products that you have other great products/deals on offer. It’s also a cost-effective way to stay top of mind and ensure you reach them with another touch point.
12. Incorporate add-to-cart modal pop-ups/sidebars with recommended add-ons - “customers also bought” or “frequently bought together”
Earlier in the guide, we talked about recommended personalised add-ons based on customer activity, but now we’re talking about the cart/checkout experience. This can be an effective strategy that I’ve seen some large brands use, but it’s crucial to get the UX right on desktop and mobile. A big thing I have seen many stores tend to do is that when you want to add something to cart, you get redirected to the cart page to check out. This isn’t the best user experience, especially when users are on mobile and when you want to ensure the user is actually ready to go to cart. If they go straight to the cart after clicking on one product, then you lose the chance for them to explore the rest of the store (and hopefully add more products to their cart).
How it Works
- Modals can be an effective UX strategy to keep the user focused on that product and make sure they see what other products are available in the store before they check out.
- This is where some of the big stores shine with their modal popups. You can add “customers also bought” (i.e. popular products) or “complementary product” recommendations.
Here are some awesome references by a couple of amazing brands seeing this tactic in action.
--> Sidebar/pop-ups experience w/ ‘quick add’ recommendation
A great reference I came across when I talked and highlighted some amazing collection page examples, that has done an amazing job with recommended adds-on as part of the modal add-to-cart experience is Blueland.
When you hover over a product, you will a “quick add” button.
After you press “quick add”, you then get a nice modal/sidebar, with then showing the product has been added to the cart successfully, with then a recommend add-on at the bottom.
Such a beautiful user experience that Blueland has built - big raving fan over here from an eCommerce marketer’s point of view.
--> Modal pop-up - slick ‘add to cart’ experience
Earlier we talked about pre-purchase upsells with a great Shopify app called CandyRack. In this modal example, an online store called Docking Drawer implemented the app to create this slick modal experience where a visitor has browsed and picked this item, selected “add item to cart”, and then receives this modal pop-up with other popular add-ons. Love the simplicity, and this sort of experience works really well on mobile.
--> “Frequently viewed/bought together”
This is nicely done by Sephora, where they’ve added “frequently viewed together” in the cart section.
Interestingly enough, when I came across this Sephora example, I also noticed that they puss their “beauty pass” rewards program, which I think is a clever upsell tactic to get people to sign up to the program and encourage existing and new customers to add more and get more points. Kudos to the team at Sephora, really smart work here.
Why it Improves AOV
- It helps make customers aware that there are other products that may suit them that they can easily add to their cart.
- It’s a good UX for product discovery that makes it simple for visitors. It can also be seen as a reminder to visitors that there are relevant items that they may have already checked out across the store.
13. Highlight free samples when you spend “X” amount
I believe this is such a good strategy to implement for eCommerce brands that so many don’t do. It applies to many niches, especially in the skincare, beauty, gardening, floral, food, and beverage industries. To be honest, it’s probably applicable for 90% of niches.
Free samples are a great way to highlight to visitors/customers that you have other awesome items that may interest them.
How implementing a “free samples” strategy would work
- You can offer free samples when a customer makes a purchase of a certain amount. For example, if you’re a beauty brand, customers can receive “4 free samples with purchases over $100+”.
- One of my favourite stores in this niche here in Australia is Adore Beauty, where they offer 2 free samples and even free express shipping with purchases over $50.
Why it can potentially improve AOV
- When you set a certain threshold, it can motivate visitors to add some extra items to the cart, which helps with AOV. Plus, giving away free samples helps customers see what other awesome items you have on offer, which helps encourage repeat purchases and overall CLTV.
14. Create highly-targeted product campaigns for existing CLTV/AOV-based customers and audiences (Segmentation)
What’s one of the easiest segments of audiences you can target with more offerings and campaigns to purchase more than last time? You guessed it… existing customers.
As I spoke about at the start of this guide, I spoke about eCommerce business becoming really focused on CAC that they forget the other metrics that matter, such as AOV. Then when it does come to AOV as a metric they’re measuring, what I then personally find happens from experience is that many eCommerce businesses become focused on the success of AOV as a metric being tied to acquiring new customers - i.e. measuring AOV from first-time purchases and transactions.
However, brands also need to focus on existing customers and AOV. As a brand, we measure and pay attention to CLTV of our customers, but we also want to see whether or not customers are buying more product from your store on average.
Again, this tactic may not seem like anything new, but the real question is whether or not your focusing on it. This is where there you can find some awesome wins happening because your existing customers already love you, especially if they’ve bought multiple times, so why not make them a focus to provide more valuable offers and product recommendations that they can’t resist?
How creating targeted CLTV/AOV-based audiences works
- Within your reporting, you can easily segment and find customer lists who have purchased multiple items or have made multiple purchases over a given period. You can find these audiences (such as repeat purchases) and other key metrics within your Shopify dashboard.
- You can send targeted campaigns via email automation, SMS, and paid ad campaigns with personalised messaging and promo campaigns to encourage more purchases. As mentioned a bit earlier in this post, Klaviyo makes it really easy to integrate Shopify audience behaviour, including segments that you define, such as frequent purchases, time since last purchases, average value per order, and more.
Why running targeted CLTV/AOV-based audiences is worth your time
- There are two primary reasons why this particular marketing strategy works - first, existing engaged customers who love your brand/product(s) are naturally more inclined to purchase again. Then secondly, it comes down to personalisation and ensuring your hitting the right message and offer, at the right time.
- The beautiful thing about tools and platforms, such as the Klaviyo, Shopify and Facebook Ads reference I’ve mentioned a couple of times, is that these tools provide and empower you with the capabilities and information to make informed decisions of when to send communications to these audiences, such as special deals and promotions. A quick example here would be to set up an automated email campaign/reminder for those who have purchased an existing product at least 2x, and then sending them a special offer (such as a discount) to purchase again within a certain time-period (e.g. in the next 7 days). There are so many options and combinations you can do, and it can be a seriously effective strategy when it comes to driving more purchase behaviour without spending more (or at the very least, not spending big).
15. Splash social proof everywhere
You may have noticed if you've read any of my other articles/guides that I go on about the importance of social proof. I believe it’s something that every store needs to do an absolutely amazing job at (not just the bare minimum) because it affects everything from conversion rates and consumer confidence to make a purchase, as well as AOV.
How you can add various elements to accelerate trust and credibility to influence positive customer behaviour (with some ideas)
You already know how social proof works, and adding elements isn’t hard. To help you get inspired, I’m going to share some tactics and ways to incorporate social proof that can help with AOV.
- Star ratings on ‘product cards’ and pages
- Customer testimonials/reviews
- Embedded UGC media - such as IG feeds or TikTok videos
- Influencer quotes and/or product UGC types videos (IG Reels/TikTok-style videos)
- Reviews/snippets from publications
- Industry/niche-specific quotes/testimonials
- FOMO pop-ups
Plus, there are many other trust/credibility elements that you can add/style. I’m sure you’ve seen other ways brands incorporate trust and proof elements.
Just quickly, here are two really nice examples I’ve come across before, to get your juices flowing for ideas and elements that you can add to your site.
--> Nav bar & above fold
This is nicely done by a flower/florist company based in Australia called Bloomeroo.
--> Video UGC embeds
I actually mentioned this reference by Duradry in my product pages examples guide, and it’s just too good not to share here and highlight too. You can’t get more compelling content/media like this to help with AOV and conversion rates.
Quick tip: Also, I wrote a detailed piece on really good social proof software providers worth considering to help you quickly build key design elements to highlight trust and credibility (e.g. media/video embeds, etc).
Why special proof plays a role in increasing AOV
- Reassures customers that many other people love the products they’ve bought from the brand and received great value.
- Once consumers have trust and can see the credibility, then naturally, they’re inclined to make the required purchases. A good way to use trust/credibility elements is with “starter kits” or “bundles”, which I spoke about at the start of the article. The great thing about this strategy is that bundles and starter kits are just multiple products tied together, so it’s an easy way to bump up AOV.
16. Highlight product protection policies & product warranties (if you sell expensive or delicate items)
This is a tactic that is more applicable for brands that sell expensive items that are over $300+, like jewellery.
Adding product protection policies may seem obvious at first, but if you sell expensive items, the question is whether or not your protection policies can be easily seen/found.
This also applies to big retailers who have insurance plans in place to reassure customers that if something gets lost in shipping, damaged, or just something goes wrong, this can help consumers know that if they were to make a big purchase, there are protection plans in place.
If you need more convincing as to why protection policies matter, well, in a case study by Cover genius, they’ve even seen brands have an AOV increase of 62% - that’s a pretty significant figure.
Also, for a popular software solution called Extend, they have a few case studies, including this one with a brand called Blendjet, which exprienced a 11% improved conversion rate site-wide with having Extend installed.
How protection policies/warranties work
- Adding protection policies to your store is straightforward, it’s just a matter of where you highlight/communicate them to ensure consumer confidence.
For example, Felix Gray (an eyewear/glasses company) offers a one year manufacturer warranty, which they highlight on this particular product page.
If you’re looking for potential solutions of apps/software that can help with implementing policies/warranties, and you’re on Shopify, I came across these potential providers that could potetnially help with your use case - Extend, Shipinsure, and Navidium.
Note: I don’t have experience in this area, nor do I advocate for any of these, just simply solutions I’ve have found online that are potentially worth looking into.
Why product protection policies/warranties may play a role in helping AOV
- Increases consumer confidence when purchasing, especially if it’s expensive products.
- Once customers know that protection policies are part of your offerings, then there’s a likelihood they will come back again, which in turn increases CLTV over time, and, hopefully, future purchases that are of high value.
17. Have a great return and shipping policy (or some sort of guarantee/free trial offer)
This is also related to the above with product protection policies and warranties, and it’s the sort of thing that most store owners overlook in terms of importance, but shipping and returns policies are certainly a consideration for many consumers when browsing. It might seem like a ‘standard’ requirement, but it can also be a key USP for your business.
How it Works
- We already know the importance of highlighting the free shipping threshold, but having an easy way for visitors to see policies in regards to shipping, in particular returns, can be advantageous for your business.
- If you have a free returns policy, highlight it on the product descriptions and pages. This is certainly something that is a conversion trigger and plays a role in the decision-making process for consumers . The other main thing to ensure you do is have a “Delivery/Shipping & Returns” link within the footer. Again, it’s just about making it clear to visitors.
- Depending on your business, you can also turn your Returns into a special offering that you can use to improve conversion rates. Koala, a mattress company here in Australia that experienced rapid growth in its early years, has done a wonderful job promoting its “120 Night Trial” as part of its USPs. It’s in many ways like a return policy, but angled in a way where there’s no risk for the customer to give it a try and return it for free, as you can see below. It’s a great landing page which you can learn from:
- Great copy highlighting the trial
- The layout of USPs of the trial
- Warranties section
They also include the trial period on various pages.
Another example here is from ASOS, where they include “Free Returns” and a link to their T&Cs if visitors want to find out more. Just knowing there are free returns, closely underneath the “add to bag” button, helps ensure people who are considering making a particular purchase know that if a product they purchase doesn’t fit (in this case, with fashion), then they can return it for free.
Why highlighting return policies and guarantees (if you can provide one) can assist with improving AOV
- It helps with consumer confidence knowing that if something goes wrong in shipping, or perhaps they aren’t satisfied with the product, or it wasn’t what they expected it to be, they can return it at no cost. In turn, this confidence means that consumers are likely to spend more/spend as they wish.
- Similar to the likes of what Koala has done, you can use warranties as a USP for your business - e.g. Koala’s 120 nights guarantee. Another quick example is what you see in electronics, where many merchants provide a multi-year warranty on high-valued items (e.g. TV’s).
- By adding it to your product descriptions, or at least somewhere clearly labelled on the page like the above examples (or making it obvious in your store design), it can help improve conversion rates, in particular for those checking out with multiple items or those ordering something of high value.
18. Remind users of your key USPs (outside of specific products), such as brand differentiators, customer service, and fast shipping
In relation to the three previous initiatives I spoke about (trust/credibility elements and policies), it’s just as vital to clearly communicate and make obvious what your key USPs are and why visitors should care.
There’s a good chance you’re already doing a pretty good job at this, the question I’m really asking is, what areas can you communicate further, or make clearer/stand out?
I like how these guys have done it below.
Brand USPs by Longwknd. Takes up good real-estate on the homepage as you scroll down.
Here’s another great example of Direct2florist, which has scattered their primary business USPs (and good use of key elements like reviews/ratings, etc) across the main homepage, such as “same day flowers”. They’ve even stated awards when you scroll down the page.
As another quick example, here’s an interesting angle/tactic that is quite clever if you’re in a competitive niche - and this nicely relates to the next tactic I talk about soon.
The Good Guys, which sells items such as TVs, fridges, electronics and so much more (based in Australia), uses their phone number contact as a marketing angle/USP to encourage customers to call.
They say “Pay less by phone” - a really smart way to get people on the phone, where their customer service team negotiates with potential customers in order to help close a sale.
It totally makes sense to do this in their particular case, because they sell expensive/high-value items, which typically entails a longer buyer-decision process from consumers.
Now, I’m not saying do this per se, plus this would be resource intensive if you’re a smaller store, but what I do like about this is that they know how important customer service is within their competitive landscape. So, they use their customer support as a key USP for people to contact to try and get people across the line.
How and why reminding key USPs matters
- I think it’s important to remember that consumers are constantly browsing your potential competition and have a short attention span. Visitors will quickly move on if they’re not compelled, or it’s not clear to them, about your primary differentiators or USPs. The key takeaway to remember is to ensure your main USPs stand out!
19. Highlight your customer service support, such as having live chat or a phone number (e.g. toll-free number) - and make sure it’s clear/easily found
This isn’t necessarily a genius tactic by any means. Still, it certainly can’t be estimated in terms of importance for customers who may need assistance, especially if you’re products are expensive/high-value. Just take a look at the The Good Guys reference I talked about above.
How and why highlighting customer support matters
I mean, highlighting how customers can contact you should be simple enough, right? Well yes, however, you’d be surprised by the amount of stores that I’ve come across over the years that don’t do a good job at this. So, it’s best to keep thing important factors in mind that I believe matter more than ever before in this digital age.
- Consumers love great customer service experiences, and it certainly plays a role in terms of customer satisfaction and repeat purchase behaviour. In fact, they don’t just love it, consumers in expect it - that means faster reply times, not waiting in queues for too long, and ensure their questions are answered in a timely manner.
- One of the best methods (and best touchpoints) of communicating with customers faster whilst they are on the site browsing is by installing a live chat solution. There are numerous options out there (almost too many). Having a live chat tool on your site really helps with streamlining any customer queries.
- If you don’t have the resources to reply in a timely manner, then consider looking into some eCommerce chatbot or automated live chat solutions.
- In conjunction with live chat, just ensuring that it stands out how customers can contact you, whether it be via a phone number (e.g. toll-free) or even via a contacts form, helps ease anxiety or resistance points for visitors.
- The key thing to remember is making it clear in terms of how visitors can contact your store or customer service team - so that includes live chat pop-ups, phone number in the footer and/or main navigation menu, on product pages, collection pages, content/blog pages, etc.
Important tip: Make sure to clearly state your customer contact support hours, so you can set expectations to those who are wanting to contact you, and ensures them that you’ll get back to their query when you can.
⚡ Frequently Asked Questions ⚡
How do you calculate average order value, and why is it one of the key metrics to focus on?
Calculating AOV is pretty straightforward. It’s simply knowing the revenue you generated over a certain period, divided by the number of orders you received during that period. For example, if your business brings in $25,000 over a 30-day period, and the total number of orders was 200, then your AOV is $125. Most store owners measure this by month (i.e. every 30 days) as well as by 6-month periods, but you can determine and choose what date periods you like. If you’re a store that doesn’t generate a high volume of orders, it makes sense to keep checking by month or every 6-months. For larger stores that generate at least a 1000 sales per week, I’d be checking it every week. In terms of why it’s such a key metric to focus on, it’s simple in my eyes. Increasing AOV leads to better profit margins and ROI from your marketing activities. As an example, if your customer acquisition cost (CAC) from ads is around $50 for selling products with an average checkout of $80 from visitors, that’s an ROI/ROAS of 1.6x. If you can find ways to use strategies that you can control on your site to bring that up to $100 AOV, your ads are generating 2x returns, which means you can scale your acquisition capacity. On top of that, if you can increase average order value, it has positive effects on other key metrics you need to keep a close eye on, such as customer lifetime value.
What are the major marketing and pricing strategies that eCommerce stores need to focus on when it comes to increasing average order value?
If you want to increase revenue and the total value of what customers check out with, then many of the strategies I’ve talked about in this guide will help you. In terms of pricing strategy specifically, three tactics certainly help with encouraging visitors to add more to their cart and checkout that have worked really well over the years with clients I work with. They are; offering custom bundles, an offer for waiving shipping fees with “X” amount, and buy now, pay later (BNPL) apps. If you incorporate these three tactics and continually run tests for improvements, you will see awesome results, such as an increase in gross profit.
Does running a customer loyalty/rewards program help increase eCommerce average order value?
Yes, it does. In fact, there are many studies on this that have found that the top percentile of loyal segments of customer bases not only order more than the rest, but also add more products to their carts over time, which means AOV goes up. After all, customer loyalty programs and AOV being closely tied together makes sense, considering that customers who keep coming back time and time again love your products, so adding incentives as part of your program will encourage them to buy more. It’s a win for AOV, a win for CLTV, and a win for your bottom line.
What types of promotion campaigns can you run to encourage higher-valued checkouts?
There are a few promotion campaign strategies and tests you can run, and I’m going to share the favourites that have worked for me in the past and even now with clients. The first one is scarcity offers, such as “limited time” or “48-hour flash sales”. These have always been really great for performance. The second one is 1-click upsells after someone makes a transaction. I’ve seen this work for a client who got 10-15% successful upsells after the purchase for products that are decently priced, so I certainly encourage you to look into installing an app for post-purchase upsells. Then the other main strategy is having special promotions and incentives for your loyal database of customers, whether it be through a loyalty/rewards program or segmented email marketing promotions.
What's the best source of traffic that doesn't hurt customer acquisition costs, but can increase average order value?
There are two sources that you should look into if you haven’t done these well already, which are affiliates and referrals. Why doesn’t it hurt your CAC, and how can it increase AOV? Well, in regards to CAC, it’s traffic coming from existing people that recommend your products or send a link to a product page, which doesn’t cost anything. Then, regarding how it impacts AOV, it’s because visitors are coming to your site based on a recommendation from a source they can trust, whether it’s a friend they know or a blog post they’ve read. From my experience with some of the stores I work with, these affiliate and referral sources of traffic have ended up being segments that spend more on their first transaction compared to other sources such as ads channels. Not to mention, many of them tend to be quite sticky, which helps with CLTV.