When it comes to e-commerce, every penny that someone spends really does count. As costs for almost all aspects of running a business increase, getting more out of what you already have is an ideal way to increase your revenue.

One key metric that eCommerce businesses should seek to improve is Average Order Value (AOV). Increasing AOV can significantly impact your revenue and profitability without having to increase traffic to your website.

And if you’re spending money on advertising, increasing your average order value will mean that you get a better return on your advertising budget. For example, if you are running Google Ads or Meta Ads, by increasing your spend per person from, say £20 to £25, you will get £5 more for the same spend!

We explore six ways in which you can increase your average order value.

What is Average Order Value (AOV)

Average Order Value (AOV) is a critical e-commerce metric that measures the average amount spent each time a customer places an order on a website over a defined period.

How to calculate AOV

AOV is calculated by dividing total revenue by the number of orders. This metric is vital for understanding customer purchasing behaviour, guiding pricing strategies, marketing efforts, and website optimisation.

A higher AOV indicates that customers are spending more per transaction, which can lead to increased revenue and profitability. It helps businesses evaluate their marketing and pricing strategies' effectiveness, encouraging the optimisation of sales tactics to drive business growth.

Most eCommerce website builders, like Shopify, Magento and WooCommerce, will have AOV calculations built in. However, you can simply calculate your average order value by looking at your total purchase value divided by the number of customers who purchased over a given time frame.

Cross Selling: Enhance AOV through complementary products

Cross-selling is a sales technique used to encourage customers to purchase additional, complementary products or services related to what they are already buying.

This strategy not only aims to increase the transactional value but also enhances the customer experience by offering them products that add value to their primary purchase. When executed effectively, cross-selling can significantly boost your website's Average Order Value (AOV), leading to higher revenue and profitability.

Here’s a great example from Victoria Beckham Beauty. As an eyeliner is added to the basket, it recommends that I may also want to buy a mascara set.

Increase revenue through upselling

Upselling is a sales technique aimed at persuading customers to purchase a more expensive, upgraded, or premium version of the chosen item or other add-ons to make the sale more profitable. Unlike cross-selling, which focuses on additional products, upselling targets the enhancement of the product the customer is already committed to buying.

This strategy not only boosts AOV but also can significantly enhance customer satisfaction by providing them with a product that better meets their needs or desires.

Some examples of upselling :

Hospitality and Travel: When a customer books a standard room, propose an upgrade to a suite with a better view and additional amenities, highlighting the enhanced experience.
Subscription Services: For a user on a basic plan, suggest moving to a premium plan with more features, access to exclusive content, or additional user seats, stressing the value added by these features.

Creating Product Bundles to Increase Average Order Value

Offering bundled products at a slightly reduced price compared to purchasing items separately can tempt customers to spend more to take advantage of the deal. This strategy not only increases AOV but also helps move inventory faster.

Here’s a great example of bundling a product from Currys

Implementing a Minimum threshold for free shipping or discounts

We’ve all been tempted to spend more to take advantage of an offer that makes us feel that we are getting good value. Generally, purchasers don’t attach any value to delivery costs- therefore, free shipping is a powerful incentive for customers to increase their order size.

Set a minimum purchase amount that's slightly above your current AOV to qualify for free shipping or a discount. This encourages customers to add more items to their cart to reach the threshold. Alternatively, offering a discount for spending over a certain amount can also help to increase AOV - just be careful that you are not eating into your profits.

Loyalty Programmes And Rewards

Establishing a loyalty program that rewards customers for higher spending can motivate them to increase their order value. Offering points, discounts, or exclusive access to products/services can enhance customer loyalty and boost AOV.

A great example of this is Tesco Clubcard offers - each month, they release special offers to get more points when spending over a certain threshold on particular products. This can also be a helpful way to turn stock around to make room for what’s coming next.

Time Limited Offers - Create a Sense of Urgency

Time-sensitive promotions create a sense of urgency, encouraging customers to make larger purchases to take advantage of a deal before it expires. Flash sales, limited-time discounts, and seasonal offers can significantly impact your AOV.

By implementing these strategies, businesses can not only enhance their AOV but also improve customer satisfaction and loyalty. Remember, the key is to experiment with different approaches and measure their impact on your AOV to find what works best for your specific audience and market.

Looking for bespoke advice for your ecommerce business? Our marketing consultancy services are designed to help you not just to attract more customers but also increase revenue.

Six Ways to Increase Your Average Order Value