AOV is a KPI you should measure often. Let's look at what AOV is, why it's important, and 11 tips to make it rock.
Increasing revenue is critical for almost every retailer—large and small. For most, this means finding new ways to attract more customers.
But here’s the thing: Signing new customers is anywhere from 5 to 25 times more expensive than retaining your existing customers. (Your best customer is your existing customer.)
This shouldn’t be surprising, but it begs the question: How are you supposed to increase revenue without spending all your resources on attracting new customers?
Increase your average order value (AOV).
Let’s look at AOV, why it’s important, and how you can adjust the dials to crank it up to “record-breaking” levels.
Average order value is the average amount of money your customers are spending on a single order over a specific period.
Maximizing the amount your customers spend per order means you earn more revenue from the same number of customers. (Without increasing your marketing costs. 🤘)
To calculate average order, simply take the total revenue earned over a specific time and divide it by the total number of orders. For example, you earned a total of $3,500 in February, and 250 orders were placed. Your AOV would be $14. So your customers spent an average of $14 per order.
Why does AOV matter? A higher AOV increases overall ROI and ROAS. It also correlates strongly with profitability. After all, you’re earning more from each customer without increasing your customer acquisition cost (CAC).
But there’s more than that.
Your AOV informs your overall marketing and advertising strategy.
For example, an online store sells guitar strings priced at $10, $15, and $20, with an AOV of $13. From this, we can conclude two things about consumer behavior at this store. First, the lower-priced items represent the majority of sales. And second, customers do not buy multiple items. Understanding customer behavior can help in segmenting customers and modifying marketing strategies to increase AOV.
If the more expensive strings have higher margins, that means there is an opportunity to adjust the marketing for those products.
That’s why your business should monitor AOV often, once or twice a week, to identify what’s working (and what’s not) and then fine-tune your efforts.
Now that you know what AOV is and why it’s important to your business, it’s time to pump up the volume.
Grab your axe and plug in because we’re about to run through…
While these two concepts are different, they have a similar goal: Increase a higher average order value by encouraging customers to buy more. Use cross-selling to show shoppers complementary products that go along with their purchase. Use upselling to promote a more expensive version or a subscription. Using both will capitalize on customers’ ‘buy now’ mentality and subtly encourages them to spend more.
Cross-sells and upsells are more profitable when they’re driven by sales data. So, use your store’s historical sales data to place personalized product recommendations in the shopping cart. Another best practice is to add them to a ‘customers also bought’ or ‘most popular’ section on your site. (Like Free Fly Apparel does below). This helps your customers discover popular products they may not have seen otherwise. Personalized recommendations can significantly enhance customer lifetime value by encouraging repeat purchases and increasing average order value.
Customers love free shipping. (A lot!) That’s why offering free shipping with a threshold is a simple way to get customers to buy more. A UPS survey found that 52% of shoppers bought more just to qualify for free shipping.
Offering short-term discount codes or coupons create a sense of urgency and typically results in shoppers adding items to their cart. Offer additional savings such as free shipping or discounts on future purchases as part of the promotion. Utilizing effective marketing and pricing strategies can further enhance these promotions to maximize revenue from each customer transaction.
Most shoppers tend to feel guilty when making large purchases. However, you can maintain a high AOV by showing customers how much they’re saving per item. Making them feel like they’re getting a good deal on large orders reduces the chance that they’ll remove items or abandon their cart, thereby increasing the average dollar amount spent per order.
Bundles (package deals) quickly increase order value. That’s one reason they’re a favorite promotion among merchants. (In case you missed it, Shopify Plus’s Stephanie Hault made a prediction about bundles in a recent interview with Rebuy.)
Offering customers a ‘buy two get one free’ promo or a 25% discount on a t-shirt and pants bundle encourages people to buy more (and increase your AOV) while saving money. Calculating average order values can show how such promotions boost sales without increasing return rates.
Here’s Vanity Planet demonstrating a bundle on the product page.
Entice people to spend more by offering a GWP when they spend over a certain amount. This will encourage your shoppers to increase their order value so they receive the gift. It’s also a great way to build customer loyalty and even manage your inventory (buy X, get Y). Additionally, GWP can significantly enhance customer lifetime value by encouraging repeat purchases and fostering long-term loyalty. GWP offers really shine when placed in the shopping cart. They also make great post-purchase offers.
Establishing a loyalty program not only keeps customers loyal but also increases how much they spend. Ecommerce businesses can significantly benefit from loyalty programs by encouraging repeat purchases and increasing the average order value. Forty-three percent of customers spend more on brands they’re loyal to, so offering a 5% discount or free shipping on their next order when shoppers meet a certain threshold encourages people to make repeat purchases.
The majority of shoppers (72%) will buy products after reading positive reviews. Including positive customer reviews (like star ratings and testimonials) increases overall customer trust and the likelihood that your customer will spend more.
Liquid Death adds social proof via star ratings to every cross-sell.
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The checkout page doesn't have to be the end of the shopping journey. With Rebuy's Checkout Extensions, you can turn your checkout page into an AOV booster. Recommend high-margin items, exclusive discounts, and "last chance" offers. The checkout page is also a great place to move excess inventory. Have a look at more tips to boost AOV on the checkout page.
Our final tip comes from Jonathan and Daniel Snow from The Snow Agency
They offer another creative way to increase AOV: Add educational messaging directly into the shopping cart that highlights the benefit of adding the second SKU
In this case, The Snow Agency is seeing an increase to AOV of 110%. Simply by adding a Pro Tip to the cart. They're cranking it up to 11! 🔊
Test out this Pro Tip in your cart and see if you get similar results. We'd love to hear about it.
In the meantime, check out Jonathan Snow's original Twitter thread
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Your store’s AOV tells you a lot about how your store is performing. It also reveals a lot about your customers—including their purchase behaviors and which sales and marketing strategies they respond to. With a little planning and consistent calibration, you can turn up your AOV, improve sales performance, and keep the show rockin’ for your raving fans. Implementing an effective pricing strategy can further enhance your AOV and overall business health.
Looking for more ways to crank up your AOV and boost conversion rates? Try these savvy sales promo techniques. 👀
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