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Your online store is set up, your inventory is stocked, your sales are booming, but what about your average order value?

When it comes to increasing revenue for your ecommerce business, you may think the answer is finding more customers. While that certainly helps, there’s an additional thing that can help you increase revenue with the customers you already have.

Increasing your average order value (AOV).

What is Average Order Value?

Average order value is the average dollar amount a customer spends when placing an order on your store.

To calculate the average order value, take your total revenue for a period of time and the number of orders you received during that same time period. Divide the total revenue by the total number of orders. The dollar amount you get is the average order value for customers shopping from your store.

Importance of Understanding Your Average Order Value

Understanding AOV goes deeper than just understanding the money coming into your business. When you understand your average order value, you get to know how your customers are shopping and in turn, you’ll be able to identify ways to improve your sales and marketing strategies.

Knowing your customers’ buying habits helps you make informed decisions when it comes to scaling your profits.

For example, if you’re thinking about adding new products, launching a new marketing campaign or ad, or looking to run a new sale, knowing your AOV will give you a launching point and a better focus for your strategy.

7 Ways to Increase Average Order Value

There are several ways, changes and strategies you can employ to increase your store’s AOV. We’ll touch on seven effective ways you can start very quickly to increase your average order value.

1. Bundle Your Products

Call it what you want – product combos, product packs, duos, trios – take two or more products and sell them together as one. Bundling is an effective way to get customers to see the value of what you offer and purchase more than just a single product.

Take a cue from skincare and makeup brand Glossier. The brand has curated product sets and offered a slight discount when the sets are purchased as opposed to purchasing products individually. Glossier has also created a few limited edition sets that appeal to customers through a sense of urgency.

2. Order Minimums for Free Shipping

Digital Commerce 360 released several consumer surveys in 2019 in order to understand how consumers are shopping and what they prefer during the shopping experience.

They found that 68% of respondents said they didn’t make a purchase because free shipping was not offered. Consumers are looking for free shipping, and you can offer it.

We know shipping can get expensive, especially if you ship large, heavy items. In order to offset some of the upfront costs of shipping your customers see, you can roll the cost of shipping into the cost of your product. While it may raise prices of your product, your customer will value the perceived benefit of free or heavily discounted shipping and make the purchase.

And by offering free shipping only if a customer orders a certain dollar amount from your store, you’ll effectively increase your average order value while offering a service for your customer. It’s a win-win.

3. Product Discounts

Along the same vein of free shipping, consider offering a percentage or dollar discount if a customer orders over a certain amount. By setting a limit to what a customer has to reach in order to qualify for a discount, you’re offering a direct incentive for your customer to increase the order value of their cart so they can receive a discount.

4. First Time Offers

Here’s a good way to not only increase your average order value but gain new customers as well. First time offers are a popular way for brands to get customers in the door. Offering a discount like 15% off a first order provides an incentive for customers to give your product a try.

And if you’re not yet bundling your products, you can get a new customer to buy more than one item by offering the first time discount on a purchase over a certain dollar amount.

If a customer doesn’t hit that dollar amount, they won’t qualify for the discount, so customers are more likely to add more to their cart in order to receive the offer.

5. Cross-Sell and Upsell

Another good way to increase your average order value is to show your customers what you have to offer. If you’re selling toothbrushes but just recently added toothpaste to your product assortment, don’t expect your customers to know the product is there.

You can show your customers more than one product at a time through cross-selling and upselling. Add a frequently purchased together section to your product pages to give your customers the confidence that other people have also purchased more than one item from your store at a time.

Make sure to only cross-sell or upsell items that will only add value to your customer’s purchase. It’s best if you can showcase this secondary product almost as a piece of advice for your customers.

6. Create a Loyalty Program

Loyalty programs can both increase your average order value and the number of returning customers. Brands like H&M, Sephora and Starbucks have loyalty programs that offer points per purchase. The more a customer spends, the more points they earn within the brand. These points translate to discounts, free items, free shipping and more.

In fact, in a report from Stitch Labs, it was found that returning customers spend on average 120% more than new customers annually.

7. Personalize

Also known as segmenting, personalization is the targeting of certain customers based on factors such as their browsing history, purchase history or engagement history with your brand.

Using the tools you have, personalize your message and cross-selling based on which pages and products your customers have viewed on your site and based on their purchase history. For example, if you have a group of customers who have frequently purchased more than one type of product from your site, you’ll most likely have more success sending this group an email than sending the same email to all of your customers.

Overall, increasing your average order value will help your bottom line.Try these tips above and let us know how quickly your average order value increases!

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