Increase Your AOV By 30-40% Instantly

When operating your websites, there are many ways to increase your profits and alter your costs using online marketing tools and strategies. By using the strategies and tools discussed in this blog, you will be able to increase your average order value tremendously. Optimizing the metrics provided by your online advertisements and order sizes versus costs will allow you to implement these strategies effectively. Increasing order sizes and using marketing strategies that directly correlate to your customers spending habits can make all the difference. By analyzing your customers behavior when shopping, appropriate strategies can be implemented, persuading them to buy, and spend more, which increases profits.

What Is Your Average Order Value and How to Calculate it?

An average Order Value (AOV) is a way for retailers and businesses to measure their customers' purchasing behaviors. Knowing your customer’s purchasing habits and/or behaviors can help you understand what makes your products sell, how you can improve your imprint on a customer’s mind, and appeal to them more. Essentially, the AOV tracks the average dollar amount that a customer spends each time they place an order. Similar to a majority of other key metrics, AOVs can be tracked over any period of time, although most companies prefer to find that monitoring the AOV as a moving monthly average proves to be the most beneficial. Tracking the AOV monthly allows for you to react swiftly to any discrepancies with how much you are spending on each customer rather than reacting after the damage has been done. Calculating the average order value is simple, it consists of dividing total revenue by the total number of orders in a period, for example, a month. Let’s look at some specific numbers; let’s say your business sells $30,000 in a total of 1,100 orders during the month of August. To calculate your average order value, divide the sales by the number of orders $30,000/1,050 = $28.57 Your AOV for the month of August would be $28.57. Although this number is calculated monthly, you could also calculate weekly or biweekly to get a more short-term average. Calculating this number weekly or biweekly is useful if you change your pricing and marketing strategies often, as it shows results based on a shorter period, more specific to an immediate change in strategies.

The Significance of Knowing Your Average Order Value

Knowing, and being able to analyze your company’s average order value will help you evaluate and alter your pricing strategy. Online marketing provides the metrics needed to measure the AOV of your business, allowing you to accurately measure the value of individual customers, rather than measuring pricing and sales as a whole. Knowing how to analyze the AOVs and use them to your advantage can aid in goal setting, and strategy enhancement, and help you evaluate how effective your business strategies are working. A high AOV directly correlates to an improvement in profit and revenue growth for a company. When using your AOV statistics efficiently, a window into the shopping behaviors of your customers becomes apparent. Using the AOVs of your customers can help you plan pricing and marketing strategies, then, in turn, improve the value of each individual order. Although there are always transaction costs associated with each order, the customer is already buying from your online store. Improving your AOV and utilizing marketing and pricing strategies can reduce these transaction costs, significantly increase revenues, and in turn, achieve greater profitability.

How To Increase Your Average Order Value

When improving your average order value, there are many strategies you can implement that will encourage your customer to spend more, by buying more expensive products, or more products. Optimizing your AOV can be achieved through all stages of making a sale. It is possible to use these statistics to encourage customers to purchase additional products related to products they already have in their cart. Offering products to customers that relate to the product they are already buying is a way to increase your AOV significantly. For example, offering a mouse and mousepad for when a customer purchases a monitor for their computer. Offering accessories like these appeals to a customer, as these products are not that expensive and are related to what they are already purchasing. Along with this strategy, you can also prompt customers to consider more expensive items, or a best-selling alternative by placing a bigger selection of products in front of them, rather than a singular one. These items should be displayed in a way that motivates a more expensive purchase or with direct incentives such as free shipping over a certain purchase size. For example, offering free shipping if $50 or more is spent on one purchase. A few other ways to increase your AOV include cross-selling, upselling, discounts, or volume discounts. Cross-selling is a common strategy used to bundle products together, which offer an additional benefit to the customer. This is a strategy often used in the fast-food industry where workers will ask “Would you like a drink with that?”. Upselling, on the other hand, is persuading a customer to upgrade their purchase. This could include buying a more expensive or upgraded version of something. Although the customer may not need a better version of a product, the fact that this product is advertised as ‘better’ or of more value, appeals to the customer. Offering discounts and volume discounts are useful tools to get customers to spend more on an order each time they visit your website. A discount appeals to most, if not all consumers. For example, offering 10% off your next purchase with a purchase of $50 can push a customer to end up spending $50, even if they only planned to spend $40. This equates to a $10 increase in purchase size. Although the 10% off is added to their next order, to make the most of that discount, they may possibly spend more, to get more value. Volume discounts, on the other hand, include offering products at a discounted price if more of the product is purchased. For example, selling 10 items for the price of 9. Increasing your average order value is a key element in growing your business and increasing profits. The strategies discussed in this blog will provide necessary strategies that will help you double, or even triple your AOV. Implementation of these strategies depends on the attention to detail of your metrics.