Ways To Increase Your Average Order Value
When we speak about Average Order Value, what are we exactly referring to? Is it the same as your sales revenue? Answer is NO.
What is Average Order Value?
The average order value is the amount you derive at by dividing your total revenue by the total number of orders. This calculation basically helps you in knowing the average amount each customer is spending on your website in every order they place.
You can calculate average order values either on weekly, monthly or annual basis. It helps you define and govern the financial health of your online store and the profits you earn to make better business decisions. All your marketing, logistics and other expenses will be based upon your average order value reports.
Why is it important?
The higher your Average Order Value, the better your ecommerce store’s revenue and profitability. Improving your AOV means you don’t have to constantly struggle for acquiring new customers and visitors. Focusing on existing customers would bring about the same outcome when aiming for new ones but with comparatively lesser efforts.
Increasing your AOV ensures you get the most out of your existing e-commerce store traffic. It grows your sales, cash flow and facilitates you to sell more products, which especially proves to be extremely helpful when you have excess inventory to move out.
How to increase your average order value?
In order to achieve your AOV goals, look for ways to encourage your customers to either buy more products or buy more expensive ones. Depending on whether your targeted customers or audience belongs to low, medium or HNI section, different strategies would be applicable to different set of buyers.
Neither eliminate any of these options downright nor try them all at once. Apply them one by one to measure the effectiveness over a period of time without being complimented or influenced by any other marketing tactics or plans.
The easier and smoother your e-commerce store navigation, the more time a user will spend on your website – leading to more conversions. Maintain a clean and easy-flowing interface, ensuring prominent call-to-action buttons and various other factors help a user go deep into your site.
Providing your visitors suggestions and recommendations goes a long way in improving your AOV. It might make them purchase things which they didn’t think of in the first place.
There are a lot of benefits in offering a gift card to your customers when a minimum spend is attained. Customers will be happy to receive this bonus card with an urge to shop more with it and increase your average order value.
Flexible And Clear Return & Shipping Policies
Flexible return and shipping policy gives your e-commerce store visitors more freedom and confidence in making their purchase decisions. When they have an option of returning a product (due to a certain genuine issue) without having to pay any additional delivery/return charges, it leads to higher purchases and ultimately increases your average order value.
This is one of the most widely used tactics by various e-commerce businesses. Free shipping doesn’t just up your average order value but it also helps customer feel happy. As we all know, Free Shipping is technically not free. Calculate your costs and accordingly decide the Free Shipping threshold for your customer.
This calculation becomes easy when you have a trusted and easy to understand shipping rate calculator app. With the help of some defined rules, the shipping rate app lets you set a minimum cart value above which the shipping can be free.
Discounted Shipping Rates
This might seem contradictory to your average order value goals, but it is still one of the always-working formulas to increase your sales and profits. There are different forms of discounts which you can apply depending on your average order value target and your customer’s spending capacity.
With the help of a shipping rate calculation app – Primary Parcel, you can set your minimum profit percentage, and pass on the remaining profit as a shipping discount to your customer. This ensures you have your minimum profit intact at the same time resulting in customer delight with a discounted shipping rate.
Up-Selling & Cross-Selling
Upselling is suggesting your customer to upgrade to an expensive version of the product they’re purchasing. Whereas cross-selling is recommending an additional product to your customer that compliments the one they’re buying.
For instance, when you are purchasing a mobile online, you’ll see suggestions to buy an upgraded version of the phone. This is the case of up-selling. And if you see recommendations to buy mobile accessories like earphones, covers etc. that’s an example of cross-selling.
Weekly or monthly analysis of your average order values would make a big difference in your business and help you grow faster and smarter by learning from these reports. These were just some of the many go-to strategies that would help you in shooting up your average order value and take better your revenue game.