How to increase the average order value - 7 tips

Your online store is up and running and generating sales - but you'd like to generate more revenue? Optimizing the average order value is the best way to do this. Of course, you can also try to attract new customers. However, giving people who want to store in your store anyway an incentive to buy more will be more profitable for you in the end. In this article, we would therefore like to present you with seven ways to increase your average purchase value (also called Average Order Value).

What is the average order value?

Average order value (AOV) captures the amount of money spent each time a customer places an order on your online store. The calculation is simple and results from the total sales and the number of orders:

An example: The turnover of an online store for motorcycle parts was 10,000€ in January with a total of 50 orders. If you divide the 10,000€ by 50, the average order value for the month of January is 200€.

Why is it important to increase the average order value?

Average Order Value is an important decision metric for marketers, providing insights into shopper patterns and trends, ad spending habits, and product pricing. A retailer who offers products worth between €15 and €65 but has an AOV of €30 may find that their customers are 1) likely to buy multiple items, and 2) are mainly shopping for lower-priced products.

By monitoring your AOV regularly, you can increase marketing ROI. The higher your AOV, the more you get out of each customer. A high AOV means you earn more per paying customer, over the same period of time. So basically, you're not only recouping the money you spent on customer acquisition, but you're also becoming a more profitable business.

For example, if you know which traffic source brings in the highest revenue, you can allocate more resources to that top-performing channel and increase your AOV.

7 measures to increase the AOV

1. Free shipping

The classic optimization method: free shipping. This is the easiest and quickest way to increase order value. It's not necessarily a matter of always allowing your customers free shipping (although this is, of course, a proven way to generate purchases in the first place). Rather, you should tie free shipping to a minimum order value. If your current average order value is €45, you can advertise free shipping from a minimum order value of €60. Just don't be too ambitious here - if your customers normally shop for 45 €, you won't go for an 80 € order value just to save on shipping costs.

It's also a big plus if you add a notification in the shopping cart that shows your customers directly how many euros are still missing until the free shipping.

2. Sell more with discount and limited time offers

You may think that offering discounts is contradictory in increasing AOV. After all, the ultimate goal is to generate more revenue with each sale. However, just like free shipping, you won't give out discount coupons without a specific criteria. For example, you could offer a discount that can be used for a minimum order value.

When you offer time-limited discounts, you create a sense of urgency among your customers. As a result, they immediately start considering whether it's a good decision to buy now. In most cases, especially with brands that offer sale promotions only a few times a year, customers buy right away. The annoyance of not having bought early enough would be too great.

3. Free gifts

"Buy one, get one for free" is probably the most common type of promotion companies use in their daily marketing campaigns. Consumers like to get items for free. They are much more tempted to accept the offer if they think they can get twice as much for the same price.

When using the tactic, however, be careful about which products you choose to promote. While consumers may be riding the "free" wave, they will quickly come to their senses if the offer turns out to be impractical. You should focus on products that 1) can be used up over time, such as cosmetics, food and beverages, 2) can be used in pairs - you wouldn't buy two hammers if you only needed one for the next 10 years, right? and 3) have a margin of at least 50%.

Of course, you can also add a favorable product as a gift above a certain order value, as Latori customer Wimpanista does, for example.

Again, you can work with a time limit to show urgency. Also, don't limit your customers' choices. Combining products from different categories can be a great offer for seasonal products or specific target customer groups.

4. Upselling

The probability of selling to an existing customer is much higher than selling products to new customers. Upselling is the practice of encouraging customers to buy a comparable, higher-value product. So if you have a range of products in a same category but with different performance characteristics and prices, consider upselling to encourage existing customers to buy again.

5. Cross-Selling

Cross-selling means that a company sells an additional product or service to the current product that the customer has already opted for. Cross-selling refers to products that satisfy additional, complementary needs that are already being met by the original item. Sounds familiar, right? But what's the difference between cross-selling and upselling? Often the two terms are lumped together.

In e-commerce, cross-selling or upselling is often used on product pages, during the checkout process, and in campaigns. For example, on online stores, you will usually see the "You might also like this" section filled with recommendations that match your preferences and search history. This is called automatic cross-selling, which generates personalized offers for every customer who visits the store. The more you personalize the offer, the more effective your strategy - and thus the increase in sales value - will be.

Michael Michaud also uses the cross-selling method and displays products of a similar price segment.

6. Bundles

Many small businesses find success selling products and services as a package - also called a bundle. Customers equate a bundle of items with savings, even if those savings are small, making it easier for you to sell. For example, instead of selling three items for €30 each, your bundle priced at €75 would cost only €25 per item. If possible, try to keep your packages somewhat flexible; a potential customer might reject a package because they feel that only three of the six items are useful for their purposes. If you can remain flexible enough or customers can possibly put together their own packages, your chances of success are greater.

Shape Republic also uses the bundle feature to sell multiple shakes at once to fitness enthusiasts.

A few more tips you can follow:

• Give customers the option to pay in installments for high-priced "subscribe and save" bundle offers.

• Sell products both individually and in bundles. The ability to compare prices when they would buy products individually will make customers more likely to buy in a bundle.

• Display the savings on the bundle page to make it easier for your customers to decide on a bundle.

More on the topic: How the Latori team implemented the bundle solution at Shape Republic, we explain in this post.

7. Create space for configurations

Some online retailers take a particularly clever step and use product customization to increase their order value. Store visitors who are interested in a product are more likely to buy a high-priced product if they have been able to help design it according to their own ideas. In addition to the fun effect of DIY, the argument of uniqueness is then also convincing. Because in the end, your customers receive a product that only exists once.