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Tips For Improving Your Average Order Value

Tips For Improving Your Average Order Value
How much money do you make from each sale?

How do you increase the order size and profit from each sale?

These are questions many business owners ask themselves daily.

What if I told you that increasing your Average Order Value (AOV) can be as easy as 10 simple tips?

In this article, you will learn what Average Order Value is and 10 easy ways you can increase your average order value.

What Is Average Order Value?

The average order value (AOV) is calculated by taking the unit price and multiplying it by the number of units sold during a certain period. It’s important to know what your AOV is so you can track sales and make decisions about pricing, promotions, etc.

This measurement is essential for small business owners and managers to determine whether or not they’re doing well, especially if they use tiered pricing schemes where they charge different prices for different quantities of items purchased.

To calculate your average order value, you can divide your total revenue from the past time period by your total number of transactions, like so:

Average Order Value = Total Revenue / Total Transactions

For example, if you want to find the Average Order Value of your supplement store over a 6 month period and you knew the following stats:
  • Timeframe: 6 months
  • Total Revenue: $500,000
  • Total Transactions: 6,494
You would calculate the Average Order Value like this:

$76.99 (AOV) = $500,000 (Total Revenue) / 6,494 (Total Transactions)

How Do You Increase Your Average Order Value?

Your average order value is calculated by the unit price and the number of units sold. Although you may not be able to change your sales volume, there are ways to increase your unit price without raising prices – here are 10 easy ways to increase your average order value.

Here Are 10 Easy Ways You Can Increase Your Average Order Value

1. Offering a loyalty program that gives customers freebies or deals when they purchase from you often also encourages repeat business. Try setting up a rewards program for loyal customers. You can also offer special discounts for frequent buyers.
American Express does a great job with this with its loyalty programs.
2. Try using a tiered pricing strategy that reduces the price of each product as more units are purchased up to a certain amount, like bulk discounts at supermarkets. This encourages customers to buy in bulk and increases your average order value at the same time.

Here is an example from Body Health that demonstrates good discounts for purchases in bulk (NOTE: I’m not a huge fan of the layout of this offer section, it’s too clustered in my opinion. Nonetheless, still a good example).
3. In addition to offering tiered pricing for customers who buy in bulk, consider using bundling strategies like package deals where you offer a product for a discounted price when customers purchase two or more of your products.

The team at Sunday Scaries Hemp do a fantastic job at bundling products:
4. You can also add a line item to your shopping cart that allows customers to add something at a discount (also called an “Order Bump”). This increases your average order value without raising product prices.

BOOM! By Cindy Joseph does this really well:
*Side note: There’s a distinct difference between an Order Bump and an Upsell. This example flirts the line between the two, but I’d consider this as an order bump as it becomes before the transaction occurs.

5. Consider offering free shipping for orders above a specified amount or for orders over $100. Free shipping can also increase your average order value.

My friends over at Survival Frog do a fantastic job with this:
6. If you have a brick and mortar shop, consider setting up a loyalty card that gives your regular customers discounts if they come in frequently or spend more than a pre-set amount which can increase average order value. Think of the “punch cards” from the ice cream stand (i.e. Free Ice Cream on your 10th purchase).

7. Try offering freebies like gift cards that your competition does not such as free gift or insurance on products above a certain price point, for example “Free Gift on Purchases over $100” – this will also increase your average order value.
*This was an old offer they ran, but it illustrates a great example.

8. Consider offering subscriptions to your email or SMS newsletter in exchange for a discount off of the customer’s first purchase. This helps increase repeat purchases since it gives customers an incentive to buy from you as well as increasing your average order value and profit margins in the process.

Linens n’ Things does a great job with this:
9. Implement 1-click, post-purchase upsells after a customer buys their initial product offering complimentary products at a discount not usually available in the store. For example, if you are selling a cell phone case you can offer a screen protector at 15% off normal price.

BOOM! By Cindy Joseph does a great job with this:

Conclusion

The average order value is a metric that will show you the total revenue from your past time period divided by the total number of transactions. There are different ways to increase an average order value without raising prices, including bundling cheaper items together in bundles or creating new higher-priced products with more expensive features. These strategies can help you get started thinking about how you might leverage the power of the human brain in your digital marketing strategy and create better sales funnels for both online and brick-and-mortar businesses alike. If all this sounds intimidating and you want help enacting these principles, let us know! Our team of experts is ready and waiting to partner with you on crafting a stellar SEO or marketing plan that drives sales by considering how our customers think.
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