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4 Ways to Increase Average Order Value

bonnie-stefanick
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These past two years have brought an increased velocity of aggressive Google algorithm changes, which for many website owners has resulted in a high amount of traffic fluctuations that has reduced the stability of Google organic as a traffic source.

Increasing average order value (AOV) is one method that you can use to increase revenue, even during traffic fluctuations. This article will show you four ways that you can increase AOV, with examples, to increase revenue from current traffic.

The Many Flavors of Free Shipping Offers

It is an open secret that free shipping provides a competitive conversion advantage.

According to a comScore study, The State of the U.S Retail Economy in Q4 2009, "while 75% of customers surveyed said they would shift to another retailer at checkout if shipping was not free, free shipping accounted for just 6 points of all transactions".

Also, according to The State of Retailing Online 2009:Profitability, Economy, and Multichannel by Sucharita Mulpuru, "40% of shoppers report being shocked at the cost of shipping and abandoning the checkout process".

However, this trend toward free shipping is tempered by the fact that free shipping for all customers is hard to scale for many ecommerce businesses. Despite this, there are certainly a variety of options for business owners to consider for shipping offers to help increase AOV.

  • Free Shipping Threshold: This is a classic shipping strategy to increase average order value is simply to provide free shipping for orders above a minimum order.
  • Flat Rate Offers: This is a popular solution for many big box retailers. Some retailers offer the first purchase for free shipping and others offer a flat rate for all purchases below a certain threshold.
  • Free For Eligible Products: Offering free shipping on eligible products is great if you are doing bundle promotions. Instead of a potential customer buying individual, they can purchase a bundle and get free shipping. This strategy is also commonly used with big ticket items.
  • Limited Time Offers: This strategy is mostly used for seasonal promotions and to help sell some of the remainder of last seasons products. However, you can try limited time free shipping order with bundle offers.

Here is an example of a basic way to spin free shipping but this is one thing that you can test out a variety of messages and strategies for the best free shipping messaging.

free shipping offer

Upselling & Cross Selling - So Many Options!

Upselling is getting customers to accept a higher cost to buy a pricier version of the same product, to add features, or even to get a warranty on what they are buying. A cross sell is getting customers to accept a higher cost to add more products from other categories in the online inventory.

The key for a successful upsell is a clear statement of benefit of what the new shinier deluxe version of the product has that the original does not. You may also consider offering a small limited time sale on the higher priced item.

Here is an example of a typical upsell. As you can see in the example below, the "most popular" uses social proof to help attract the eye to a specfic offering any you can easily see by viewing the bulleted list what all the features are that make this offering stand out from the lower priced ones.

Upsell Most Popular

Cross selling online usually entails usage of recommendations or related pages.

Nathan Richter recently wrote a great piece on some dos and don'ts in this area in 4 Tips to Improve Conversions Through Product Recommendations. Richter mentions that most methods for generating recommendations are not relevant to customer intent and that increasing relevance is the key to cross-selling success. I agree, and would also like to add that recommendations and related content is also a great tool for improving internal linking for SEO.

One of the really big takeaways from this article is avoiding over cluttering the user experience with recommendations and instead take an organized approach to recommendations. One suggestion Richter made was to show complete sets of complementary items that are parallel.

Here is one example of how related products are normally displayed on many ecommerce websites, showing variations of the product on the page.

Cross Selling Example

Here is another comparable ecommerce site that is leveraging related content for cross selling.

This retailer is also linking to related product variations, but they are also linking out to accessories. This create an opportunity for a cross sell while also better internally linking all of these deep pages together.

There is also an opportunity to optimize some of those internal links as well. Who says SEO and conversion can't be friends?

Another Cross Selling Example

Volume Pricing - Savings Packs, Kits & Bundles

Volume pricing is the strategy of getting customers to spend more by getting them to increase the number of units being purchased by offering a discount for buying more. Definitionally speaking, these can also be used as great upsells. There are many strategies for volume pricing, but I'll go over three popular ones here:

  • Savings Packs: Saving packs are buying the a larger quantity of the same unit. For example buy one, get one free. Here is an example of a savings pack, combined with a free shipping offer after a certain amount:

bundle-and-free-shipping

  • Kits: A kit is buying a packet that includes several different kinds of units. A kit is similar to a bundle but the goal is to provide a grouping of individual units that people would normally buy separately and offering them together as a package. Here's one example of a common seasonal activity for many gardeners and an all in one solution with a very clear discount:

Kit Offer Example

  • Bundles: A bundle is similar to a kit usually includes accessories for a given product. The example below is common. Try to think about what products of yours complement each other and offer a discount for getting them together.

Bundle Example

Free Gift Offers

Free gift offers are another great way to increase average order value. At checkout, you can also use some logic to your shopping cart to display a count toward getting the gift, something like, "Spend just $15 more and get a free gift!" This will help encourage customers to get accessories or smaller units.

Free Gift Example

Here is an example of a subscription service that combines a bundle offering and includes a free gift.

Bundle and Free Gift

Leveraging Multichannel Strategies

Having a multichannel strategy is an increasingly important component of the commerce online marketing mix. Why not use it to leverage your AOV? One popular way that this is done is by using social media to offer discounts to brand ambassadors, the people who already love and are talking about your brand.

In a recent article by Alicia Florletta, Livescribe Boosts Average Order Value By 34% With Social Referral Program, Florletta describes a recent Livescribe multichannel campaign:

Through the [use of] the Extole [customer to customer social marketing platform] social referral program, Livescribe offers brand advocates $15 (via PayPal) for each friend or family member they drive to purchase a "smartpen." The merchant promotes the campaign via its website, Facebook, Twitter and blog. Additionally, current brand advocates receive information on the program through dedicated email blasts as well as welcome and order confirmation emails."

Florletta went on to describe the results of the campaign:

"... Livescribe’s social referral program has generated more than 9,700 social shares across Facebook, Twitter and email, increasing the brand’s presence throughout the web and driving traffic to its ecommerce site. Additionally, Livescribe has been able to boost overall conversions by 18%. The merchant’s social referral program also has increased overall cost-per transaction, Johnson reported. In fact, an Extole-influenced customer has an average basket that is 51% bigger than the average online shopper."

Although this is just one example, this illustrates is a huge area of opportunity think outside of the box and to leverage other channels, including social media, to help increase AOV.

One final note on increasing your average order value: testing to tune your offer for maximum return is another important component. Never forget to test!


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