If you’re like most ecommerce business owners, the first thing that will come to mind as you try to think of ways of boosting your revenue is acquiring more customers. While it’s a good approach, it has a price due to increased marketing expenses.
Fortunately, there’s a more cost-effective way to grow your revenues while relying on your existing customer base: increasing your Average Order Value (AOV). Squeezing more value from your existing customers will save you five times more than getting new customers to your store.
But where do you start? Read on as we explore four strategies to boost your AOV on Shopify.
What Is Average Order Value?
Before we dive into the AOV optimization strategies, let’s define what Average Order Value means. Your AOV is the average amount of money customers spend each time they hit your checkout page.
You calculate the AOV by dividing the total revenue you generate by the total number of orders placed. For example, if you generate total revenue of $2,500 from 100 orders placed during the month, your AOV will be $25. AOV helps you understand how much customers spend on each purchase.
4 Ways to Grow Your AOV on Shopify
There are various strategies to increase your AOV on Shopify, but here are four of the most effective ones.
1.Upsell and Cross-sell Products
Upsells and cross-sells are great ways to get customers to spend more on each purchase. Let's take a closer look at what each strategy entails:
Upselling is a sales technique that encourages customers to purchase a more expensive version of the product they already intend to buy. This technique benefits both you and the customer by allowing customers to get more value from their purchase while increasing your business profits.
One example of a brand excelling at upselling is Pro Flowers.
This flower retailer gives customers three or four bouquet size options when shopping for flowers, including standard, deluxe, premium, and exquisite. The brand has a clever way of automatically selecting the second-lowest-priced bouquet size, which increases the possibility of upselling.
Cross-selling involves suggesting related or complementary products to the ones customers are already buying. This technique can increase customer satisfaction by providing them with the complete set of items they need to get the full value from their purchase.
An example of a brand successfully leveraging cross-selling is Quince, a fashion brand offering sustainable products.
When customers add a dress to their cart, the store suggests related items, such as jewelry, to complete the look. This way, customers get everything they need in one purchase rather than purchasing separate pieces. By cross-selling complementary items, Quince increases its AOV.
You can use upselling and cross-selling tactics in your email campaigns, on your product pages, and during the checkout process on your ecommerce store. There are various Shopify apps that make it easy to set up upselling and cross-selling in your store.
One is Product Options & Customizer, which has an up-charge pricing feature that allows you to add additional charges to certain products or variations. This app also supports the creation of custom product pages, making it easier for customers to personalize their purchases and increase their AOV.
Another app is Sales Rocket, which has an In Cart Upsell feature. This feature helps you increase your AOV by suggesting add-on products to customers right after they’ve added the main item to their cart.
2. Offer Free Shipping Thresholds
One of the best ways to eliminate customer hesitation to buy more is by offering free shipping thresholds. This technique allows customers to get free shipping when they reach a certain purchase amount. For instance, you can offer free shipping on all orders above $50.
The real task here is to determine the appropriate threshold. You want to ensure the threshold is high enough to increase AOV significantly but not so high that customers are discouraged from buying altogether.
To determine the ideal free shipping threshold, Aaron Zakowski, a digital marketing expert, recommends adding 30% to your AOV. For instance, if your AOV is $25, you can offer free shipping for orders over $32.
You can include a notification bar on your product pages, which tells customers that they must add X dollars to their cart to get free shipping. This can be an effective way to encourage customers to buy more and increase your AOV.
3. Create Bundled Products and Packages
Bundling involves combining multiple items into one product or package at a discounted price. For best results, ensure that the price of the product bundles is less than the sum of all individual items. Bundling can increase AOV by offering customers the convenience of buying multiple items in one purchase.
The strategy also increases the perceived value of the items while allowing customers to save money and get everything they need with one purchase. It also encourages impulse purchases since customers don’t have to think too much before buying.
One bundling approach is to offer product packages that provide an all-in-one solution for customers. For example, Beard Brand offers grooming kit bundles comprising products for beard, face, hair, and skin grooming.
The products include a cleanser, conditioners, shaving lotion, and a styling gel for hair and beard. Since this package provides convenience by allowing customers to get everything in one package, they feel encouraged to buy more, which increases the AOV for the brand.
Shopify store owners can use apps such as Bulk Discount Now to encourage customers to purchase bundled items at discounted prices. It shows them how much they're saving when they buy in bulk. As a result, they are incentivized to buy more, increasing the AOV.
4. Start a Customer Loyalty Program
Consider setting up a loyalty program that rewards customers for buying more or making repeat purchases. The program will boost retention while encouraging customers to purchase more items. It also builds strong relationships with existing customers, which increases customer satisfaction and leads to better results in the long run.
You can offer points or discounts to customers when they reach a certain spending threshold, encouraging them to buy more items from your store and increase AOV. You can reward loyal customers with exclusive offers such as early access to new products or special prices for specific items. This makes them feel valued and encourages them to purchase more items.
You should keep revising your loyalty program to match customer preferences or market trends. For instance, if your competitors offer free gift cards, consider adding this benefit to your loyalty program.
Start Increasing Your AOV Today
Increasing AOV can be a great way to boost online sales and improve customer satisfaction. With the right strategies, you can easily increase AOV without sacrificing the customer experience. If you would like to boost your AOV through upselling and cross-selling, consider using the In Cart Upsell & Cross-Sell app.
This Shopify app makes it easy to upsell and cross-sell on product pages and in shopping carts. It uses AI to automatically recommend products that your customers are likely to buy. The app's advanced targeting capabilities make recommending products to your customers easy based on order amount, cart content, and location.
Start your 30-day free trial to see how the In Cart Upsell & Cross-Sell app can help you increase AOV.