11 Tips To Crank Your AOV "Up To 11" 🔊
AOV is a KPI you should measure often. Let's look at what AOV is, why it's important, and 11 tips to make it rock.
Try these classic and creative ecommerce sales promotions to increase your AOV, manage your inventory, and reach new customers.
You’re getting traffic. People are buying. And yet, business isn’t exactly booming. What should you do?
Increase your Average Order Value.
Average Order Value is an important ecommerce metric and one of the first KPIs that savvy business owners track.
Below, you’ll learn what Average Order Value is and how to calculate it. Then, you’ll learn six popular sales promotions many top Shopify stores use to increase AOV. And because many merchants have lost their way in the concrete jungles of ecommerce sales promotions, we’ll point out a few common pitfalls you'll want to steer clear of along the way.
In the world of ecommerce, few key performance indicators (KPIs) are regarded as highly as Average Order Value. But, what is it, exactly? Average Order Value often referred to as AOV, is the average dollar amount spent by customers who place an order on your website.
To calculate AOV, divide Total Revenue by Total Orders. Say your online store generates total revenue of $2,000 in January. You notice there were 200 total orders during the same month. Using the formula above, you can calculate the AOV for your store to be exactly $10. ($2,000 / 200 = $10.)
Average Order Value is a key metric for evaluating the performance of your online store. It reveals your customer’s purchase behaviors and informs your pricing and advertising strategies. And when tracked on a daily or weekly basis, AOV can help you understand how effective your advertising campaigns are.
But there’s another reason AOV is so important to ecommerce businesses.
Typically, you have to spend on marketing and advertising to generate revenue. Spend money to make money, right? But here’s the thing: All else equal, when you lift your AOV, you also lift total revenue...but without the marketing spend.
That’s money in the bank.
Before we jump into our list of six popular sales promotions you can use to increase AOV, consider this: AOV only gives you a partial picture of your customers’ purchase behavior. It shouldn’t be your only measure of business health, so make a point to learn about two other key ecommerce metrics you can influence to grow your business.
If you run an ecommerce business, you’re probably looking for simple and effective ways to
bring in more relevant traffic
build brand loyalty
manage inventory levels
Keep reading to see how savvy brands on Shopify and Shopify Plus use sales promotions to achieve all of those goals and more.
The idea behind GWP promotions is simple: offer your customers a free gift when they spend over a certain dollar amount. The key to a successful GWP promotion is to offer something your customers actually want.
Gifts are popular for obvious reasons. First of all, they’re free! And who doesn’t enjoy getting something they want for free? Plus, gifts are a great way to boost your AOV. They also help build brand loyalty and keep your customers coming back for more.
So how do GWP promotions show up in your online store?
Look closely at the example below from Redline Steel. They’re offering a free Infinity Heart when you spend $20 or more. They promote the gift on their homepage with large, high-quality graphics and clear messaging. It’s the first thing shoppers see when they visit the site.
But Redline Steel doesn't stop there. They’ve also got a catchy banner at the top of the site to advertise the GWP promotion. That way, customers are reminded of the offer on every page they view.
What happens when your order exceeds $20? As you can see, the Infinity Heart gift item automatically appears in the shopping cart.
Look closely and you’ll notice two price thresholds Redline uses to help pull up AOV as high as possible. For orders of $20 or more, they offer a GWP. Then, for orders of $100 or more, they offer Free Shipping (which we’ll dive into shortly).
Now, there are a few ways to run your own GWP promotion. You can use a discount code your customers must apply in the cart manually. Another way is to reprice your gift item to $0. (The customer must find the item and add it to their cart manually.)
Because the customer must do some leg work, those methods don’t offer the best shopping experience. However, if you’re on Shopify Plus, you can create a more seamless GWP promotion when you set up a Shopify Script.
Bundles are kind of a big deal.
But what’s a bundle? In ecommerce, a bundle refers to a group of related products sold under one SKU. For example, when you buy a “package deal” of two items for $20 instead of paying $12 for each item individually? That’s a bundle. One of the most popular types of bundles is the Buy-One-Get-One-Free deal, also known as BOGO.
“We're constantly rotating through suggestions...trying different approaches to get relevant pieces in front of our shoppers." - Deven Davis, Roma Designer Jewelry
One reason Bundle And Save is so popular among top shops is that 66% of consumers say that BOGO is their favorite type of deal. Bundles are a great way to generate more sales and increase product awareness. Plus, big opportunities exist for brands to use bundles to offload less popular and obsolete products.
Here's a great example of a successful Bundle And Save promotion.
Roma Designer Jewelry offers a Milano Twist Necklace in silver and gold. To encourage shoppers to buy the pair, Roma offers a Bundle and Save option. The offer appears via popup, and triggers when shoppers add one of the necklaces to the cart. At that point, the shopper is showing the bundle offer and can accept it by clicking the Upgrade button.
Roma Designer Jewelry has achieved outstanding results using Bundle And Save promotions. “We're constantly rotating through suggestions," says Co-Founder, Deven Davis. "We’re trying different approaches to get relevant pieces in front of our shoppers.”
A time-tested tactic in ecommerce, free shipping is largely viewed as an extremely effective marketing and promotional tool to increase sales. We agree, considering 84% of global consumers have bought extra items just to receive free shipping.
"By implementing a minimum threshold for free shipping, you will attract the people who are likely to buy more products if it means that the fee they typically pay for shipping will go towards buying a little bit extra from the store." - Jason Wong, Doe Lashes
Many consumers resent paying for shipping costs, and they’ll buy more just to clear a minimum purchase threshold to avoid it. In this study by Forrester, online shoppers listed shipping costs as the #1 cause of cart abandonment. And that was in 2010.
It’s safe to say consumer expectations are even higher today. And free shipping is now considered by many retailers as table stakes just to stay competitive in today’s ecommerce environment.
Let’s go back to Redline Steel for an example. Below, you’ll see the free shipping bar in the cart at the top. This visual highlights the $100 threshold and entices customers to spend extra so they can avoid shipping costs.
Tons of shops we work with on Shopify include free shipping in their strategy. Why? Because free shipping can offer key benefits to you as an online store owner. For example, offering free shipping can help you increase your average order value, boost the number of total orders, and help you get new customers.
There are many ways you can use free shipping to increase AOV. Consider experimenting with free shipping on purchases over a certain dollar amount, for high-margin products, or for other special campaigns. Because it’s so effective, it behooves you to offer free shipping to your customers in some capacity.
“Sell the outfit, not the shirt.”
This is the idea behind the Complete The Look promotion. You might recognize this promotion from the brand that made it wildly popular—Amazon. Complete The Look is essentially Amazon’s “frequently bought together” cross-sell section, but with a title that suits visually compatible verticals like clothing, furniture, and jewelry.
Look at Pura Vida.
When you add the Sunshine ring to your cart, Pura Vida encourages you to “complete the look” by adding complementary items to your cart. Adding each item to your cart will give you the full 4-piece set.
While it’s perfect for fashion and apparel brands, Complete The Look performs well in other verticals, too. Just consider experimenting with the title text to send the right message to your shoppers.
For example, if you sell something like kitchenware or protein powder, you might decide to change the title from Complete The Look to Recommended.
Ideal for your product description pages (PDP), Complete The Look is a fun, simple, and creative way to increase AOV.
Everybody loves a good mystery. With the Mystery Gift promotion, you invite your shoppers to solve a mystery by buying a little extra. This promo works because it piques your shoppers’ curiosity so effectively, and in a fun way.
Looking to clear your overstock? Offering a Mystery Gift in the checkout is an excellent way to clear excess inventory and push specific SKUs.
In the example below, Fanjoy features a Recommended section in the cart. That’s where they cross-sell not one but two mystery gifts at a steep discount. A hoodie for $15 is a steal. A hoodie for $15 from a brand you love is even better. And who doesn’t like getting a surprise gift in the mail?
This promotion serves a practical purpose, too. Looking to clear your overstock? Offering a Mystery Gift in the checkout is an excellent way to clear excess inventory and push specific SKUs.
There’s something incredibly satisfying about walking past a looong line of people, showing your VIP card, and entering the building. The Skip The Line promotion helps your customers associate that feeling with your brand.
The idea is this: when a shopper buys a Skip The Line product, their order gets shipped before other orders.
To run a Skip The Line promotion, simply flag one of your products as a Skip The Line product. Then, create a Shopify flow to prioritize orders that include that product. When a shopper checks out with a Skip The Line product, your new Shopify flow will trigger fulfillment to ship those orders first.
Here’s an example of Skip The Line in action.
Notice the product required to skip the line here is a service called Rush Processing. Dao Drops promises to ship within 24 hours if Rush Processing is added to the order. That reassurance is a good way to inspire your customer to purchase right now, resulting in a higher AOV for your shop. Win-win!
So far, we’ve looked at 6 popular sales promotions top Shopify stores use to increase AOV. But the road to ecommerce success is littered with slapdash sales promotions that have caused unintended consequences for hapless shop owners. Here are three pitfalls to avoid when attempting to increase your AOV with sales promotions.
Both discount pricing and promotions aim to create urgency, but there’s a big psychological difference between the two.
Discounting refers to a dollar or percentage reduction to your price. For example: “Online only for a limited time. Sandals up to 50% off.”
Promotions offer added value. They sweeten the deal by throwing in something extra your customer wouldn't otherwise receive. A free gift with a full-price purchase, for example.
Both discount pricing and promotions aim to create urgency, but there’s a big psychological difference between the two. Discounting leads with Price. Promotions lead with Value.
Discounts seem like a great idea because they often lead to better conversion rates and more sales in the short term. And while it’s not always a bad idea to use price discounts, Laura Bosco explains how using them can have painful long-term effects like:
Draining your margins
Training customers to expect (and wait for) steep discounts
Attracting less-than-ideal customers
Lowering customers’ perception of quality
However you decide to use discounts and promotions, just make sure your efforts align with your overall strategy.
This brings us to our next common pitfall.
The best promotions drive results that support your overall sales strategy. Outlining a promotion strategy early on can help you use promotions to achieve your current business objectives. Winging it can waste time, tank morale, hurt your brand, and leave money on the table.
And if it gets really bad, you might find your sales have dropped 20%, as JC Penny did after they botched their new pricing strategy.
For example, if your business objective is to increase AOV by 5% over the next 3 months, slashing prices across the board might draw some eyebrows from your sales team. (To increase your AOV, pass on the deep discounts and try intelligent upsells and cross-sells instead.)
It’s easy to get excited when you see things working. You may want to add a Bundle and Save popup on every page in hopes of drastically raising profits. It works, right? Let’s add them everywhere! But, resist the urge to throw in the kitchen sink.
Overwhelming your customers with promotions can confuse customers and undermine your brand value. “They may begin to question the validity of your service if it's always on sale,” says Linda Ray. “Additionally, when they see continuous promotional campaigns, customers may postpone a purchase because they know if they wait, it will be on sale soon.”
Sure, experiment with mixing and matching promotions. (Redline mixes GWP and Free Shipping in example #1.) But be careful so you don’t end up exhausting your shoppers.
AOV is an important metric to track for your online business. Increasing it can help you generate more revenue and grow your business.
When done well, sales promotions increase AOV, attract new customers, create urgency, and more. Experiment and optimize to learn which promotions work best for your online store.
Want more? Learn how Roma Designer Jewelry used a killer Bundle And Save promotion to increase AOV by 21%.
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