Good traffic? Check. Hitting Conversion rates? Check. Average order value? Not so good.
Understanding your average order value (AOV) and how to increase it on Shopify requires trial and error in more ways than one.
Here we identify five ways to boost basket size, resulting in satisfied customers and no purchase regrets.
What to expect
- What is average order value?
- Why average order value is important for your business
- Five ways to increase average order value on Shopify
What is Average Order Value?
AOV is an essential KPI that measures the average total spend of every order placed by a customer.
AOV = Revenue/Number of Orders
For example, if your online store made £50,000 in sales across June with a total of 2,000 orders you would do the following:
£25,000/2,000 = AOV £25
Why is Average Order Value Important?
Knowing your AOV offers a window into shopper behaviour and how much they are spending on your products.
By learning how much your customers are spending on each order, you can then plan pricing and marketing strategies to improve it.
For example, if you are an online beauty retailer offering a selection of face creams at £5, £15 and £25 but the average order is £6, it shows customers are primarily buying the £5 skincare range.
ROI and ROAS are metrics to keep close attention too. For your marketing efforts, you can shift the paid advertising budget or adjust your market segmentation and targeting.
Monitor your AOV daily especially when campaigns and promotional offers are live. It provides quick insight into how your customers are reacting to pricing and marketing strategies.
Now we have that covered, let’s see what your Shopify business can do to improve AOV.
Five Ways to Increase Average Order Value (AOV)
Improving your AOV will mean considering the following factors: improving customer experience, data analytics and competing on price.
It can be a whirlwind trying to strike balance between profitability and what’s right for your customers, but we feel if you follow these five steps, your Shopify’s AOV will improve:
- Segment your customers
- Free delivery and returns
- Customer support
- Loyalty programme
1) Segment your customers using their purchase history
The beauty of improving AOV is you are already targeting high intent customers.
However, to increase it for low frequency or high-frequency shoppers means understanding your customers more.
By analysing their purchase history you can segment customers into different groups, allowing you to gain more control over targeted messages/offers/promotions etc.
For example, low-frequency shoppers will be receptive to upselling and cross-selling. Whilst loyalty programmes appeal to high-frequency shoppers.
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2) Free delivery and returns
Never mind about increasing AOV, if you do not get this right – expect to see cart abandonment too.
Setting a benchmark for free delivery is a quick way to increase the basket amount and give value to the customer’s purchase.
A WorldPay study found that 56% of customers who abandoned ship was due to unexpected costs with 32% saying the overall price is too expensive.
Aaron Zakowski suggests a 30% increase to your AOV is a good target for the free shipping minimum. However, reporting will identify if customers exit the funnel at the store cart stage. If so, consider adjusting your free shipping threshold.
Free returns give the customer confidence and security in purchasing items. Online shopping removes the luxury of trying out items in the flesh. So by offering this to your community, it allows them to make non-hesitant purchases.
3) Customer support goes beyond live chat
A missed opportunity is an eCommerce platform without customer support.
Forrester said customers who use live chat are 2.8x more likely to convert as opposed to those who don’t.
Nowadays, Shopify merchants have embedded a live chat function – which is great for answering quick time questions and general queries such as deliveries.
However at Confer With, we are encouraging businesses to explore outside the static chat realm.
Video calls are the next step up from customer support. Not only can you nurture a strong relationship with the customer, but conversions can increase by 10%. This follows with an increase in AOV too. Finally, it empowers the customer with valuable product information and can also lead to repeat custom.
4) Cross sell and upsell
Shopify has recommended some great upsell add ons for your eCommerce platform:
- Ultimate Special Offers – enables one-click offers directly in your checkout
- Zipify One Click Upsell – this one is for Plus customers. It drives AOV with handy one-click upsell offers
Mastering the art of add ons requires thought and planning. You don’t want to scare your customers away with unattainable and irrelevant items.
Data-driven marketing works best here, provide recommendations on purchase history and incorporate bundles that suit the customer’s needs.
But most importantly, place yourself in the customer’s shoes.
If you are talking with the customer via video call – don’t harass them into promotions simply because KPIs are telling you too.
The growing demand for human interaction online provides a blank canvas for you to establish great relationships with your community base. From there, cross-selling and upselling will become natural whilst meeting the customer’s demands.
Going back to video chat, this is the ideal opportunity to immerse customers in your product inventory.
Online shopping has removed the classic “let me take that to the till for you”, (we know you miss it too). This means incorporating a video call with a shared basket allows your customer to purchase inside the shopping experience.
With this level of ease – customers will return.
5) Loyalty programmes
Ask yourself the question – why should my customers come back for more?
Offering customer loyalty programmes and reward incentives can increase AOV by 36%.
It’s in our nature to be rewarded and praised for completing activities – purchases are one of them.
How will you reward customers? A point system? Free delivery on next order? 25% off? Some will work and some may not. We encourage A/B testing across your segmented groups to yield great results.
Pacifica Beauty has a live point tracker in the checkout showing how many points they have, and how many post-purchases. It also shows how many points are needed for the next beauty product reward.
By offering achievable milestone in the customer journey, this will no doubt boost basket size.
The key takeaways from this piece are:
- AOV provides a window into customer purchasing behaviour and how receptive they are to pricing and marketing strategies
- AOV should be monitored daily, especially around campaigns and promotions
- Free shipping and returns provide value
- Companies should explore video calls to offer real-time advice and suggest suitable add ons.
- A/B testing is strongly recommended to see what message works best with segmented groups
By combining data, effective pricing and superior customer service you can expect to see this KPI rise. It will take time and perseverance, but we encourage trial and error to see what works best for your eCommerce platform.
To find out more about how you can use video commerce to increase sales and customer success, schedule a no-obligation demo today.