Ecommerce can be extremely successful when managed well. However, if you aren’t clued up on how to attract and retain customers and increase sales, your business won’t be as lucrative. If you want to make your business more profitable, it’s time to take a look at your average order value.
Average order value is the average amount a customer spends during each transaction with your business. Understanding average order values and how they can be improved is key to increasing your profitability. You can monitor these and other fundamental metrics by using an all-inclusive ecommerce platform such as Magento 2.
By increasing the average order value of a significant number of buyers, you’ll achieve a higher return on investment (ROI) for the marketing strategies you use to attract customers as your business brings in more revenue. Over time, this will boost growth and profitability of your brand. Here, we dive deeper into average order value and what you can do to increase this metric.
Offer free delivery past a certain order value
We Brits love a good deal. Even if we’re only saving a couple of pounds, that promise of free delivery can be enough to push us to spend a bit more. Therefore, the easiest way to encourage your buyers to increase their average order value is to offer a threshold on free shipping.
Adding 30% to your average order value is a common way to set the threshold. For example, if your overall average order value is £50, setting your threshold for free delivery at £65 should be just enough to persuade your customers to add an extra item to their basket and increase your average order value.
Highlight bulk order savings
Drawing attention to bulk savings is another way to encourage customers to spend more than usual. For example, “10% off when you buy three.” Take the time to assess your revenue and any expenditure involved in promoting or running the deal to ensure your profit will rise rather than fall.
Offering discounts past a certain order value can be very effective. Deals such as “Save 20% off when you spend £60 or more” seem to be popular, especially for the bargain hunters among us. Even though a customer will realistically know they are spending more than they intended to, they can easily justify that when it’s connected to a savings offer.
Provide product recommendations
Showing your customers other products that they might be interested in before they checkout can increase your average order value. Both cross-selling and upselling can be used in this scenario.
Cross-selling is where you show a customer an item similar to the one they’ve got in their basket or that might be relevant to the product they already have in their basket. For example, if your customer has added a camisole to their cart, you could recommend a pair of shorts in a complementary colour.
Upselling is where you show a more expensive item or additional products which could increase the amount your customers spend. For example, if someone is buying cushions, you might suggest a duvet and collection of bedding.
