The average order value (AOV) is the average dollar paid when an order is placed on a website or in-store by a customer. The average order value helps educate companies about their plans for marketing and pricing.
Companies may directly influence their sales growth by rising their average order value. So in summary, AOV strongly helps you assess your pricing plan and online marketing strategies by offering the measures needed to calculate individual customers’ long-term value.
The relation between AOV and Profitability:
AOV is directly related to Revenue and Profitability. So to increase the rate of profitability you need to improve your present setup. Along with it, financial and time resources are needed to raise sales and revenues. These resources (time and money) would be used in improving website traffic and attracting new customers via marketing or promotion. In this way, you are not only improving your AOV but also increasing your customer base. Consequently, a keen focus on AOV should be given to increase not only the revenues but profitability too.
Ways to Boost Average Order Values:
Even a business with a relatively small customer base can increase its revenue by implementing some very basic strategies for boosting the AOV. Before implementing these strategies you should segment your customers based on the amount they spend with your company. The segments will assist you to effectively use and target these tactics, as well as make it easier to further modify and develop them.
Target Repeat Customers:
We all know that retaining a current customer is better and cheaper than attracting a new one. Repeat customers often prefer to spend more because they already trust the goods and services. The secret way of getting repeat customers are:
- Let your customers know what you are doing for them.
- Email them on a special occasion and wish them kind words.
- Offer them sales and discounts on special events.
- Always consider follow-ups and get their feedback.
Custom Products or Create Packages:
Try to make product packages that cost less than if the same products were purchased individually. You can increase the perceived value of a customer’s purchase by bundling products. One perfect approach is to provide your customers an all-in-one solution.
You can also give them the privilege to build their own bundles. They could select their desired items or add-ons they want in their order. This could help significantly in boosting your Average Order Values.
Always Offer Free Shipping Threshold:
Customers want to spend their money on products and not on shipping or delivery charges. To create an incentive for customers to spend more money on your goods, use free shipping. Customers would be encouraged to buy more when you offer free delivery at a certain threshold. Besides AOV, the conversion and cart abandonment rates will also be increased and reduced respectively.
As reward and freebies works, cashback function in a similar way. You can effectively allow your customers to make a repeat purchase by offering a cashback. Typically, cashback is viewed as an added advantage that the customer gets for the money they pay.
The secret to cashback is often connected to the sense of urgency, keeping them time-limited so that clients feel the urgency to redeem them. You may also set minimum order prices that must be met for the cashback, So that, you can easily operate on your AOV
Upselling or Cross-Selling:
In terms of both volume and profit, cross-selling and upselling have been used for a long time to generate further sales. While cross-selling allows consumers to add more goods to the cart, upselling allows them to add more costly ones.
To hit the psyche of the customer here, you need to embed a personalization approach in your plan. So that you would be able to deliver a genuinely useful cross-sell. A keen analysis and intelligence will complement your attempts to understand both your new and current customers.
So it is crucial to take note of every single activity of your customers and try to plan big to boost your AOV. Average order value is much more important to increase profitability, so if you are running a business, keep an eye on the latest trends.