You launch your ecommerce site, you've been marketing it, you're selling a few products and eventually, you notice something. Nearly all of your orders average out to the same, low amount. Your customers checkout with the same quantity of products and the same order total every time.
Your store starts to look like it's plateauing and your revenue begins to look the same every month. One remedy is to get more traffic and thus, more orders on your website. But for some store owners, that can mean more work and more spending.
Alternatively, and sometimes a better option, is to get your customers to checkout with more products in their cart.
In this blog post, I’m going to share five actionable strategies that can help increase the average order value of your store and get your customers to checkout with larger carts.
First, What Is an Average Order Value?
Your store’s average order value is the average amount of money each customer ends up spending per transaction. You can calculate your average order value using this simple formula:
Total revenue / number of orders = average order value
For instance, if your store’s total revenue of $1700 was split between 100 orders, your average order value would be $17. You can also find helpful apps to calculate this for you in the Shopify App Store.
To increase your average order value, you’ll need to convince customers to add more items to their cart before checking out. Let’s talk about how you can encourage that.
1. Product Recommendations
Occasionally, customers are so focused on buying one of your products that they neglect to browse around to find more. This leads to smaller carts, and as a result, smaller average order values.
To help solve this problem, try adding product recommendations to your product or checkout page. By profiling popular products, or products that other customers purchased in addition to what’s currently in the user’s cart, you can not only minimize friction before checkout, but also increase average order values.
To illustrate this point, here’s Barberry Coast pairing the aftershave balm in my cart with a sample pack of other scents. This is a great technique, especially if I wind up liking a new scent and decide to order more down the road.
Consider using phrasing on your website such as “Complete the look” (for fashion and apparel websites) or “Customers also bought” when suggesting more products for your customers.
2. Display Relevant Accessories or Complementary Products
Much like the previous strategy, this tip involves adding product suggestions to your product page. In this case, instead of simply suggesting other popular items from your store, try hand-picking products that pair well with the item in the user’s cart, such as accessories or add-ons. For example, a mouse for a laptop, or batteries for a remote control.
This is essentially cross-selling and upselling, which you can learn more about in our blog post about upselling and cross-selling.
3. Set Order Minimums for Coupon/Free Shipping/Free Gift
Increasing your average order value can also be accomplished by providing an incentive when customers spend a minimum amount on your store. Consider setting a minimum order amount for free shipping - it’s really easy to do within Shopify and very effective at raising average order values.
According to research from the University of Florida, the average order value for a store with “Free shipping for orders > $75” was $64.68 compared to an average order of $46.04 when that same store offered “Free shipping for everyone”.
Other examples of minimum order incentives are offering a coupon or free gift when your customer meets the purchase amount threshold. For example, giving a 15% discount on orders over $75 or a free t-shirt on all orders over $100.
Be sure to also use a promotion bar on your website to make it obvious that you’re offering a minimum order incentive.
4. Set up a Loyalty Program
If your store sells consumable products (something customers need to re-purchase, like razors or shaving cream), consider setting up a rewards or loyalty program. Loyalty programs act as a retention strategy and help forge relationships between customers and a brand, as well as helping you increase the average order value of your store.
When there’s an incentive for your customers to earn points under your loyalty program, you can expect to see your average order value increase significantly. Sweet Tooth found that stores that add rewards for orders 15%-20% above the store’s average can get customers to spend more.
It might seem counter-intuitive to offer a program that provides discounts (which cuts into your revenue) but a study from the Center for Retail Management from Northwestern University, according to BigDoor, found that loyal customers can make up to 70% of total sales. Additionally, a survey by TechnologyAdvice found that customers are more likely to shop at stores that offer loyalty programs.
5. Bundle Products or Create Packages
If you want customers to checkout with more items, try creating product bundles that cost less than if the same items were purchased individually. By bundling products, you're effectively increasing the perceived transaction value. This is the satisfaction customers get from taking advantage of a deal and according to a study done by the Faculty of Virginia Polytechnic Institute and State University, this can help increase sales.
For example, recommend another complementary product and offer a discount at checkout like SafeSleeve does with their laptop and smartphone cases.
You can also empower your customers to create their own bundles by allowing for custom products or packages that let customers choose which features or add-ons they want in their order.
For example, Endeavour allows their customers to build their own surfboard and choose additional features, customizations and add-ons that increase the order total.
This also works for custom bundles, allowing your customer to choose which products or accessories they want in their package before checkout. For example, allowing customers to build their own first aid kit or allowing customers to build their own makeup kit. Instead of selling the components of these kits individually, encourage your customers to create their own bundle and thus increase your average order value.
Now it’s your turn. You only need to implement one of these strategies to start noticing an increase in the average order value of your store. Again, check the Shopify App Store to quickly start applying these strategies to your store.
If you have any questions about increasing your store’s average order value or have feedback regarding this blog post, leave a comment below. I engage and respond to everyone.
About The Author
Corey Ferreira is a passionate entrepreneur, coconut water lover and content creator at Shopify.