What is AOV?

The average order value (AOV) is the average amount of money your customers spend when they order from your eCommerce store. 

Why is it important?

AOV is an important benchmark for understanding customer behavior. By understanding what the AOV is and which products are purchased most frequently, one can figure out the best ways to increase it that would make sense for their customer base. 

Some of the main benefits of increasing your AOV include:

  1. Increasing your sales revenue overall.

  2. Bringing in more revenue over a shorter period of time.

  3. Recovering the cost to acquire customers more quickly. 

  4. Increasing the lifetime value of your customers.  

How to calculate the Average order value?

The formula to calculate average order value is as follows: 

Average Order Value = Total Sales Revenue / Number of Orders

We need to know the total revenue and the number of orders to calculate the AOV accurately. 

Ways to Increase the Average Order Value:

1. Set Minimum Price Exclusion to promote only High-Value products & not spend money on low-value products. You can do this from My Account > Default Setting > Rules & Automations. By setting this automation, we make sure that the Ad spends are only being used to promote high-value products. (Please note that this automation only works for the smart ads/catalog-linked ads).

2. Product bundling

We recommend brands to bundle up products, create combo packs, etc. on their website to boost AOV. Generally in the Beauty Industry, Health & Wellness Industry, & Food industry, where the unit price of the products is on the relatively lower side, we recommend brands to have Combo Products, Bundle Products on their website.

3. Create order minimums for free shipping

To get customers to add more products to their carts, free shipping can be offered if their order surpasses a certain amount. For example, you could offer free shipping for orders over 300/400. This is a common strategy that many online retailers use to increase their average order value. 

If you decide to offer free shipping with a minimum purchase amount, be sure to display this offer throughout your website: on the homepage, on product pages and at checkout.  

4. Cross-sell complementary products

Whenever possible, display or mention complementary products to your customers to make a bigger sale. This can be as simple as mentioning which items pair well with one another in your product descriptions. Make it clear in the ad copy that your items gain more value when paired with other products. Just make sure that on the website, if you are including the complementary products, we have it on the product page, not in the cart page.

5. Upsell your products

Similar to cross-selling, suggest the more expensive versions of your products and position them as a “better value” to increase your average order value. For example, on a product page for your older stock, display or make recommendations to your customers to check out your newer, similar (and pricier) products. 

6. Start a customer loyalty program

Loyalty programs are a powerful way to build up your brand. Not only are they great for getting people to add more to their orders, they help increase customer retention.

7. Provide a more personalized experience

Use data to create more personalized and targeted shopping experiences that will increase your AOV. By looking at customers’ order history, you can create marketing campaigns with messaging and products that resonate with that specific audience. The more targeted and specific you can be with your marketing, the more likely customers are to spend larger amounts. 

8. Offer limited-time promotions

No one wants to miss out on a great deal. Urgency can spark the need to add more items to the cart. Try offering short-term discount codes (with a 24-72 hour window) for certain items to increase your average order value. 

9. Gain customers’ trust with social proof 

Reviews and feedback from previous customers are examples of what’s known as “social proof,” and they can have a huge impact on purchasing decisions. If you have glowing reviews for your products, be sure to display them prominently on your website and marketing materials to entice and reassure customers. 

10. Give a free gift or gift card with purchase 

Everyone loves a free gift. Similar to the free shipping tactic we listed earlier, entice more people to click “buy” by offering a free gift or a coupon code with purchase. A store gift card or a coupon code offer encourages customers to purchase from you again in order to redeem it—especially if you attach an expiration date to your offer. 

11. Establish a flexible return policy

Now more than ever, it’s important to be both as transparent and as flexible as possible with your customers. Creating a flexible return policy will help ease any anxieties or hesitancies that potential customers may have about making a purchase from you. 

Once you’ve established your return policy, it’s important to display it clearly to your shoppers. The most common places to put a return policy are your purchase confirmation emails, social media accounts, and website banners.