At the tip of the day, all the pieces we do as entrepreneurs—sending direct mailers, creating email campaigns, sending push notifications—is supposed to transfer prospects by way of the funnel to a purchase order. But, there are methods we are able to use to enhance the worth of every order a buyer locations whereas establishing and sustaining robust relationships.
Average Order Value (AOV) is the full order greenback quantity in a given timeframe divided by the full variety of prospects in the identical timeframe. So, for instance, if in a single 12 months you will have complete gross sales income of $5,000 and 100 prospects, your AOV for the 12 months is $50. Increasing AOV is essential as a result of the upper the AOV, the more cash you’re getting from every particular person buyer and, consequently, every buyer’s inherent lifetime worth will increase.
But, earlier than we do a full-blown AOV deep-dive, we now have to level out, as Shopify mentions, that AOV isn’t an ideal calculation. Relying on simply the common, with out additionally wanting on the median (center quantity) and mode (most incessantly occuring quantity), solely provides your model a small view of buyer conduct.
In the instance Shopify supplies, a enterprise has an AOV of $24 however modal orders are $15—that means the vast majority of the orders have been $15. Aiming to enhance the modal orders, moderately than specializing in the common, might really influence the underside line extra. Say the modal orders enhance to $20, you’re including extra complete worth whereas only one greater worth order can skew the common.
But, AOV remains to be a useful metric for protecting monitor of orders. So, let’s look a bit deeper into some methods entrepreneurs can enhance AOV.
1. Try Free Delivery Thresholds
Let’s begin with the fundamentals. As a buyer, once you’re constructing an internet order and head to the checkout web page, the supply charge can cease you from inserting that order. “56% of shoppers abandon their online shopping carts when they encounter unexpected costs.” But, if there’s a means to take away the supply charge, by including a value threshold—free transport once you spend $X—it’s, for some purpose, extra interesting. You, as the buyer, are spending across the similar amount of cash (or possibly much more), however the cash is now contributing to the order worth versus being spent on transport.
According to Wharton, “Approximately 60% of online retailers cite ‘free shipping with conditions’ as their most successful marketing tool.” One purpose for the success of free transport, even with a value threshold, is that it justifies the net buy. With a transportation charge, prospects are extra doubtless to abandon their cart, saying they will choose up the merchandise in-store to keep away from the unexpected cost. If there’s no transport price, however extra objects are added to the order, it helps ease buyer considerations about further charges, rising AOV.
2. Implement Cross-Channel Marketing
Next, we now have cross-channel—or omnichannel—advertising as a technique for rising AOV. A fast refresher: cross-channel advertising is connecting with prospects throughout numerous advertising channels. These channels can embrace SMS, email, push notifications, and so on. The key to a profitable cross-channel advertising technique is making the expertise seamless for purchasers. For occasion, altering the content material that will get delivered through every channel to enhance the probability of engagement.
But, again to AOV. When prospects have the chance to work together with a cross-channel marketing campaign, they really find yourself buying orders of upper worth. According to Retail Dive, “The average order value (AOV) of customers interacting with a single-channel campaign spent only $58.70 on average, while omnichannel campaigns earned a 13% higher AOV.” There’s a customized facet to cross-channel campaigns that present your model is paying consideration. When you may cater to the wants of your prospects by connecting with them how they need to be reached, it will increase retention and builds belief, leading to greater common order worth.
3. Lift AOV with Gamification
We’ve touched a bit on gamification and how including a component of “play” to the shopping for course of can enhance the general expertise, however how does it enhance AOV? Neil Patel makes use of McDonald’s as an ideal instance. During their Monopoly campaign, McDonald’s presents peel-off sport items that could be mixed for prizes. A bigger order (bodily, and price-wise) means extra stickers, which implies extra probabilities to win.
In an internet world, including less-literal components of gamification might help encourage check-out. Amazon, for instance, makes use of a progress bar to present what the steps are within the checkout course of so customers can see how for much longer it is going to take to full their buy.
Upon checkout, DoorDash, the meals supply app, now supplies a DoubleDash possibility. If there’s a restaurant on the motive force’s route, prospects can add objects from different eating places to their order. The expertise is gamified as a result of as soon as the unique order is positioned, there’s a timer counting down the minutes customers have left to add different eating places their order. The timer encourages prospects to make the most of the deal, rising AOV.
Customer Experience is Key for Increasing AOV
The frequent denominator in free transport promos, cross channel advertising, and gamification is lowering friction within the buyer expertise. Customers need to trust within the manufacturers they’re purchasing with and in every of those methods, manufacturers are aiming to construct belief and set up buyer relationships.
So, whereas rising AOV is helpful for monitoring your manufacturers’ success, it shouldn’t be the first purpose. By protecting your prospects’ wants and desires top-of-mind and striving to create a frictionless buyer expertise, it’s doubtless common order worth will enhance consequently.
To study extra about constructing a frictionless buyer expertise, schedule an Iterable demo at present.