May 18, 2020

5 Tips to Proactively Boost Average Order Values (AOV)

Even under normal circumstances, in e-commerce, average order value (AOV) is a key metric to consider. However, given the unavoidable recent public health crisis, now more than ever, we’re seeing AOV numbers decreasing across the board – in most cases.

This isn’t necessarily the most shocking piece of information. Nor is it a terrible thing. In fact, it’s an aspect of something quite good that’s occurring in our digital economy.

These declining AOV numbers come in large part due to the massive increase in consumer demand in the space. TechCrunch and many others have even referred to April as being “Black Friday”-like in terms of online shopping activity in the U.S. at the moment.

According to new data from Adobe’s Digital Economy Index, U.S. e-commerce jumped 49% in April, compared to the baseline period in early March before shelter-in-place restrictions went into effect.

So, yes, it’s a bit of a catch-22. More people ordering online counterintuitively leads to lower AOV numbers, as we’ve witnessed quicker, lower value shopping sessions.

Senior Analyst at Advertise Purple, Valerie Silva provides an example of how this all has played out on our agency’s end: “We’ve seen a rise in affiliate sales across the board, but AOV has seen a slight decline. We typically like to see AOV rise in accordance with increased traffic and brand awareness. However, this is a pretty easy fix within the affiliate space. In fact, we were previously noting a dip in Home & Living AOV despite the verticals click traffic growing 87% YoY YTD. Following our response to this, their AOV bounced back and in fact is 10% YoY YTD higher than in 2019! With consumer demand not an issue, enticing consumers to spend more can come in many forms and are widely effective! It’s all about finding that sweet spot for your particular program.”

So, how can your brand counteract that? Well, these 5 tips are a great place to start as you aim to eek out more from each individual shopper who finds your products and engages in your funnel shopping experience. Thus, increasing revenue and profits in the process.

1. Offer Free Shipping With a Minimum Purchase Amount

A simple proactive step you can take is to look at your average order value (AOV) and attempt to give it an incremental bump by offering free shipping if the customer slightly outspends that value.

Of course, make sure to proceed with caution. This is a sensitive play, as free shipping can simultaneously increase the AOV while the additional shipping charge possibly reducing the total number of transactions.

In fact, there’s research that suggests the lack of free shipping is the biggest reason behind cart abandonments.

It’s a good idea to A/B test between completely free shipping and one that is free after a minimum order value. Then you’ll want to track cart abandonment, clicks, orders, and revenue to see what’s the smarter play long term.

2. Offer Discounts on Minimum Purchase

Do more than just extend a 20% flat discount in order to clear all of your dead stock. Get creative, and let your customers know you will provide a discount on a minimum purchase of $50 or $100 (or any figure that makes sense for your specific brand).

Make up sufficiently for your lost margins in giving that discount. Give a little and take a little. You have the advantage of understanding your inventory, customer behavior, and how much you’re willing to invest in moving more of your products.

3. Create a Time Crunch on a Campaign or Offer

Take advantage of what we know about shopper’s tendencies. For example, it’s been proven for years that shoppers mull over the decision-making process when it comes to pulling the trigger on an item or two.

Going off of the last idea, adding a limited duration to the offer can create a sense of urgency among visitors and encourage them to buy more in one go.

For example, ‘Get 40% off on all products’ might motivate the visitor to browse the products. But when you say ‘Get 40% off on all products for next 2 days’, it compels them to act right away.

It’s psychological, but it works. And given that many of these shoppers who are exploring the online marketplace are new, now is an even better time than before to utilize some of these proven methods to bump  up that AOV and increase revenue numbers too.

4. Try Volume Discounts

The risk of doing this is wreaking havoc a bit on your profit margins, but of course this is pretty clearly an easy way to bump that AOV number up.

Thinking like Costco can be smart, but you should A/B test to make sure you don’t end up losing out on profits by shipping everything out for too cheap.

5. Think Like a Waiter at a Restaurant

Cross selling, upselling, and packaging products together in bundles are all sales strategies we’ve seen expertly executed for decades. Of course, our familiarity as consumers with these strategies makes us a bit more sensitive to them if done incorrectly.

Like a waiter in a restaurant, recommending items that “go well” with other items (or dishes, in this case) can make a customer feel they’re receiving great service and point them in a direction of increasing AOV without noticing it. Cross selling.

Or, if the customer asks for a wine bottle that is $25, it might be smart to first compliment their choice, but recommend the $30 bottle that is just a little bit tastier. Upselling.

Then, lastly, a combo deal is a great direction to point someone interested in one dish, who could maybe get it paired with a soup or salad of their choosing that they hadn’t quite considered yet. This could also be companion products like a mouse and keyboard to go along with a laptop. Packaging.

As I mentioned before, you want to be super careful with all three of these somewhat similar ideological ways to get each individual to spend more money. Make sure you’re incentivizing more expensive orders without being heavy-handed and possibly even risking losing the sale.

Again, I hope these help. And the good news here is that we are living through a troubling time, but e-commerce is proving to be a major winner as far as digital infrastructure is concerned.

Hopefully, we’ll continue to see strategies like these successfully implemented, helping the user and merchant both, in the process.

Are you getting started in affiliate marketing or looking to improve your current program?

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