How to increase the Average Value of the Shopping Cart?
You have invested significant amounts of money in a variety of marketing campaigns, such as PPC, content marketing, newsletters, social media campaigns, but something seems to be wrong: almost all orders placed have a small value. Although it doesn't seem like a big deal, in the long run, it's a real problem for the well-being of your business.
How to increase this value of the orders? Simple! Read this article and find out how to boost your sales and profits by increasing the average value of the shopping cart.
But, first of all…
What exactly is this Average Order Value?
Average Order Value (AOV), and how to increase it, is an essential revenue concept for any business owner to understand. Basically, your store’s AOV is the average amount of money each customer ends up spending with each online transaction they make. You can calculate your average order value using this formula:
Total revenue/number of orders = average order value
The most important 5 strategies you have to take into consideration
1. The shopping cart button – Easy to find it!
When you have an online store, the most important part of your website is the cart button and how easy it is to find it. Why? These days when everything is fast forward, people no longer have the patience to sit and search the magic button. So, if your shopping cart is not so easy to find you risk to lose clients.
What is indicated to do is to place the button in sight, to be as large and easy to access by customers.
2. Free shipping at a certain threshold
The most common and efficient strategy for increasing the Average Order Value is to offer free shipping at a certain threshold. Why is this so appealing for clients? It is a psychological fact that shoppers love free shipping, and people are more triggered to buy more products in the moment they read “Free shipping for orders of at least X dollars”. This strategy requires a detailed analysis and planning because its integration implies digits and money. Here are some crucial steps you have to take into consideration to make this strategy successful:
- Verify how much your sales have to increase to compensate for the cost of shipping
- The next step is to establish a minimum purchase level that the client has to reach to benefit from free shipping
- Set your threshold slightly above your average transaction total, but not too much higher
3. Create or adopt a loyalty program
Customer loyalty programs are very useful for both increasing customer loyalty and boosting Average Order Value. These loyalty programs include a series of discounts and surprises for clients who buy regularly and keep coming back time and again.
You would think that all those discounts would mean significant losses in the long run, but in reality, the opposite happens. This phenomenon is based on the fact that loyal customers spend 67% more money than first-time customers.
4. Use Cross-sell and Up-sell strategies
A cross-sell is an item that a customer may like that’s different from the product they’re viewing. This strategy will encourage your customers to take into consideration or to buy directly products that match their initial option. For example, when you buy a new computer, you may need a keyboard or a mouse, so it is more probably that you will see these items on the „recommended products” section.
An upsell is a product presented after the initial purchase that can be considered an add-on (accessories, warranties, etc.) to the original product. It can also be an upgraded version of the product. In other words, you’re presenting a better version or additional options that are directly tied to the original product and seeks to expand on that purchase in some way.
5. Create Product Packages
Creating these ready-made bundles is a good strategy for increasing the average value of the shopping cart. The customer doesn’t have to spend extra time building an entire package, plus purchasing the items in a bundle is typically cheaper for the customer while still giving you a net positive in revenue.
Another improvement that can be done is to add customization options to these product packages.
Customers will be more tempted to buy if you offer them more customized options, specially built for their needs.
e-Commerce is growing faster than almost any other industry which means there’s a lot of competition for share of wallet. It’s important to keep up with the new trends and be one step ahead of your competitors to maintain a balance between consumer satisfaction and the profitability of your business.