Boost your average order value: easy wins for bigger profits

How to increase your online average order value

The world of ecommerce is a competitive place. It can be expensive to produce marketing campaigns to reach more customers and increase sales. So why not consider ways to maximise the revenue you’re generating from your existing customer base? That’s where understanding average order value can help.

Average order value (AOV) is the amount of money each customer spends in one transaction at your store. The higher your AOV, the higher your revenue per customer. It can be a useful statistic to understand how your store is performing. You can calculate your store’s AOV using the formula:

AOV = total revenue / total number of transactions

You can also use tools such as Google Analytics to track it over time. Increasing your AOV can be an easy, sustainable way to increase revenue from customers you already have. 

Benefits of increasing AOV

Increasing your AOV can directly contribute to increasing your business sales revenue. This can be achieved through making higher value transactions, as well as by improving customer experience, encouraging customer loyalty and making the most of your existing website traffic. By optimising your mobile checkout, your ecommerce store could benefit.

Your customers may already trust your products and your brand.
So, introducing features to increase AOV, such as loyalty programmes and flexible returns policies, can allow your customers to feel more valued, driving up AOV while allowing you to strengthen your customer relationships.

Encouraging higher basket values can also streamline your dispatch and shipping processes, making them more efficient and reducing shipping costs.

Additionally, many methods of increasing AOV can, in time, decrease the need for marketing campaigns to reach more potential customers. Making the most of the traffic that your website is already getting can reduce your marketing expenses, while increasing your sales revenue and widening your profit margins. 

Ten ways to increase AOV online 

When you optimise your website for smartphones, loading times greatly decrease. This is because pictures and text will automatically render at the correct resolutions.

Price optimisation techniques and tips

According to figures, the average company spends just six hours on their pricing strategy throughout the lifespan of the business. If you fail to put in the effort to optimise your pricing decisions, this can have a detrimental effect on your business.

To put it simply, price optimisation is using mathematical analysis to work out how to price a product or a service – and understanding how products will sell quickly at the right price and time, while still making a decent profit.

Companies (B2B and B2C) use a price optimisation formula based on factors such as: demand for their product, competition, historical prices and sales, and the cost of manufacturing goods.

The best price point is where companies can best meet their objectives, whether that means increased profit margins, customer growth or a mixture of both.

Price-optimisation models can be used to tailor pricing for customer segments by simulating how targeted customers will respond to price changes with data-driven scenarios. Given the complexity of pricing thousands of items in highly dynamic market conditions, modelling results and insights helps to forecast demand, develop pricing and promotion strategies, control inventory levels and improve customer satisfaction. 

To optimise pricing, you need to collect and analyse your data, both qualitative and quantitative. Ultimately, this is the only way to find out how much your customers will pay for a product or service you offer. It allows you to break free from that guessing-game cycle. Quantitative data – such as transactional data, customer reviews, and supply-and- demand data – show you how you’re doing and what needs to be changed.

Qualitative data is about speaking to your customers, either via surveys or phone. Ask them what they may like or dislike about your product, or the benefits they value, for example. To work on your own website’s price optimisation, you would: 

Conclusion

Taking steps to increase your AOV could be a simple way to increase revenue and help your business to grow. Many of the methods for increasing AOV also target improving the customer experience on your ecommerce shop – which can, in turn, improve your customer relationships and encourage repeat sales.