Give yourself a well-deserved pat on the back. Breathe in the success. And receive my heartfelt congratulations.
You did it. After everything you’ve sacrificed, you’ve actually reached this far and gotten your first customer.
There he is now, browsing on your website and reading product reviews. He’s clicked on several options and, oh, wait, look – he’s decided to put a product on his shopping cart! That’s so exciting…except, he’s actually chosen the cheapest product. But wait, maybe he’s going to add more? Oh, he clicked on “checkout” and he’s paying for it already.
So, it’s good for you that you’ve finally gotten a customer. Someone actually went on your website and trusted your brand enough to do business with you.
But what do you do to increase your revenue when majority of your customers are simply buying your cheapest product?
You can increase the number of your customers, sure. You can also increase the repeat purchase rate and encourage your customers to buy from you over and over again.
Finally, you can also increase the Average Order Value (AOV) and this is exactly what we’re going to cover in this week’s video.
Average Order Value (AOV) is the average amount spent by your customers on each online purchase. Increasing your Ecommerce store’s AOV increases your company’s profitability. Here are five effective ways you can do this:
1. Provide product recommendations
Product recommendations generate 33% higher average order value. You can include product recommendations in both your product pages and cart pages.
In your product pages, you can include the phrase “Other customers who view this product are also interested in these products…”
And for your cart pages, you can include a list of products with the title “This product you’re buying is frequently purchased together with these products…”
How do you figure out which products to include in your recommendations? You can do this manually or by simply using a recommendation algorithm.
2. Upsell or cross-sell complementary products
You can get an immediate 15-30% increase in revenue from upsells. If you’re not doing this tactic, you’re stealing from your company by limiting its potential to earn more revenue.
If product recommendations mean you’re encouraging your customer to add popular products to their purchase, up-selling & cross-selling mean you’re encourage your customer to add helpful and complementary products to their cart.
Confused? Let’s take a customer buying a laptop as an example.
Product recommendation is suggesting a smartphone or a tablet.
Upselling is suggesting a more premium laptop model.
Cross-selling is suggesting a mouse, a keyboard or a laptop bag.
3. Set order minimums for a discount
In my 30+ years of experience as a human, I haven’t met anyone who doesn’t want to get a discount. After all, it’s more bang for your buck, right?
Don’t give out discounts too freely, though! You need to qualify
This tactic helps you incentivize your customers to spend more just so they can save money.
How do you do this in a sustainable way that’s win-win for the both of you?
Compute for your AOV. Then, pick a number higher than your AOV and add how much you’re willing to discount and use this number.
For example, if your AOV is $15, and you’re willing to discount $10, tell your customer that if he reaches $30, you’ll take $10 off his total. This way, your customer gets to save money via the discount and you get to increase your AOV over the long run ($20 vs $15).
4. Set up a customer loyalty program that exchanges points for customer benefits
The more your customer spends with you, the more points he’ll receive. And the more points he’ll get, the more benefits he can experience.
An effective way to implement this is to establish tiers within your loyalty program. The more he spends, the faster it is to unlock the higher tiers which provide more points per dollar spent.
Don’t know if this really works? Just check out this study done by Smile.io which found that “majority of brands see at least a 13.71% increase in order values from rewards program members over non program members.”
This means that every time a non-member spends $100 on an order, a member would have spent $13.71 more.
5. Sell product bundles/product packages or offer BOGO deals
Offer product bundles that cost less compared to buying the same items individually.
For example, a product bundle that includes a laptop + a mouse + a charger + a laptop bag can cost $499, whereas buying the same products individually can cost $649.
This way, customers are more likely to buy the bundle because this will save them money. And doing this helps you increase your AOV and subsequently, your revenue as well. You can also offer Buy One, Get One deals to incentivize purchases higher than your AOV.
Now, we’ve talked about the five tactics that you can use to increase AOV but you can do these only on the pre-checkout phase, meaning, before your customer finalizes the transaction. What do you post-checkout? You can also:
6. Include product recommendations and up-sells while the payment token is still active
Once your customer clicked the “pay now” button and while his payment token is still active, you can still send him to a post-purchase sales funnel which does the product recommendations and upsells for you.
For example, you can use CartHook to do this for you: while your customer’s payment token is still active, you can present time-limited exclusive offers that they can click once to be included in their final order.
7. Include product recommendations and up-sells in your email receipts
Here at CM Commerce, we still see email receipts performing really well: high open rate, high click rate and high conversion rates.
Simply include a discount coupon and a product recommendation in your email receipts to boost your AOV. For example, include a casual offer in the email they’ll receive, something like:
“Hey, nice cart! Customers who bought the products you’ve bought also got these… Want to get these products at a discount? Here’s a discount code just for you – valid for 1 hour only!”
Increase your AOV this 2019 and see your company’s profitability soar, too. Any other things you’d like to add? Let me know and let’s talk in the comments section below. See you next week. Cheers!
(Photo by Jungwoo Hong from Unsplash.)