Improving your average order value (AOV) can make a huge difference to your bottom line
When you’re running a business that’s primarily online, you’re always subject to significant competition. This means that one of the key challenges is ensuring that each sale is optimized to produce the highest possible returns. Your average order value (AOV) can mean the difference between a thriving business, and failure.
Yet, it can feel as though how much your clients spend on each visit is largely out of your control. The truth is, you have more tools and tactics at your disposal to make a difference to this metric than ever before.
Why does it matter?
On the surface, your AOV might appear to be simply a gauge of the state of your revenue. It’s more important than this. As a key performance indicator (KPI) it’s essential to both the day-to-day running of your business and your long term plans.
In essence, it’s a tool for decision making. Knowing the average dollar spend gives you insights into customer needs, and how fully they’re engaging with you. This means that you’re able to plan your marketing and pricing strategies in ways that capitalize on the types of product and services that your demographic is hunting for. It helps you to see what elements of your website are a draw, and which are areas of leakage that fail to convert customers.
The higher your AOV, the better returns you’re going to get on your customer acquisition investments, too. Every time a visitor arrives at your site, it’s the result of marketing costs, and even their eventual checkout comes loaded with transaction fees. It’s in your best interest to push that AOV as high as possible.
How do you do this?
1. Understand Your Customer
This one shouldn’t be a surprise to any business owner. By taking time to examine how consumers prefer to interact with your product, you can gain better insights into additional services they might appreciate or products that could interest them.
This means you need to focus on collecting and analyzing some data on customers who have interacted with your business. Surveys can be a good start, but as with your marketing approach you’ll generally find you’ll get better quality results by getting personal and opening a dialogue. Send out prompts to get the conversation started; there are free email marketing services available that can help you save time on the logistics here. Learn what draws them to your product, how they use it, and what they appreciate in an eCommerce experience.
2. Cross-sell and Up-sell
Too many business owners pull back on the prospect of cross-selling and up-selling because it’s considered an aggressive tactic. However, it has to be a key part of your strategy to raise your AOV. It’s important to remember that it’s your approach that can be the difference between coming across as pushy, or a company that’s conscious of its customer’s needs.
Use what you already know about them to offer them relevant additional products or premium services. Link automated product recommendation tools to the data on items customers have been viewing or are already in their basket. When the recommendation kicks in, this should also be coupled with a message about why the additional product compliments or enhances the basketed item, or how a premium service might be more suitable to their requirements.
3. Create Brand Loyalty
You’re always seeking to help customers to build a deeper connection to your brand. You want them to associate your name with positive experiences, and make them feel as though they’re more than just another one-and-done customer. By creating a loyalty or membership scheme you have the opportunity to not only encourage repeat custom, but also a higher AOV with each visit.
Provide incentives for membership that also rewards multiple purchases. Lower priced or free premium shipping, exclusive products, early access to new services. Create the impression that their loyalty to your brand makes them a VIP. However, you always have to ensure that all these services are tied to your brand identity. When directing them customers to premium services via SMS or social media, use a URL shortener that is unique to both the offer and your business. Create custom codes and tailored offers. Make sure that they associate the experience with your company.
4. Focus on User Experience
User experience (UX) has become a buzz phrase in business circles for good reason. When you’re dealing primarily in online sales, making certain that your customers can utilize your website easily is essential. It’s not only vital in ensuring customers more likely to make it to the end of the sales funnel, you can also use it to encourage them to spend more on each visit.
Use your landing page to start them on a journey through your site. Post videos that not only tell them what’s exciting about your company, but also alert them to discounts available. Use elements of personalization. Geotagging data should help you to alert them to localized services and offers. Returning customers shouldn’t see the same old home page that new customers experience; use data from their previous visits to highlight similar new products and links to take them there. Make it as easy as possible for customers to discover items aside from those they had initially intended to buy, and guide them to the checkout.
5. Embrace Social Media
While it can be helpful to use your social media to advertise products or promotions, it can do more for your AOV. Customers tend to respond better to your business when they’re able to connect on an ideological or emotional level. Studies show that Millennials — who now represent the largest percentage of consumers — prioritize businesses who demonstrate similar values.
When crafting social media post ideas, plan to produce content that reflects how your business is making a positive impact. Give insights that show how customers spending more with every purchase directly affects your ability to make meaningful changes in society. Give them a reason to keep engaging with you.
By raising your AOV you have the opportunity to operate a more streamlined and agile business. Traditional approaches such as discounts and loyalty schemes should be combined with tactics that make best use of the online sales environment.
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