What is Average Order Value (AOV) and 3 Simple Ways to Increase It

Kelsey Clutter, Content Marketing Manager

What is AOV?

Average order value (AOV) is the average amount of money a customer spends in one transaction on your website.

It’s a powerful metric that you can use to improve the overall profitability of your store, giving you insights into buying patterns, customer trends, and even marketing ROI.

What constitutes a good AOV depends on your business, products, and customers. Growcode has pinned the average AOV for eCommerce at $128, but it can vary depending on your product prices and customer lifetime value.

To calculate your business’s AOV, you can use the equation below:

By analyzing your AOV on a customer demographic level, you can identify your biggest spenders. This will help you target your marketing and advertising campaigns to attract your most profitable customers.

What’s more is you can even calculate your AOV across different eCommerce holidays which will allow you to identify and target the ones driving the biggest surge in spending.

As a result of having a grasp on your AOV, you’ll be able to plan marketing budgets and strategies accordingly so you can smash marketing goals and increase your bottom line.

Actively working towards increasing your AOV will allow you to benefit from:

• Higher revenue and profit: You make more money per order and increase profit margins by reducing ancillary costs (e.g. shipping and packaging).
• Marketing and advertising ROI: You reduce CPA and increase the return on marketing and advertising spend.
• Inventory efficiency: You increase your inventory turnover, reducing storage costs and stock depreciation.
• Input vs. gain: You boost your customers’ value, which positively increases the resource and financial input vs. gain ratio.

3 Strategies to Increase AOV

1. Display Social Proof

Social proof instills consumer confidence in purchase decisions, making customers more open to spending more. This is especially true for higher-priced items, where customer reviews can increase conversions by 380%.

Social proof also creates a psychological fear of missing out (FOMO) that drives impulse actions, especially when you’re cross-selling items that other people also bought.

For baby accessory brand Freshly Picked, word-of-mouth recommendations are crucial for its community of new parents. Using Okendo, they were able to display customer reviews across product lines to educate and engage with their community of new parents which resulted in an $11 increase in AOV.

Sprinkle social proof across the customer journey using:

• Star ratings on category pages and in the Google search results — these attract customer attention to high-performing products.
• Review counts at the top of product pages — these provide shoppers with a quick reference to a product’s popularity.
• User-generated content in product descriptions and on-site marketing — this gives customers more detailed insight into a product and its benefits.
• Shoppable Instagram feeds on your homepage and product pages — this displays tagged UGC which shoppers can purchase directly from.

2. Cross-Sell and Up-Sell Complementary Products

Cross-selling and up-selling introduce customers to items that enhance or supplement their current cart contents when they’ve already shown a commitment to purchase.

Cross-sells and up-sells also enhance the customer experience by aiding product discovery. For example, when someone adds a pair of shoes to their cart and you cross-sell a matching dress, the customer doesn’t have to leave their cart (or your store) to search for that item themselves.

A great example is dog treat brand WAG. The brand had a collection of valuable data on their customer’s past purchase history and used it to create hyper personalized product recommendation emails to cross-sell similar products. As a result, WAG was able to witness a 423% increase revenue per recipient and a 300% increase in placed order rate.

Seamlessly integrate cross-sells and up-sells across your website using:

• Product comparisons on product pages to show customers examples of similar products they might be interested in.
• Product recommendations at the checkout to showcase complementary products that other buyers bought.
• Post-purchase emails to intelligently recommend follow-on products based on a customer’s purchase history.

Don’t neglect customer reviews and UGC when making product recommendations. Over 90% of shoppers trust reviews from family and friends. If a customer uploaded a photo of them rocking that shoe and handbag combination, use it! You can also include star ratings and reviews to your onsite product recommendations.

3. Offer Your Customers Rewards

Over half of customers change their spending behavior to earn rewards. Rewards increase AOV because they give customers a reason to add more products to their cart to ‘unlock’ the benefit.

Women’s fashion brand Beginning Boutique uses post-purchase email flows triggered by customer behavior to offer different reward incentives for its customers when leaving a review.

For example, customers who place an order are able to leave a written review in exchange for a 10% discount. If they add a photo or video to their review, customers are then able to upgrade their reward for a 15% off discount. This allowed the brand to drive more sales and increase coupon code redemptions by 53% through timely reward incentives.

There are many ways to incentivize customers to spend more money when shopping using rewards, some of the easiest being:

• Free shipping: Setting a minimum spend requirement to unlock free shipping.
• Tiered loyalty program: Creating a tiered loyalty program where rewards are unlocked based on transactional value.
• Reviews: Offering customers rewards in exchange for reviews based on quality or quantity.

Conclusion

Increasing AOV can help you demonstrate marketing and advertising ROI, allowing you to increase budgets and drive overall store profitability.

With Okendo, brands can maximize their AOV through timely customer review incentives, compelling review displays, and powerful integrations with leading technology partners like Klaviyo and Rebuy to cross-sell and up-sell products.

Book a demo with Okendo