If you are a value added reseller with an e-commerce store, then you know how difficult it is to design and implement new marketing strategies consistently in order to improve sales revenue and a higher ROI for every dollar spent. The most basic way to drive more conversions is to get more orders on the site. However, that can again be a daunting task in terms of money and efforts. It is here where you should think about increasing the Average Order Value (AOV).
What is Average Order Value?
AOV is a key performance metric for your e-commerce business. It is the average total amount spent by customers on every online purchase (order) over a definite period of time (month, quarter, year). It is determined by calculating the sales per order and not sales per customer.
The formula for calculating AOV is:
AOV = Revenue/Number of Orders
AOV gives useful insights into the buying behaviour of customers, product pricing and returns on online marketing spending.
How to Increase Average Order Value?
There are many ways to increase average order value:
- Give limited period offer
Discounts and offers yield results only if they have a deadline attached to it. Customers have a tendency to postpone their purchases. But, if you give them an offer that is valid for only a limited time, it will create a sense of urgency and urge them to take action immediately.
- Offer Incentives or Discounts on Minimum Purchase
Let your customers know that they can get the discount on a minimum purchase. The discount should be such that it covers your lost margins and clears your dead stock. Customers are most likely to buy more to avail discounts.
- Upselling and Cross-Selling
If you are wondering how to increase conversion rate through AOV, then try upselling and cross-selling techniques. So, if your customer is looking to buy a laptop, try to offer a complementary product such as a mouse device (cross-selling) or a premium variant of laptops with enhanced features (upselling). However, before doing so, ask your customers about their budget so that you know what options to offer them.
- Use Customer Recommendations
When customers are browsing through the products or are on the checkout page, give them recommendations for other similar or complementary products. The recommendations can be either based on customers’ needs or a related slow-moving product you want to push. You can also showcase recommendations through Facebook marketing to get more traffic and thereby increase AOV.
- Create Packages of Products
Make product bundles and sell them to your customers. Product bundles are nothing but a combined package of individual goods and services – something like a combo offer. The price of product bundles is lesser than each individual product therein. So, the customers get a better deal while you increase the AOV.
AOV is a very useful metric for VAR business to get more traffic, conversions and revenue. The above tips should get you started with AOV.