With customer acquisition costs on the rise and ecommerce competition fiercer than ever, savvy retail marketers are realizing more than ever the importance of making the most from every virtual visitor through their ecommerce doors.
While conversion rate optimization is often a focus of capitalizing on organic and paid traffic, there's an equally effective tactic that'll produce the kind of juice that's worth squeezing for: boosting average order values.
Selling more to every customer is an effective way to grow the bottom line, with a net positive effect on a number of other key ecommerce metrics, including CAC to LTV ratio, as well as ROI.
Average Order Value (AOV) is never far from retailer's minds either, of course. It's why upsells and cross-sells are so popular (and effective) to boost an ecommerce store's bottom line.
If increasing AOV is top of mind for your business to, good news: We've got five simple strategies to try out on your store, all of which are proven to drive bigger basket sizes while improving the customer experience.
What are upsells and cross-sells?
A lot of people will use the term 'upsell' to cover what both upsells and cross-sells are, but there is a difference. An upsell involves getting customers to spend more on a specific item they were already interested in. A classic upsell example to boost average order value would be 'Would you like to supersize your drink today?'
But to bring it home to the ecommerce world, some examples might include upselling:
- A one-time purchase into a subscription
- A larger size of a product (often discounted as a 'value size')
- A premium version of a product
- An add-on enhancement such as gift wrap, embroidery, or personalization
- An add-on service such as a warranty, installation, or white glove delivery
In contrast, cross-selling involves selling two or more products that work well together. With cross-sells, AOV goes up because customers are buying more products in a single transaction, as opposed to upsells, where you're spending more on a single product. Again, the classic example cited for cross-sells to boost average order value is 'Would you like fries with your drink?'
Looking at ecommerce examples, typical strategies might include cross-selling:
- Matching sets by variant (color, print, designer, etc.)
- Complete looks
- Items frequently bought together
- Related or alternate items
Not every strategy to grow AOV is specifically tied to an upsell or cross-sell, but understanding the difference between these tactics is critical to driving more revenue and bigger order values.
Strategy #1: Promote items that will specifically help a shopper hit a free shipping threshold
Free shipping has pretty much become table stakes for most ecommerce retailers - if a shopper is willing to shell out a particular amount of funds. Many merchants include some sort of progress indicator that helps shoppers see how far away they are from free shipping, such as a dollar value countdown or a progress bar.
The reason? Free shipping works. 58% of shoppers say they're willing to add products to their cart to hit that free shipping minimum. It's unsurprising, then, that orders with free shipping tend to be about 30% higher in AOV and revenue as well.
But there is a better way to promote free shipping and get a higher average order value than just a progress indicator. It's called product recommendations. Specifically, product recommendations that will help a customer get to that free shipping threshold that much quicker.
Let's use an example to explain. Let's say Samantha is shopping on a beauty store and they're $10 away from free shipping. Samantha sees this when she hits checkout, and is motivated to find another item for $10 to unlock that perk. But wait! You had them on the hook - Samantha was ready to checkout. Now she's browsing the site again, filtering for products around the $10 mark, and maybe getting a little frustrated. She might leave the site and come back to it later, or go hunting for a coupon code. Even if she does find something to add, it's probably the best candidate for an item to be returned.
Not a great scenario, right? Let's say you offered Samantha a carousel of product recommendations based on what she's already got in her basket. Suddenly Samantha isn't looking for something for the purposes of hitting free shipping. She's adding on items that'll enhance her overall product experience. A lip primer for lipstick makes total sense - and at $12, Samantha will be pumped to get free shipping at the same time.
Word to the wise: This average order value-boosting strategy works best when you consider dollar value. Even if the best product for Samantha's cart (based on her other items) is an $80 eye shadow palette, if she only needs $10 to get free shipping, aim low. Think like a grocery store and provide cheap and cheerful impulse buys that'll tip the scales for a customer for greater total revenue.
Strategy #2: Don't give up at checkout
For many merchants, the cart is the last stand to drive AOV up. Once a customer hits checkout, it's like they've entered some sort of sacred zone that many brands are afraid to touch.
When you get someone at checkout, that customer is captive. They're one of the 2 people out of a 100 that have hung on up to this point. Don't let them off the hook - tap into their motivated customer behavior and reel them in with one more amazing offer by including an upsell or cross-sell at checkout.
In-checkout upsells or cross-sells should take one of two approaches. The first is to use AI-based product recommendations to provide an upsell or cross-sell that's tailored to the item(s) a shopper is about to buy. If the customer is getting a new pair of sneakers, cross-sell insoles. Buying a TV mount? Upsell an installation service. These offers feel personalized and tailored - both criteria that will make a shopper that much more likely to convert.
If you want to take a bolder approach to increasing average order value, however, keep reading.
One of the most effective in-checkout upsell or cross-sell strategies we've found is to provide an offer that doesn't exist anywhere else on the store. We're talking a crazy good deal - the kind that feels too amazing to pass up. Use this space to provide a massive discount on a product bundle; you'll move more product and boost average order value. Got deadstock? Clear it out with in-checkout cross-sells that offer steep discounts that feel like a deal to the customer while growing order values along with the total number of items purchased. Watch the average amount customers spend skyrocket in no time!
Strategy #3: Make email make you more money
Quite often, merchants will keep their upsell and cross-sell tactics strictly on their website. Yet literally zero ecommerce merchants keep their customer communications to a single channel.
Fix this gap by offering upsells and cross-sells in email. Virtually any email can have personalized product recommendations inserted, but a truly savvy ecommerce marketer will use email recommendations to drive higher average order value.
For example, try offering product recommendations on an abandoned cart email. These might be related items, or items that are frequently bought together with whatever the customer didn't check out with. If a shopper wasn't quite ready to check out before, they might be keen to do so once that customer sees another item of interest in a tailored reminder email - ultimately adding that item to cart and boosting AOV in a flash.
Strategy #4: Offer personalized 1:1 service
Personal shopping has been a profession since the 19th century, and for good reason: It works. The job of any personal shopper is to understand their client's needs and provide tailored recommendations that'll typically drive way bigger order values than a shopper might make on their own.
Think of it this way. When Mark shops in a department store by himself, he might be there on a mission, like to find new jeans. But if Mark was approached by a personal shopper, they might also bring shirts that go with the jeans he's trying on, curating an entire look. Or they could look at the brand Mark feels most confident in, and bring him a pair of chinos from the same company. Suddenly Mark is leaving with a small wardrobe update, instead of a single pair of jeans. Hello bigger average order value.
This of course, is a retail example. But 1:1 service can be accomplished at scale in ecommerce as well. AI-based product recommendations are an effective tool to give shoppers tailored advice and guidance for their 'next click', and what they add to cart. Strategic product recommendations that take into account what a shopper has shown interest in - based on their browse and add to cart behavior - will automatically update, giving the shopper more ideas for more things to add to their cart and boost AOV.
Personalized 1:1 shopping can also be offered online through clienteling solutions, such as Tulip or Goinstore, or through live video co-shopping on-demand platforms, like GhostRetail. These tools let online shoppers connect with a real sales associate over video chat, walking through their specific requirements to find the perfect products - and giving savvy salespeople an in to recommend more products to grow basket sizes.
Strategy #5: Get time on your side
Think back to the peak days of Black Friday hysteria - we're talking eye-popping deals in limited quantities that caused lineups to start in the middle of the night. Today in comparison, many brands are kicking off Black Friday sales earlier and earlier, and many times product availability and discounts may actually be better before the big day itself. While...not everything about peak BFCM days were great, they did have the effect of encouraging people to shop before the deals stopped, oftentimes building up huge baskets without even thinking about it.
One amazing strategy to drive bigger average order value involves using time to you, and your customers', advantage. There are three ways to do this.
- Use limited-time promotions to drive more sales. For example, offer a 20% discount on orders over $100 - but only for one day. Or serve up an upsell or cross-sell at some point in the shopping journey that provides an irresistible discount, like 50% off a specific item (Pro tip: We especially like this average value-boosting tactic for post-purchase cross-sells). If you're going to go the time promo route, just ensure it's actually limited time. Most shoppers don't love seeing an item go on a limited time sale...every single day.
- Include a bounceback coupon to improve both LTV and AOV. If you've ever seen Old Navy's Super Cash promotions then you're already familiar with this customer retention tactic. The more you spend, the more you get back in promotional value, to be spent during a later window. While this is a relatively complex undertaking, a simpler one can be to offer customers a 30% discount on their next purchase when they spend $100 on this one. Customer lifetime value is an important part of increasing average order value - the more a shopper trusts a brand, the more likely they are to rack up bigger baskets and more revenue.
- Think about return policies carefully. One of the biggest risks for any online shopper is an item not living up to their 'in real life' expectations. Any online store that has challenging or unclear return policies run the risk of a shopper, especially a new customer, hedging their bets and buying less, with the aim of keeping everything. A more generous return policy (including longer return windows) is key to higher AOV, boosting average revenue, and decreasing returns.
Increase average order value with personalization
The simple reality is shoppers will spend more at brands that feel like they align with each individual's values, interests, and needs. It's the job of every ecommerce merchant to find effective ways to do this in order to maximize the potential, particularly with existing customers, for a higher average order value.
Personalization at scale to drive more loyal customers is possible, particularly if you invest in an AI-based personalization platform like LimeSpot, which equips brands with all they need to run upsells, cross-sells, bundles, tailored promotions and recommendations, personalized content and emails, and other AOV-boosting tactics.