Becky Lawson

Simple steps to increase your average order value

When looking at key business performance metrics, a lot of online retailers rightly look at their conversion rate and focus in on improving it. However, it’s equally important to consider average order value and dedicate time to increasing it. With this in mind, here’s a view simple steps you can take to help you achieve that goal:

Free Delivery Threshold

Setting a price point at which a customer gets free delivery is a great way to incentivise them to add more products to the basket and increase their order value. A study by Deloitte found that 40% of customers were willing buy more items in order to get free shipping.

It’s important to prominently display the free shipping threshold on the basket page, with a call to action stating how far the customer is from getting their products delivered free of charge. Whilst this can be a really easy tool to increase average order value, it’s crucial to look into what your competitors are doing – if a competitor’s free shipping threshold is lower, or they offer free shipping across all orders, you could be at a distinct disadvantage.

Upselling and Cross-Selling

Amazon reported in 2006 that upselling and cross-selling accounted for 30% of their total sales, whilst reports suggest overall it accounts for 10%-30% of sales for online retailers.

Good upselling leaves customers purchasing “just in case” and asking “why not?” when considering the more expensive item, for example purchasing a 4K TV as opposed to a standard HD one. Cross-selling can be incredibly effective when focusing on finding products that positively complement each other, for example a footwear retailer may display shoe polish alongside their formal footwear.

When needing to make a decision on your screen space on the product page, it’s important to consider that studies show that upselling can work up to 20 times better than cross-selling, however a mix can also be highly effective.

Offer Finance on Expensive Items

There are a number of services available which you can utilise to provide finance to customers that make the process easy with almost instant credit decisions.

Displaying a finance payment option for expensive items gives customers the opportunity to purchase items that they normally wouldn’t be able to if they had to pay a lump sum on purchase. This can be particularly effective when combined with upselling, by alerting a customer looking at a cheaper product that they can get the more expensive option on finance.

Discount on Bundle or Bulk Purchases

Providing a discount on multiple items bought at the same time gives the customer an incentive to spend more. This is most effective when the two products complement each other well, for example purchasing a pair of jeans and getting a belt for half price.

The same principle also applies to bulk purchases of the same products, if a discount is added for purchasing at a higher quantity a customer will be more inclined to add more of the product to their basket. Setting discounts on bulk purchases of a product will naturally work best on products that a customer will regularly replenish, such as light bulbs or batteries, and can be incredibly effective when selling to trade customers.

Related articles: