25th August 2021 - 8 minutes

Increase Your Average Order Value With Ecommerce Personalisation

What is average order value (AOV)? 

Average order value (AOV) is an ecommerce metric that defines the average total of every online order placed with a business over a certain period of time. AOV is an extremely important metric for all ecommerce businesses to monitor and understand. 

Marketers use AOV as a benchmark for customer behaviour, to measure how successful their marketing efforts are doing. It is a metric that helps online retailers understand where to invest additional spend. For instance, it can help determine whether to increase spend on advertising, store aesthetic, or/and pricing of products. 

Typically online businesses track their AOV closely, daily or weekly, and then will compare month on month trends. Generally speaking a higher AOV is what marketers aim for. However, factors such as industry vertical, social trends, device type, product type, product pricing and more can impact your average order value. It is important to understand what the average order value is for your industry, to be able to compare whereabouts you sit against your competitors. 

How to calculate AOV:

Total Revenue (£) / Total Number of Orders = Average Order Value 

Putting AOV into practice 

EXAMPLE 1: You want to work out your AOV for the month. Your business has generated £5,000 in revenue for the month and you have had 100 orders. 

£5,000 monthly total revenue / 100 number of orders = £50.00 AOV 

There has been some criticism around how accurate AOV is as a singular metric for customer behaviour. Taylor Holiday, co-founder of marketing agency Common Thread Collective, suggests that to increase the value of your orders, marketers and online stores must consider all three measures of central tendency: 

  • Mean: the average value of all orders (AOV)
  • Median: the middle value of all orders
  • Mode: the most frequently occurring order value

EXAMPLE 2: You want to work out your AOV based on the first quarter of the year. You could either take a look at the total revenue for these months and apply the equation above. Or if you have documented each month’s AOV you could work out the mean AOV by adding all the numbers together and then dividing by the amount of months. 

January + February + March = X / 3 = AOV for quarter 1 

 £50.00  +   £48.50  + £51.25 = 149.75 / 3 = £49.91 

It is important to compare your AOV week on week, month on month, year on year and, even in some cases, day on day, to have a clear scope on your business’s growth. 

Please note: Average order value is based on per order and not per customer. A customer could return and make multiple orders at different values, and each of these orders would be included into your AOV. Also, note that this metric doesn’t refer to gross profit or profit margins, but does give insight into how those figures are formed. 

Additional important metrics for online stores to consider: 

AOV allows you to evaluate your online businesses pricing strategy. As well as average order value, ecommerce businesses should also keep in mind other KPIs, such as; 

  • Conversion rate, 
  • Revenue per visitor and traffic source, 
  • Customer acquisition cost, 
  • Shopping cart abandonment rate.

6 ways to increase your ecommerce AOV with personalisation: 

Now that we have discussed what the average order value is, how to calculate it, and why it is important, let’s take a look at how we can increase AOV through ecommerce personalisation. All six of these marketing strategies will not only increase AOV, but maximise revenue growth, conversion rate, and user experience. 

1. Loyalty programs 

Loyalty programs are a great way to increase customer retention and customer lifetime value. Online businesses that sell products that you need to restock or repurchase could introduce a rewards system and user accounts. Or they could consider introducing monthly or bi-monthly (depending on the product’s lifespan) product subscriptions, to increase AOV and ensure that new customers become returning customers. 

Incentives are a great way to engage your customers. For instance, a points system motivates people to increase their spending. You could reward them 10 points with every purchase over X amount and then when they have collected X amount of points they receive 25% off or a freebie. 

“Creating a customer loyalty program is a retention strategy that helps you forge relationships with your customers, encouraging them to return.”

Shopify

It is important that any loyalty program is personalised to the individual and evolves with the customers needs. A way to ensure that your offers, content and loyalty programs are targeting the right people is through customer segmentation. You could create different segments based on the kind of customer that they are. 

For instance, you could create a segment for VIP consumers. A VIP consumer must meet the criteria of X, Y, and Z. The content that would then be pushed towards these customers could be tailored to suit their needs. If they are not already a part of your loyalty program you could reach out to them through a popup convincing them to enter their email to receive exclusive offers. Or if you already have their email you could send them an email campaign showcasing products that you think they will love based on their previous visits and offer them a discount code when they spend over £30.00. 

2. Upsell or cross-sell complementary products

Upselling encourages customers to purchase comparable more expensive products than the one your customer is currently interested in. Cross-selling, on the other hand, invites customers to purchase related or complementary products to add-on to their order.

Personalised product recommenders are almost always on an online store these days. If you don’t have them already the short answer is you need them – especially if you are wanting to increase average order value. They are the best and most effective way to upsell or cross-sell your products – according to Amazon. 

The real game changer now is AI driven product recommenders, which use machine learning to formulate which products to show based on real-time analytics, meaning that the right products are being shown to the right people at the right time. This maximizes the chances of conversion and AOV by tenfold. 

To get an idea of AI product recommenders in action, Comfy Homes, a Yorkshire based furniture retailer, increased their AOV by 5% through cross-selling and upselling their products with AI product recommenders. To start with these recommenders were placed on their homepage, product pages, and their basket page. 

“Personalised recommendations drive revenue by positively impacting a customer’s total cart amount. They offer relevant cross-sell and up-sell opportunities that pique a customer’s interest, resulting in them purchasing more than just the original item they came in for. Statistics show that sessions that contain no engagement with product recommendations have on average, an AOV of $44.41. However, when prospects engage with just a single recommendation, this number multiplies by 369%.”

BigCommerce

3. Quick responses and customer support through Live Chat 

Focus your marketing efforts around your customer’s needs and wants. Creating a customer-centric marketing strategy is essential for increasing average order value. A customer that believes they are experiencing the best user experience is likely to spend more and continue to keep returning. 

A great way to improve your customer service is through offering a range of means of support. On-site content such as blogs, social proof, FAQs, and how to articles are great for connecting to your customer and addressing their queries. However, these forms of content aren’t always going to fulfill the needs of the customer. 

Customers are impatient. They want answers fast, if they can’t find those answers they will leave and probably not return. That’s where Live Chat comes in. 

Live Chat is a great way to offer support to your customers, answer any questions they might have, and recommend relevant products (upsell and cross-sell) based on their current activity on your site. Online businesses that use Live Chat features tend to see an uplift in their conversion and AOV, as it allows the customer to chat directly to an employee. It humanises the online shopping experience. In some cases time and resources are limited, that’s why automated responses are always a good way to still cater to your customers even if you are not there. 

Forrester revealed that online businesses that facilitate Live Chat have the opportunity to sell more, with an average increase of 10-15% per shopping basket.

Want to increase your ecommerce conversion rate?

4. Personalised content and offers

Personalised content is what is says on the tin – content that is personalised to the individual. The content I see would be different to the content that you see, because our shopping behaviours, habits and interests are unique to us. One size does not fit all. 

Twilio Segment’s research stated that if brands do not offer a personalised experience, then nearly 50% of consumers will shop elsewhere. In addition to that, according to SalesForce, 84% of consumers rate being valued as an individual and not as a number as crucial to winning their business. 

The wonderful thing about personalised content is the freedom to be as creative as you want. From dynamic banners to product carousels, you can tailor each person’s journey to suit them. By doing this you are optimising their customer experience, when a customer is happy they are more likely to spend more. 

Use personalised content to target certain audience groups (segments) with irresistible offers to increase conversion, sales and – of course – AOV. You could have a VIP customer, first time visitor, visiting through a mobile, who lives in America, your customer segmentation list can be as extensive and specific as you wish. 

Let’s take a look at some offers that you could promote to increase average order value: 

Bundling products

If you sell products that could be sold together then run campaigns to promote these products as a bundle. Products that are usually bundled include a small discount in price making them more desirable for consumers. Additionally, you could promote products as sets. For example, if you sold skin care products you could bundle skin care kits – night time routine kit, day time routine kit, so on and so forth. 

Introduce a free shipping threshold

You could run a campaign across your site to target visitors to spend more. Including a spend over X amount or minimum purchase to receive free delivery is a great incentive. Statista found that high shipping costs was the primary reason for basket abandonment at 63%. It’s important to display your delivery offer clearly, so customers are aware and have a chance to add more items to reach the free shipping threshold.

Volume discounts

Everyone loves a discount, especially in volume. These kinds of offers are common during businesses flash sales, a big one being Black Friday. Businesses sell products at a heavily discounted price and in volume. Let’s say you sell home furnishings. You could advertise your hand towels for £10.00 per towel, but only £7.50 each when you buy a minimum of three. 

Discount off their next purchase

A clever way to persuade your customer to make a repeat sale with your business is to give them a discount code on their next purchase with you. This could be advertised through a banner, popup or email campaign depending on which your customer is most likely to interact with. This could be targeted at FTVs. 

Top tip: A/B Test Campaigns

If you are unsure of which offers to run to which audiences then ecommerce personalisation solutions, like PureClarity, allow you to A/B test campaigns. This gives you insight into which campaigns are converting, increasing AOV, and are worth investing more time, resource and money to. 

6. Track online metrics through website analytics 

Analytics are the pinnacle of any marketing strategy. Ecommerce personalisation allows you to track important key metrics (AOV, conversion rate, total revenue etc), monitor customer behaviour, and evaluate campaign and product performance. 

Real-time analytics give you an additional layer of insight into what your online visitors are doing in their current sessions. It allows you to understand what people are interacting with on your site and what content is converting.

Key takeaways

Ecommerce personalisation is essential for any business looking to improve their marketing strategy. If this is something you would be interested in – get in touch today. Book a discovery call

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