19th November 2021 - 5 minutes

Why isn’t my Average Order Value Growing?

What is average order value? 

Average order value (AOV) is an ecommerce metric used by many online businesses to measure the success of their ecommerce store. It is a key performance indicator (KPI) that defines the average monetary sum of orders placed within a period of time. 

To work out your AOV you can take your total revenue for the month, quarter or year, and divide that amount by the number of orders placed. For instance, say you make a monthly revenue of £10,000 and have 200 orders your AOV would equate to £50. 

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

Four important ecommerce metrics to consider in tandem with AOV include:

  • Lifetime revenue per visitor,
  • Cost Per conversion,
  • Revenue per visitor and traffic source, 
  • Shopping cart abandonment rate.

Are you struggling to increase your AOV?

Is AOV an important metric for all online businesses? 

Short answer, yes. 

Alongside conversion rate and online revenue, marketers can use AOV as a benchmark for customer behaviour, to measure how successful their online store is doing. It can help online retailers understand where to invest additional spend to increase the number of products visitors are buying within one order. For instance, it can help determine whether to increase spend on marketing efforts, store UX, or, even indicate if it is time to re-evaluate the pricing strategy. 

It is always good practice to understand the average AOV within your vertical, to see where yours sits in comparison to competitors. This again will highlight how successful your ecommerce store is performing and will help make future business decisions. 

As a general benchmark, the average AOV for ecommerce businesses in the UK is now £88.36, which is up 22.36% from last year. 

These metrics are bound to fluctuate depending on factors, such as; industry vertical, social trends, device type, product type, product pricing and other external factors that can impact your average order value. However, these can be seen as a benchmark for businesses to use and, generally speaking, a higher AOV, i.e.getting customers and website visitors to spend more in one transaction, is what everyone wants to aim for. 

If you are struggling to increase AOV or want to understand how you can, below are 8 reasons why this could be and how you can increase average order value. 

8 reasons why your average order value could be static and how to improve it: 

Ask yourself these eight questions when you are next reviewing your marketing strategy and wondering why your average order value isn’t growing: 

1. Do you have a free shipping threshold? 

Free shipping is always a great place to start for increasing AOV. How many times have you been shopping on a website and then see that shipping costs are extortionate – it’s off putting, right?  

To put this into figures, 55% of online consumers abandon shopping carts because delivery costs are too high. That is over half of your online visitors, imagine how much extra online revenue your business could generate if you could convert those customers. And a free shipping threshold could be the solution. 

If you can offer free shipping, it could boost AOV, encouraging customers to buy more with each purchase. If you set a minimum purchase requirement as a free shipping threshold, this will give customers an incentive to spend more to reach this amount. 

Before you set a free shipping threshold, take a look at your average order value. If your AOV sits at around £30, you might offer free shipping to orders over £40. Studies suggest setting your threshold at 30% higher than your AOV. The goal is to make free shipping feel attainable to your customers and profitable to your business. However, setting the threshold too high risks increasing abandoned shopping carts.  

2. Are you bundling products? 

Incentives can come in all shapes and sizes to meet the needs of your business. 

If you want customers to purchase more items, try creating product bundles that cost less than if the same products were purchased separately. Bundling is a great way for your customers to make a big save and enjoy volume discounts, whilst creating a higher AOV for your business. A great approach to bundling is adding products together that create the-all-in solution, compliment each other or make sense to be bought together. 

For instance, a beauty brand could create a package deal price for a series of products that can be used during a night-time skin care routine. This could include a cleanser, toner, essential oils, and moisturizer. 

3. Do you offer discounts to encourage a higher AOV?   

Another incentive is, of course, by offering discounts. If you have a first time visitor come onto your store you could offer them a 10% discount on their first purchase. Or you could offer a 10% discount when customers orders reach over £80. These kinds of discounts can be shown in a number ways: a pop-up on the homepage or basket page, a dynamic banner on product pages, a personalised email featuring relevant product recommendations, and so on. 

Are you struggling to increase your AOV?

4. Are your product recommendations working as good as they could be? 

It is common knowledge that product recommenders can do wonders for an ecommerce store. If they are used strategically they can increase the opportunities for upsells and cross-sells galore, and, therefore, increase ecommerce average order value. 

Amazon are the kings of upselling and cross selling. 35% of Amazon’s annual online revenue comes from offering people add-ons, complementary products, related products or more expensive products across their webpages.

Top tips for getting the most out of product recommenders: 

  • Switch to AI-driven product recommenders.
  • Place real-time recommenders on all the main pages of your site; homepage, search results pages, product listing pages, product pages,basket page and even embed within your order confirmation page and email.
  • Upsell more expensive items by giving nudges via pop-ups, live chat, and personalised emails to buy bundles and consider additional products. 
  • Check out our 7 techniques of using product recommenders article

A great example of how to use product recommenders effectively is Prima Coffee. They increased their AOV by 43.9% by placing AI-driven product recommenders on their homepage, product pages, and basket page. 

5. Do you have a high bounce rate on your landing pages? 

High bounce rate is another metric that can determine how successful your ecommerce store is. Again, high bounce rate can be determined by a number of things, but ultimately will impact your AOV. 

If your content isn’t meeting the wants and needs of your visitors they are likely to leave and never return. A solution for this is ensuring that your landing pages are relevant, consistent and engage with the visitor straight awayEcommerce personalisation, a solution that creates unique and relevant shopping journey’s for each visitor that lands on your site, is an effective way to optimise your on-site content, reduce bounce rate, increase conversion rate and maximise AOV. 

A recent survey revealed that a whooping 73% of online consumers have stated that they prefer personalised shopping experiences, and 86% of them have declared that personalisation plays a big role in whether or not they make a purchase with a brand. 

6. Is your customer base segmented into specific audiences? 

Customer segmentation allows businesses to group specific customers based on their needs and wants. For instance, new customers could receive a completely different experience to a returning customer. Segments can be created for many reasons; frequency of orders, the types of products they’re purchasing, or any other method that suits the businesses end goal. 

To increase AOV you can segment your audience based on their visitor profile, location and purchase history if they have been to your site before. Start by splitting your customer base into three groups (low, medium, and high spenders). If your customers typically have a high AOV they could be labelled as a VIP and be shown special offers and premium products that are suitable. Different marketing efforts could be used to accommodate each of these groups. Customers that historically have spent a small amount could be encouraged to spend more by offering a 10% to reach a specific threshold (like we discussed in point 1). 

7. Have you considered a loyalty program? 

Does your online store sell consumable products? Products that your customers will need to repurchase again and again. If so, to increase the AOV of your high frequency and VIP shoppers, you can enroll them in loyalty programs that reward them. This strategy is great for increasing customer retention, creating customer loyalty by forging long lasting relationships and expanding each of your VIPs customer lifetime value. 

Loyalty programmes work well with all ecommerce retailers.Many online retailers use a point system as rewards for their customers enrolled into a  loyalty program. For example, if your customer spends over £50 they could be awarded 50 points and every time a customer hits 100 points they receive a prize – free delivery, 10% off their next purchase, and so on. 

8. Are you testing and tracking your campaigns? 

It is important that all digital campaigns are tested and monitored. Analytics should be at the heart of all business decisions. 

A/B testing is a cost-effective way to compare marketing campaigns, in order to decide which will make the most impact to your overall ecommerce goals. Using this method, helps marketers analyse the ecommerce metrics to understand where improvements can be made in order to increase AOV.

How can PureClarity help you grow your AOV today?

PureClarity gives ecommerce businesses like yours the technology, service and the customer insight you need to increase your revenue and AOV. 

All our features work coherently together to deliver the optimal experience for customers. If you are looking to connect better with your customers with real-time personalisation book a discovery call now to find out how PureClarity could help your ecommerce store. 

If you have any further questions please feel free to contact us at: sales@pureclarity.com

Increase your AOV today

Start a no-commitment 30-day free trial and enjoy all PureClarity features on your website.

Leave a Reply

Your email address will not be published. Required fields are marked *