If you want to increase your online sales, there are three things you can do; increase the number of customers, increase the purchase frequency or increase the amount of time they trade for.
In this blog post we will consider 11 different actions you can do to increase the average order value, most often known as the AOV (average order value).
What is the average order value (AOV)?
Average order value, or average order value in good Norwegian, is how much each customer uses on average per purchase.
It's a very simple calculation. All you have to do is divide your turnover by the number of orders in the same time period.
Let's say you've traded for 1 million in January and you've had 500 orders. AOV 2000 is then NOK (1,000,000,-/500).
In most online shopping systems and analysis tools you will see this number reported, so there are often a number that many people have a relationship to.
Knowing AOV is too many a good starting point, but it may often be good to look at the other centrality objectives:
- Median: is the value in the middle. If you put all the order sums on a row from the lowest to the highest, the median will be the middle one.
- Type number/mode: is the value that occurs most often. So the sum of the users.
- Average: is the mean value.
So here's an example from the same data set we used to figure out AOV.
As you can see, there is a significant distance between median/type and mean. It tells us a couple things that are important to keep in mind when we're working on increasing the AOV.
The distance between the numbers tells us that there are large variations in the size of the orders. For example, it could mean there are some very large and many small orders. This example clearly shows that the average order value is not always a good representation of typical order value, and that should not be the starting point for the actions you plan.
To increase the AOV it may be useful to focus first on how we can increase the number of orders of NOK 1390, as this is the amount most traded for.
These simple calculations should give you a better understanding of how people act with you. But the insight has little value before you use it to design strategies and measures that help you sell more.
Why is it important to increase order value?
Increasing the order value is in many cases the best way to improve your margins. Higher margins open up to either sit with a larger bottom line or to reinvest more in the company so that you can grow more and faster.
It is also often easier to sell more to someone who is already interested in shopping with you.
11 additional order value measures
1. Increase your prices
The easiest, but often translate the way to increase the order value is to increase the prices. Too many prices of goods and services are too low and have a (often unwarranted) fear of experimenting with increasing them.
This does not mean that it is right to increase all the prices, but you can earn a lot from identifying which products you can increase the price of without seeing a negative impact on the purchase.
Start by testing to increase the prices of some best sellers, then you will quickly see if it has a negative or positive effect on sales.
It only takes a few minutes to test and you can always go back again if the results are not as expected.
2. Reduce your discounts and use "rebate paths"
Many online stores have many orders to use discounts. Either in the form of discount codes or offers on goods.
One thing that's easy to experiment with is to reduce the discount rate. Are you planning to put 20% on a sale category? Try to go down to 15%. Do you give away discount codes of 20% to those who sign up for newsletters? Try 10%.
Less discounts will increase the value of the order and, not least, make you left with more on the bottom line.
Here you can risk seeing that the order volume drops, so it's important to follow what you're left with on the bottom line. Many people experience earning more per order and sitting back with more money, so it's absolutely worth testing.
You can also use discount paths. Instead of giving a 20% discount immediately, you can start with 10%, then increase to 15%, and finally 20% if you do not get the desired response.
Three. Free shipping on order over a certain sum
Very many online stores offer free shipping on all orders over a certain sum and this is one of the most popular measures to increase the AOV.
Our experience is that many people put the free shipping limit almost randomly. To increase AOV, you should first calculate your type of order value, and then set the free shipping threshold slightly higher than this.
In our example from the past, we saw that the type value was 1390. So here we could have tested to have 1500-- at the limit of free shipping.
Using type numbers that start with it helps you avoid setting the threshold too high. If you had based on an average of 2000, you might want to set the free shipping threshold of 2500,-.
For the many customers who only use 1390, this will be perceived as a huge increase and you can risk that they end up interrupting the purchase or trading the goods with a competitor.
Make sure that the cargo boundary information is visible everywhere. It should come out clearly on all sides – even better if you can show it dynamicly, so that the customer can always see how close they are to obtaining free shipping.
Here is an example from Grägstid.no which dynamically updates with how much remains for free shipping:
4. Discount on order over a certain sum
Just as many offer free shipping on purchase over a certain sum, so many offer discounts on orders that exceed a certain amount.
Once again, our experience is that many have not thought enough about what they should use as a limit. If the limit is too low, more customers will get a discount than necessary, which may damage your margins without giving the desired increase in order value.
You should also take the type number value to find the threshold you should apply to give discounts.
Remember to be aware of how discounts affect your margin and be sure that you do not go into the trap of getting a higher order, but actually earn less money.
Also in this case, make sure that the information is visible everywhere. It should come out clearly on all sides – even better if you can show it dynamicly, so that the customer can always see how close they are to obtaining free shipping.
5. Free gift on order over a certain sum
A free gift, often called GWP (married with purchase), is one way you can increase the order value. Many customers are motivated by the possibility of getting something, and may be willing to use more than intended.
You should also use the type number value here to determine what threshold you should apply to give a gift.
Unlike discounts, this will be an action that will make it easy for you to control your margin per order.
If you're going to give away a gift, you should experiment with what gifts work best. We've seen most of it. Sometimes it works best to give away something expensive, sometimes something cheap. Also make sure you don't give away something that ends up costing you more than the profit of people acting more. A tip here may be to talk to one of your suppliers and hear if they have any goods they want to promote (so you get them to take the cost).
The information about the border should be clearly and clearly displayed on all sides – even better if you can show it dynamically, so that the customer can always see how close they are to obtain free shipping.
6. Makes it easy to buy related products
There are few things that are more annoying than having purchased something, to find out later that the store also sells additional equipment you should have purchased at the same time. Therefore, this is not only a good measure to increase order value, but also good service!
Therefore, have accessories readily available on the product side and in shopping basket.
So let's think about an example from Elspur. If you buy a Playstation, you will often also have an additional check. Here it is also super easy for the customer to bring extra products.
A less efficient, but cheaper and easier way to get this in place is to link to accessories you believe the customer should buy in the product description.
Seven. Create Product Packages (Bundles)
Collect products that should be purchased together in a package. Here you can start from some of your bestsellers to combine packages with their associated and relevant products.
Examples include:
- Start packages: For example, everything you need to get started with Korean skin care
- Shop the look: for example, a full suit
- Shop the collection: a full collection
Here's an example from Beer-wrecking services selling start packages for you to start brewing beer (they also have very clearly communicated free shipping limit):
Many people believe that when you put products together in a package, you have to give a discount, but our experience is that it often also sells well without discounts. So try out -- don't give away more margin than you have to!
Eight. Make it easier to buy more products
Many types of products may be relevant for customers to buy more. Therefore, it is important that you make it easy to buy many of the same product.
Customers often think “I’m going to buy this or not?” but they rarely think about how many they’re going to buy.
A summary of 37 experiments shows that changing the “Kjøp”/ “Add shopping basket” button to several buttons with different quantities may increase sales by 29%. Here's an example from Aryh on how it might look:
Another way to encourage customers to buy more of the same product is to make product packages containing more of the same product. So when customers are on category pages, they can easily decide whether to buy for example 1 or 3. Here's an example from Tights.no:
Here also, our experience is that you don't necessarily have to give discounts, but there's definitely something that works.
Nine. Selling up services
Think about whether you have any additional services you can sell to your customers.
Examples include:
- Faster cargo
- Gift wrapping
- Insurance
- Video course
- Product guides
- Product personneling
- Installation/Installation
Promote these services on product pages, in the shopping basket and on checkout.
When you shop at Lyko you get the opportunity to attach the gift wrapping. Something that is both practical for the customer and an easy way for Lyko to increase the order value.
Ten. Offer flexible payment solutions
Offering GDPL (buy now, pay later) such as Klarna and Afterpay may have a major impact on average order value.
The various suppliers of GDPL often talk about seeing an increase in the AOV of 40- I'm sorry.60% (but some of the increase is due to the fact that those who have high orders often want this solution, even though they would nevertheless act).
I Nets E-commerce Report of 2023 state that 15% of consumers prefer to pay with invoice. So if there's nothing you're offering today, there's definitely something to look at.
If you offer GDPL/invoice solutions, it is important to communicate this around your online store. Not only in the box – customers may already have fallen off.
11. Sell gift voucher
Customers who trade in gift cards often use more than the amount the gift card is on. A study from the United States shows that over 600 kr more average than the gift card was on.
Therefore, selling more gift cards can be a good idea to increase the order value.
Now what?
Now you have got 11 different tactical grips you can take to increase the order value in your online store. It's just getting started! Do you want to perform all the actions in this blog entry? Probably not, but someone wants! So it's important that you try out and you're not afraid to test.
Each week, more than 20 Norwegian companies have visited a Operational Market Assistant from INEVO, which is part of their market department and has one of Norway’s best professional environments on online commerce in the back.