Average Order Value (AOV)

Increasing AOV is one of the easiest ways to increase total revenue for your WooCommerce store.

You already have customers purchasing from you, the low hanging fruit is to get them to purchase more. It’s much easier than getting more traffic.

What is AOV?

Total Revenue / Number of Orders = Average Order Value

Average order value is calculated by dividing revenue by the number of orders. For example, if you had 10 sales and $350 total revenue, the AOV would be $35.

350 ÷ 10 = $35

Math is hard, but we can all do that calculation!

Why AOV Is Important

If I asked you to increase revenue by 10%, it may sound like a daunting task.

You might consider getting more traffic, or adding more products. That requires marketing, SEO, product development, and on and on.

If instead you think of it in terms of AOV, all you have to do is get people to buy one extra item, or spend 10% more. If you increase AOV by 10%, you increase total revenue by 10%.

AOV is a way of thinking in terms of small wins that can add up to be BIG.

How to Increase AOV

There are several ways to increase AOV, but it usually stems from one of two things:

  1. Customers purchase more items
  2. Customers buy higher priced item(s)

If you can do either one of these things, you will be able to increase your AOV, and consequently, your total revenue.

With that in mind, let’s look at how to influence customer behavior in order to increase AOV in your WooCommerce store.

1) Show Related Products

Getting customers to purchase more items than they originally intended is the first big way to increase AOV.

This is done with cross-selling and up-selling.

WooCommerce has built-in related proucts, up-sells and cross-sells. If you are not using these, here’s a quick overview.

Up-sells and related products display on the product page, while cross-sells display on the cart page.

You can set these up when you create a new product under Product Data > Linked Products.

This built-in functionality is a good place to start, but you aren’t going to see big improvements in your AOV without putting in a little more effort. The timing and placement of your cross-sells and up-sells is extremely important, as well as choosing the right products to display.

Here are some slightly more advanced upsells using 3rd party WooCommerce extensions.

2) Show Upsell on Add to Cart Click

One great place to show an upsell is right after your customer has made a purchase decision. They are already in the buying mindset, and they are more likely to make another one.

You can show upsells to more expensive products, or accessories that go with the product. For example, if you sell a camera, you can recommend the appropriate batteries in an add to cart window.

The Beeketing for WooCommerce plugin offers up-sells and cross-sells after you click add to cart.

Another option is the YITH add to cart popup. This plugin displays related products in a pop up window after clicking add to cart.

3) One Click Post-Purchase Upsells

Many stores don’t take advantage of the post-purchase upsell.

This means that right after your customer has filled in their credit card and pressed “Purchase,” you show them another offer. This is not an add to cart upsell, or thank you page upsell, it’s a little bit different. Usually it looks something like this:

This type of offer shows after you have purchased, but before the thank you page. It allows you to add something else to your order without having to re-enter your payment information.

These type of post purchase upsells can be very powerful. A customer who just purchased is already in a buying mindset, and offering them an upsell with no additional friction is a great way to increase AOV.

WooCurve offers a 1-click upsell plugin for WooCommerce, here’s a great tutorial on how to use it.

4) Create Bundles

Another way to get customers to purchase more items is to create bundles or packages.

edd-starter-package

Easy Digital Downloads offers a Starter Package the comes with a 30% discount. It incentivizes their customers to purchase 5 or more plugins, greatly increasing their customer AOV and LTV (lifetime value).

Other bundle type offers include:

  • Buy 2, get the 3rd free
  • Buy these together and save 20%

WooCommerce allows you to create bundle products without any additional plugins.

5) Free Shipping Limits

Shipping costs are a bear for any business that has physical products, and increasing average order value is very important for profitability.

Many businesses are pressured to offer free shipping to compete with Amazon, one way to do that is to offer free shipping after a certain threshold. Jenson USA offers free shipping with orders over $50:

Studies such as this one from the University of Florida have suggested that these type of offers increase AOV, because customers want to get the free shipping.

If a customer is close to your free shipping threshold, they are more likely to add another item to their cart to get it. This increases the number of items purchased, and subsequently, your AOV.

WooCommerce Advanced Free Shipping

WooCommerce Advanced Free Shipping allows you to set rules for when free shipping should be available to your customer. For example, you can base it on order total, weight, location, and more.

6) Raise Prices

Raising prices is the easiest way to increase AOV from a technical standpoint, but it’s also the trickiest.

You can’t always raise prices because you may be in a price-competitive market like hotels or clothing. Software businesses have a big opportunity to raise prices, but many are too afraid of what will happen.

Will sales drop if I raise prices?

In many cases, the answer is no. If you sell a product for $59, and are considering raising it to $79, there are a few considerations.

  1. Most software businesses are already underpriced, because they do not price for value.
  2. A small price increase should be negligible to your customer if they value your product.
  3. If you increase prices by 10% and lose a few sales, you are more profitable than before, due to less customer service costs.

If you want to raise prices, just make sure you announce the change properly.

Chris Lema offers some tips on announcing pricing changes without totally screwing it up. My main takeaways from his post are:

  1. Don’t hide a price change, communicate clearly and openly.
  2. Explain the reason for the change, and how it impacts your customer.
  3. Try to add value along with a price increase, or consider adding a lower priced option.

One final thing I would add is to make your price increase an opportunity for your customers. Send them notice in advance, and let them get in before the price increase. This is a very effective way of generating sales, similar to a coupon type promotion. The benefit for you is that you are not discounting at all, but that is the way it’s perceived by customers.

7) Use Time-Sensitive Offers

Time-sensitive offers can increase average order value by using the principle of FOMO, or the fear of missing out.

You can see this principle in action when you make a hotel or airline reservation, and they display a countdown timer. It gives you a sense of urgency to complete checkout, which can help eliminate distractions and flip-flopping.

It’s also used by Amazon for their deal of the day:

Time-sensitive offers can be great for increasing your conversion rate and average order value, just make sure you don’t overuse it. I’ve seen sites that show the same countdown timer every time I visit the site, which decreases the effectiveness and erodes trust.

To add a countdown timer to your WooCommerce site, try out this plugin.

Conclusion

Understanding your average order value is the first step to increasing revenue. Calculate your AOV now, using the formula total revenue / total sales = AOV.

Once you understand your AOV, take small steps to increase it. Use cross-sells and up-sells in more creative ways than just the standard WooCommerce related products. It’s all about when you show an up-sell, and how relevant it is. Using add to cart popups and post purchase one click upsells can do more for your AOV than the standard related products.

Consider adding bundled products to get customers to purchase more items, or raising your prices. It may take several attempts to find out what works best on your store, but the point is to start trying.

Any increase in average order value is an increase in total revenue, so start testing today.

Published by Scott

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