Average order value (AOV) has always been the neglected middle child in ecommerce, overshadowed by its older and younger siblings: customer lifetime value (LTV), cart abandonment rate, and conversion rate.
But not anymore.
Today, AOV has become the angry and neglected-for-so-long middle child, who if you don’t pay attention to, has the potential to create a lot of discomfort for you.
This is especially true when you already lose $29 right away in customer acquisition costs (CAC). It’s important for you to try and recoup the money lost upfront, without relying on future purchases or lifetime value.
The reason: the market is oversaturated with tons of options, making customer loyalty fickle.
One of the most promising solutions is to tap into strategies to improve your store’s average order value.
You might’ve already applied common tactics like offering free shipping or trying to cross-sell. In this article, we’ll have a look at some different strategies which are as effective, but often overlooked. Here are some important ways you can boost the AOV of your DTC store and maximize your CAC.
Think of your grocery checkout experience: there are always low-cost products like candies and soda on display around the checkout aisle. In fact, retailers pay an extra amount - up to a whopping 1 million USD per year - to be displayed at this desirable location.
The reason is simple: they capitalize on the consumers’ impulse purchase temptations and make it easy for them to add the items to their cart just when they go, “Oh, I need that.” The good news is, you don’t have to spend a million dollars to capture this temptation. You can apply this same psychology to your Ecommerce store checkout, at a minimal cost. Display low-cost high-margin products at the checkout page to drive more sales.
Here’s how Laura Gellar, a DTC makeup brand, applies this strategy.
The product suggested for cross-selling here has important features:
If you’re a consumable brand, this one’s for you. On every product, mark how long the product quantity will last them, for example, a “90-day supply”. This works by solving one of the most pressing problems with Ecommerce products: Your customers can’t see or feel the product in person and, hence, can’t estimate the product quantity.
Daniel Chabert, CRO for 7 and 8 Figure Ecommerce brands, tested it out:
“We tested the old 1/3/6 units rule for consumable goods a bunch of times and it never worked better than its counterparts. It was a bust and only dropped our conversion rates and revenue per visitor. But recently, we decided to give it another shot, but with a twist. Instead of just throwing the 1/3/6 out there, we added a suggested dosing schedule that explained how many times consumers need to take the product for the best results. We also suggested the number of bottles they'd need to buy. And guess what? Our AOV, conversion rates, and upsell take rates all went up!”
iHeartDogs, a DTC brand for dog supplements, combines this strategy with a tiered discount—displaying the product quantity next to more discounts for larger purchases:
In-cart gamification offers free products or discounts for every purchase threshold your customer crosses. Similar to a reward program, in-cart gamification works by giving your customers an incentive to purchase more.
Here’s the caveat: Just like the other strategies, your reward or incentive should be motivating enough to persuade the customers to purchase. The perceived value of the incentive should be more than the extra spend.
Obvi, a DTC supplement brand, offers tiered cashback and free shipping for every threshold its customers achieve. The checkout page has a progress bar to show the amount left to achieve the next reward:
PRO TIP: Instead of giving free products as rewards, which may or may not be used, cashbacks or discounts would work better, as in the case of Obvi.
For more than half of of consumers, free delivery is one of the deciding factors for an online purchase.
But offering free shipping on all orders, without a P&L analysis, can quickly erode your margins, especially if the order value is too low.
That’s where the minimum cart threshold for free shipping comes in.
Jones Road Beauty, a DTC makeup brand, implements this with brilliance. It cross-sells the bestsellers on the cart page, the pricing of which almost always makes up for the difference between the free shipping and the current cart value.
It also strategically shows a progress bar indicating how close customers are to achieving the free shipping deal.
You can notch this up by pricing your bestsellers in a way that’ll help customers reach free shipping.
The key to making this strategy work is setting your threshold limit just above your current AOV. Too low and you won’t be able to cover the shipping costs; too high and customers won’t bother to add additional products.
Ethan Bence, the founder of 4080 Marketing, scaling 7-8-figure DTC brands, has a unique suggestion to increase your average order value:
“The more people trust you, the more they’re willing to spend. The number one way to build trust is through social proof – but it needs to be specific social proof. Specific customer stories, testimonials, and reviews that represent your prospect's ideal outcome is a great way to build trust to increase average order value.”
Ethan also suggested how you can get better social proof: get a customer interview, highlight existing customer stories, and fit them with respect to the avatars they represent. Once you have that, use these stories on your landing page, product page, and sales page.
For example, notice how specific the reviews are for Crio Bru, a coffee-replacement DTC brand:
Product bundles lead to outstanding results when created strategically: Your Super, a DTC health supplement brand, hit $70 million in Ecommerce sales with just product bundles.
Here are three strategies you can use to create these product bundles and increase your average order value:
1. Use past data to create the best product bundles.
Product bundles aren’t about putting a bunch of products together and calling it a day. Rather, they’re about curating products that’ll make the best possible purchase for your different customer personas. Which products do people often buy together? Do people buy a higher number of products for a specific category? You will get more conversions when you back your bundling decisions with data.
Triple Whale’s Cart Analysis gives you clear data of the products frequently purchased together and automatically curates the perfect bundles.
2. Give special product bundle discounts.
Customers don’t want to pay more. But when you show them that they save more, they’re motivated to jump on that deal. Here’s how Kopari shows its customers the amount they’d save if they bought a product bundle.
3. Make your product bundles easy to spot.
How long does it take for your customers to reach a product bundle? Your Super prominently displays its product bundles at every point—the website's home page, email copies, and product pages. Here’s an example of their abandoned cart email:
A lot of times, you miss out on opportunities to cross-sell and up-sell just because your customers don’t know the usage of complementary products.
Create product guides in the form of blogs or ebooks to showcase your products in action. List down all the use cases with real-life examples. Also, showcase the complementary products to educate your buyers on their usage.
You can also create gift guides here and include different product bundles. Here’s how IKEA has different product guides featuring multiple products:
Loyalty programs work because they give incentives to your customers to buy more. Data backs it up, too: the basket size of the customers that use a loyalty reward in their purchase is 39% higher than those who don’t.
Not only that, the customers in your loyalty program can easily become brand evangelists who recommend people to shop from your brand.
Revolution Beauty, a beauty brand, wanted to scale its direct-to-consumer channel but was struggling with low average order value and one-time purchasers. As soon as it implemented a loyalty program, the average order value shot up by 44%.
The program works on the following principle: The more loyal a customer is, the more they buy from you, and the more they earn rewards. Here’s what it looks like:
At the heart of any ecommerce revenue boost lies improved user experience. In this case, increasing the average order value isn’t about how much more you can sell. Instead, it’s about how much more value you can give to your customers by creating better offers.
That is only possible when you know your customers, their preferences, and purchase behavior inside out – taking the guesswork out. If you think your audience will prefer product bundle X without any solid data to back the thought up, there’s no certainty that the offer will work.
This is where leveraging the power of data comes in. Triple Whale, for example, gives you data-backed suggestions on how you can bundle your products better. Not only that, but you also get a centralized dashboard, giving you a bird’s eye view of all the relevant Ecommerce metrics, which you can use to improve your store health, going beyond AOV.
Request a demo today to learn how this can work for your brand and products.
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