Join us at The Whalies • April 10th
Get Your Ticket
8 Powerful Ways to Increase Average Order Value (AOV)

8 Powerful Ways to Increase Average Order Value (AOV)

Last Updated:  
March 18, 2024

So you’ve got good traffic coming in and your conversion rates are on an all-time high. Great!

But are your order values headed for a downhill spiral? Boosting basket size is paramount to growing your online business. 

When it comes to increasing revenue, instinctively a lot of marketers look at adding more customers to the business. Hate to break it to you — that's not the only way to grow!

There is another way to approach revenue growth and that is by giving your “Average Order Value” a much-needed boost.

AOV is believed to be one of the most dominant metrics for every ecommerce business that is looking to improve its revenue.

What’s a good average order value (AOV)? 

Growcode dived into 10 different ecommerce studies and nailed down at $128 as the desired AOV for ecommerce

By focusing on the Average Order Value instead of trying to usher in new customers, you get a lot more value out of the customers you already have. 

This simply means your business can grow without having to spend a bomb on marketing and advertising activities. 

With this in mind, let's explore what’s AOV, its importance, and the industry best practices to improve this key for your online store. 

Average order value explained

Average Order Value, better known as AOV, is the average amount each customer spends on orders placed at your store. 

You can calculate AOV by dividing the total revenue earned by the number of orders processed. Let's look at a simple example to understand the calculation. 
Let’s say you own a store that sells cookies and in September, you earned $2,000 in total revenue, and 400 bags of cookies were ordered. Your Average Order Value will be: 2,000 ÷ 400 = $5. To sum it up — a customer spends $5 on average for each purchase made at your store. 

If your store's AOV is increasing, it could mean that your shoppers are buying more expensive products or that they are adding more items to their shopping cart right before checking out.

Either way, it's a win-win 🏆 situation for you! 

Why AOV is crucial for your ecommerce business

The higher your AOV is the more revenue you can generate from your existing customers. This means that you can increase revenue without increasing your spending on marketing efforts aimed at roping in new customers. 

We’ll play out the key benefits of tracking AOV for your online business:

  • It helps you understand customer behavior. Tracking the AOV gives you a peek into the purchasing habits of an average customer. The information you get can help you figure out how to get more from every sale.
  • It lets you know how much you should be spending on customer acquisition. Ideally, the AOV must be a lot higher than your customer acquisition cost. 
  • It has a positive impact on your company's profitability. AOV has a strong correlation with profitability. A higher AOV means there is more money coming in without increasing spending on customer service, delivery, or conversion. 

The three types of AOV (and why you should care) 

Mean, median, and mode – these metrics are central tendencies that help you break down a data set. Let’s go through each and find out exactly why they’re more important than your basic AOV. 

1. Mean AOV

The mean is what is commonly known as the average. In mathematics, it is known as the arithmetic mean. In ecommerce, it is the average value of all your orders.

Average or Mean = Sum / Number

So if your data set has the following numbers: 

10, 20, 25, and 40. 

The mean value = 10+ 20+ 2 5+ 40 / 4 = 65. 

Why is Mean AOV important? It lets us know the average order value from all the orders placed. 

2. Median AOV

It is the middle value of all your orders.

To calculate the median, rank all your orders and select the middle value.

For example, let’s say that your order values go like this: 25, 20, 15, 10, 40.

Rank them in increasing order- 10, 15, 20, 25, 40. Now choose the value in the middle. The middle value is 20 and so your median is 20. If the data set count is an even number, take an average of the middle number to get the median. 

Median AOV helps you find out what the middle point is in terms of purchase value. 

3. Mode AOV

It is the value that shows up most frequently in a data set. Your mode is by far the best indicator of buyer behavior on your website. 

To arrive at the 'Mode' sort your data set numerically (in this case, your order values) and select the amount that occurs most frequently. 

For example, if your order value amounts are - 4, 22, 300, 59, 300, 50, 100, 300 and 25, the mode AOV = 300. 

The mode is important because, in all probability, you will receive this amount per order. 

When you have a large number of orders, it can be useful to represent the entire data with a single value that defines the "average", "median" or " most frequently occurring value" of the entire set. 

“Calculating each of these metrics will give you a better understanding of your customers' buying tendencies. Any one of these statistics will give a generic idea, computing all three will give you a more complete picture.”
- Rabah Rahil, CMO, Triple Whale

8 Powerful ways to increase average order value (AOV)

There are quite a few AOV marketing tactics that can increase your revenue. A lot of them will help you improve conversion rates and customer lifetime value too.

We’ve done the groundwork for you - here are 8 top-ranked ways to take your AOV to the next level! 

1. Offer a free shipping threshold 

Let's say your AOV is $100 and you want to increase it by 30%, then offering free shipping on orders above $130 is a smart way to increase the AOV for your store. 

If there is one thing that most customers detest, it is paying for shipping costs. 85% of shoppers prefer free shipping over fast shipping. So using this concept will give your customers a breather and fetch you a higher AOV. 

For example, the brand Dorris Sleep encourages customers to buy a set of two pillows to become eligible for the free shipping threshold. 

3. Discounts and bundle deals 

Bundling products help nudge customers to a higher AOV while ensuring they get better value. To implement this, determine which of your products are complementary to one another and bundle them together. 

Take a look at Bath & Body Works, they have an entire page dedicated to bundle offers, marketed as gift sets. 

Here’s something we found that might be useful👇 

3. Personalization 

Offering personalized product recommendations are a sure-fire way to keep your customers engaged (and coming back for more!)

Lots of companies offer personalization by showcasing products based on customers' previously viewed items. 

Tiffany and Co allow its customers to engrave jewelry items for an additional $5-  often pushing up the order value by up to 5%.

4. Time-sensitive offers 

You can provide time-sensitive deals to increase average order value. Time-sensitive offers have a way of creating a sense of urgency and sparking your innate sense of FOMO. 

When deals are time-bound, it reminds customers that they are not going to last forever and they must place their orders before the products are gone! Forever21 gets it right with their end-of-season sale.

5. Cross-sell & Upsell 

One of the easiest ways to boost your average order value is to get customers to add more products to their shopping carts. For this, we’d say - try cross-selling. 

Cross-selling is all about recommending a related product to your customer based on what they were looking for. If your products don't complement each other, you could try a 'customers also bought' bar to boost AOV. 

Upselling, on the other hand, is about getting customers to upgrade to products that are more expensive than what they were looking for. 

Take the case of Blue Rock, a toothbrush brand, that offers a 10% discount whenever a customer signs up for their annual subscription. 

6. Tweak product pricing 

One of the easiest ways to increase your AOV is to raise your product's price. Hiking up the prices will surely boost the AOV. However,  price hikes must be handled with caution to make sure it doesn't create a negative impact on conversions. 

7. Reward your loyal customers

Having a loyalty program in place is a great way to encourage shoppers to continue buying from you. It not only allows you to promote products but also helps you build ongoing customer relationships. 

For instance, Marks and Spencers is a brand that offers priority access to online shoppers. While this is a long-term approach to building customer relationships, it is worth giving a shot (alongside other short-term tactics). 

8. Offer other perks 

Apart from free shipping and discounts, brands are into all kinds of promotions to up their AOV. 

Rituals is a cosmetic brand that offers a wide range of gifts to get shoppers to add more to their shopping carts. 

Get these apps to grow your average order value

These Apps were designed to do the job for you. We’re helping you out with our top picks.

1. AOVBoost

The app was built to help brands improve their Shopify Plus store's AOV. It empowers your store by increasing the size of every order before a customer checks out. 

The app does this by letting you showcase products, gifts, and special offers to customers just before they complete the checkout process. The app is easy to install and allows you to get more from every purchase. 

2. Selly

This app was created to help Shopify store owners drive sales. Selly helps you create bundles of your products where customers can easily add all the products displayed with just a click. Selly runs a personalized recommendations bar at the bottom of every page enabling you to sell more.

3. Privy 

Privy is a Shopify app built to help Shopify store owners drive online sales faster. It allows users to get more repeat purchases using email and SMS to inform customers about new products. On Privy, you can also set up a free shipping bar to boost your AOV. 

Higher Average Order Value = Higher Growth + Peace of Mind

If you want to boost your bottom line and build a healthier and more successful business model, turn your focus to AOV and sleep peacefully at night. The equation is simple –  you can either acquire more customers at a sky-high CPA or simply get more out of the shoppers who are already purchasing stuff from you.

© Triple Whale Inc.
266 N 5th Street, Columbus OH 43209