Steps to fight decline in average order value

What is an average order value?

An “Average order value” also referred as “AOV” and at times “Average Ticket”, is an algorithm, representing the value of an average order within a period of time. It is quite simply calculated by dividing “Revenue” by “Number of Orders” in a specific “Period of Time.”

To know your average order value, simply divide your “Revenue” by “Number of Orders” for a specific period of time. Let me explain with an example:

Suppose that your revenue for 30 days is $100,000  and the number of orders received within that specific time of 30 days is 5,000. Now using the above formula, you average value will be :

Revenue ÷ Number of Orders = Average Order Value

$100,000 % 5,000 = $20

It is one of the important operational parameter for online stores to increase their sale, a little engrossment on this parameter, can boost the average store sale.

Here are a few steps that will help you fight decline in average order value and at the same time increase online sales.

Product bundles

By combining several identical or related products together as one product, will not only raise the average order value but also create a new product for your online store that never existed.

Therefore, it is always recommended to offer product bundles selling highly relevant products together. Many retailers use this as the most common tactic that helps them to increase average order value as well as get rid of their old inventory.

To give an example: A bundle of comic books, or a bundle of iPhone accessories.

Cross-selling 

This can be considered as one of the effective and best practice to fight decline in average order value. An unusual spin of bundling, instead of having companion products together, you can keep them separate and cross link them on the product page. Surprisingly many online retailers overlook this practice, but let me tell you, this technique helps motivate customers to add more products to their cart, in turn enhances your store sales.

Similar to many other multi-channel ecommerce platforms, if your budget permits, you may consider an online analytics database that will help you cross-sell, based on consumers shopping behavior.

Up-selling

Up-selling technique is the eventually the biggest bang for your buck when it comes to fight decline in average order value. This is because it is offered when your customer has already in a buying mode, therefore there is no better opportunity to increase average order value that at the point of sales. Up-selling products can be listed on all products pages, as well as at various points through checkouts. Ensure that your up-sells make sense and complement the main product sale.

Down-selling 

In up-sells the prospect has already purchased and you offer an additional, usually a complementary product. But when your prospect refuses to buy that product, then down-sells can be a great opportunity to offer steep discounts just to save the sale. This way you can fight decline in average order value.

Free Shipping thresholds

By offering free shipping to your customers, you change the way they think when they shop from your site. So, for certain high value orders, offering free shipping, means you are attracting customers to meet your thresholds. Therefore, if your average order value is $90 and shipping cost $10, set you free delivery thresholds at $110. This way your customers consequently tend to spend more than where you set the bar.

Discounts

Offering a discount always makes shoppers feel like they are getting a real deal. So, your discount can either include free shipping, bundle purchase discounts, discount thresholds, coupon codes which will convince your customer to purchase more of a product that they were intending to, in turn increase average order value and sales too.

Conclusion

When you looking to fight decline in average order value, its valuable to choose tactics that does not require cash layout. Adding product bundles, discounts, free shipping thresholds and up-selling and cross-selling to your customers will surely improve the average order value.