Many online retailers invest significant resources in email marketing to drive new and existing customers to their sites. Of course, too many emails can cause email fatigue, tuning customers out and weakening brands. There are certainly other ways to drive traffic, such as paid search and digital advertising, but these approaches come with a price. Paid media is an important part of any brand’s marketing quiver once optimized to acquire sales profitably. However, there are other ways successful merchants create value, the most notable of which is driving customers to spend more each time they shop.
To increase average order value (AOV), you can either encourage customers to buy more products or buy more expensive products — preferably, both. Below I've outlined five simple ways to boost AOV. While some of these methods may cut into your per sale margins, it’s important to remember that you’re strengthening customer loyalty, which also strengthens customer lifetime value (CLV).
- Offer discounts when minimum spending amounts are achieved. Rather than offer “10% off storewide purchases,” consider offering a set discount only for orders above a certain amount. For example, “Take $10 off when you spend $100; take another $5 off for every additional $50” can encourage your customers to put more items into their shopping carts and drive additional profitability for your business.
- Recommend additional items based on what’s in a customer’s cart. This approach takes a page from Amazon.com' playbook, as providing relevant product recommendations has helped establish the company’s leadership in online retail. Offering product recommendations requires some intelligence on the back end, but many platforms have smart recommendation algorithms built in, or allow merchants to associate relevant products with one another. For example, if a customer puts a blue shirt in his cart, he should be shown other products that he may like or which pair nicely with the first product during the purchasing process. This also presents an opportunity to offer a discount to add another item, which leads me to recommendation No. 3.
- Offer a discounted "bundle" when items in the recommended group are purchased. Upon showing additional product recommendations as outlined above, include a special offer for a discount when customers choose one or more items from the recommended group of products. For example, you can offer free shipping on the total order, or $10 off when shoppers pick two additional recommended products. Or you could make an offer such as, “add one item to your order from our recommended products below and get 50% off any second item.” (You’ll want to specify in the fine print that the discount will apply to whichever is the lower-cost item, and make sure your recommendations don’t include items that are more expensive than the original item that prompted the recommendations.)
- Feature a “Product of the Day” at a discount. A “Product of the Day” promotion can be used to draw attention to brand-new products you’re selling, items in your inventory that aren't top-sellers, or items for which you have much unsold inventory. By making a product available at a discount for one day only, you create urgency and compel customers to take advantage of the limited-time lower price. The discount you offer can be anything — 25 percent off, free shipping, or a credit towards their next purchase — which leads me to the last and final recommendation.
- Offer an online credit toward a future purchase. This approach is great to shorten the time between purchases and to drive high value from existing customers. Be sure to set an expiration date of 30 days or less to take advantage of the offer since time after purchase is inversely correlated with likelihood of return.
These are just a few ways to get customers to reach a little deeper into their wallets as you build your relationship with them. By encouraging shoppers to spend more, you can maximize the impact of your marketing and advertising campaigns, strengthen loyalty, and efficiently manage inventory. These tactics can also increase customer engagement and the chance that customers will recommend your site to others, which helps further strengthen your brand.
Thatcher Spring is CEO of GearLaunch, a sophisticated platform for E2E commerce, a rapidly emerging category that focuses on the full e-commerce value chain.