5 Expert Strategies to Increase AOV + Industry Averages

You can increase the average order value (AOV) by using personalized marketing to upsell, cross-sell, and bundle products to existing customers. Learn the tips our experts use to increase AOV by 50%.

Here, you’ll find:

• What is average order value (AOV)?
• How to calculate AOV
• Expert tips to increase average order value
• What’s the typical AOV?
• AOV and LTV: A winning combination
• Common mistakes that reduce AOV (and how to avoid them)
• Checklist: How to increase AOV in 9 simple steps

When you operate an ecommerce store, it can be hard to know which metrics to track to gauge the success of your business.

One we recommend? Average order value, or AOV.

This metric isn’t just easy to calculate, but can give you valuable insight into your customers’ shopping experiences.

In this article, we’ll show you what AOV is, how to calculate it, and how to increase it for your online store.

What is average order value (AOV)?

Average order value is the average amount of money customers spend in your ecommerce store per transaction.

AOV provides a valuable snapshot of how much your current customers are spending every time they shop at your store. This gives you a solid indication of how loyal your shoppers are, and how good the online experience is.

Why is AOV important?

Finding new customers to visit your ecommerce store can be challenging because they’re starting at the top of the sales funnel. So you have to invest significant time and money in marketing campaigns that encourage them to buy.

It’s ideal to encourage existing customers to buy additional products or, alternatively, more expensive products. You’re selling to customers who already know your brand and love the products you sell without blowing your marketing budget on attracting new customers.

How to calculate AOV

The AOV formula is the total revenue you receive, divided by the total number of orders you receive.The formula is AOV = Total Revenue / Number of Orders.

So let’s say your ecommerce store brought in $50,000 over a month, and you had 500 orders.

$100 = $50,000 / 500

That would make your monthly AOV $100.

Expert tips to increase average order value

How can you encourage customer retention, entice repeat customers to return to your site, and increase your average order value? Here are five expert tips that you can implement.

• Implement a loyalty program
• Introduce a free shipping threshold
• Use cross-selling, upselling, and bundling
• Personalize your marketing
• Show your human side

Implement a loyalty program

A customer loyalty program can encourage larger purchases and drive repeat orders, helping to increase your average order value.

According to a joint study by Visa and Bond, 80% of people say a loyalty program makes them more likely to continue shopping with businesses, while nearly 70% admit to buying more to maximize their rewards.

Many ecommerce platforms have plugins and extensions to help you manage a loyalty program. For example, Shopify has a range of apps, including Smile, Joy, and Bloop.

James Koskela, Founder of Zero Day Gear, advises doing your research before implementing a customer loyalty program. “Loyalty programs work best when there are ample repeat orders from customers,” he says. “Before implementing one, I’d look at your current customers first to see if they’re making additional purchases, and if not, why not.”

Introduce a free shipping threshold

Customers still love free shipping — over 60% of shoppers say they won’t buy from an online store if free shipping isn’t an option.

If you want to increase your AOV, introduce a minimum purchase for free shipping to entice customers to add more to their shopping carts. Roughly, 78% of customers are willing to spend more if it means free shipping.

Of course, it’s important to research before implementing free shipping. Look at your operational costs to see how it’ll affect your margins and how you’ill offer free shipping. Will you automatically deduct the cost at checkout or provide customers with a coupon?

Use cross-selling, upselling, and bundling

Cross-selling, bundling, and upselling encourage customers that are already on your website to either buy more (cross-selling), a collection of related products (bundling), or a more expensive version of a product (upselling).

All three are great strategies for businesses looking to increase AOV on their ecommerce sites. According to VWO, offering additional or premium products can increase your revenue by up to 43%.

When upselling, cross-selling, or offering a bundle of complementary products, use these tips:

• Look at your website data: Sell products that your customers want to buy.
• Implement limited-time offers: This can instill a sense of urgency. However…
• Be honest and transparent: Customers may not return if they feel you tricked them into a sale.
• Don’t get greedy: If upselling, ensure your upsell costs no more than 25% of the original product.
• Try different product combinations: A/B testing is a great way to see what leads to the highest conversion rate.

Personalize your marketing

People react best to personalized experiences online. According to Netcore, implementing a personalized ecommerce experience increases AOV for 98% of retailers.

How can you go about optimizing your marketing to see the best results? Ways you can implement personalization to improve your AOV include personalized:

• Product recommendations based on your browsing and purchase history
• Search results
• Landing pages and homepages
• Pricing and discounts
• Reviews and testimonials
• Product pages and product descriptions

Diana Zheng, Head of Marketing at Stallion Express, uses email marketing effectively.

“We implement personalized email campaigns that include tailored product recommendations derived from a customer’s browsing history,” shares Zheng. “As a result of this, we’ve seen a fantastic 30% increase in average order value.”

Show your human side

As well as personalizing your marketing, show your human side and the values you believe in. According to Statista, 61% of U.S. shoppers will buy from brands that reflect their personal beliefs.

Social proof, such as customer reviews, ratings, and case studies, can make you more relatable and trustworthy, encouraging customers to buy more.

An easy way to drive conversions and boost AOV is by using user-generated content, or UGC, on both websites and social media.

“We’re seeing that UGC drives interactions, conversions, and AOV on a much larger scale than branded content,” explains Gareth Newman, the founder of Blakely Clothing.

“Being able to incorporate the customer into the branding and allowing them to tell their story of the brand is a significant driver. As much as AI seems to be taking over, it’s important not to miss the human connection which makes brands relatable.”

What’s the typical AOV?

So you’ve got your AOV calculation, but how do you know your ecommerce store is on the right track? According to Oberlo and Dynamic Yield, the average order value by industry is:

• Home and furniture – $217
• Luxury and jewelry – $162
• Fashion, accessories, and apparel – $139
• Food and beverage – $90
• Multi-brand retail – $74
• Beauty and personal care – $73
• Pet care and veterinary services — $63
• Consumer goods – $51

However, other factors can affect your AOV.

For instance, seasonality can be a significant factor. Many ecommerce businesses find their AOV spikes during Black Friday and the holiday season because they receive larger orders from more customers.

The products you sell and the price you sell them at can also have an impact. For example, the AOV for a designer clothing store will be a lot higher than a discount clothing store.

While there are industry benchmarks, the best company to benchmark against is yourself. Monitor your AOV regularly to take action if your average order value significantly drops.

Here’s a handy tip: Calculate the AOV of each of the marketing segments that shop with you.

That way, you see which demographics are likelier to spend more. For example, are older or younger shoppers more likely to be loyal customers? You can then focus more attention on the biggest spenders.

AOV and LTV: A winning combination

Want to make the most of your AOV? We recommend pairing it with LTV to get the full story about your customers.

LTV stands for lifetime value — you may also hear it referred to as customer lifetime value, or CLTV. LTV measures how much revenue a customer spends with you throughout their relationship with you.

How do they work together? AOV measures the short-term, while LTV measures the long-term. Generally, the higher your AOV, the higher your LTV, but this isn’t always the case.

For example, a high AOV but a low LTV may indicate that customers are spending a lot in your store, but aren’t sticking around. It may also mean customers are spending a lot, but are returning many items.

“Knowing your customers is key when increasing AOV and LTV” explains Sam Yadegar, CEO of HawkSEM.

“You need to comprehensively review your data to understand what to do to encourage customers to buy more, more frequently. This can help you know what pricing strategy to use, what product bundling to implement, and what to upsell during checkout.”

At HawkSEM, we work alongside our clients to understand their target audience and customer behavior to increase AOV and LTV.

Common mistakes that reduce AOV (and how to avoid them)

So you’ve calculated your AOV but it’s lower than you’d like. What next?

Here are the most common mistakes digital marketers make with AOV, and how to sidestep them:

• You’re doing too much
• You aren’t tracking customer data
• You’re not looking at other website issues

You’re doing too much

While reducing your pricing can entice customers to buy more from you, you don’t want to lower the value of your offer.

Let’s say you want to increase your AOV, so you run a flash sale to get people to buy from your site. That works well, so you run another sale, and another.

However, you soon find that people stop buying from you as they think you sell low-quality products. After all, that’s why you hold sales all the time, right?

If you lower your prices to get customers to buy, do it sparingly. Alternatively, focus on providing a good customer experience instead. For example, rather than slashing your prices, offer exclusive early access to VIP customers when a new collection of products is available.

You aren’t tracking customer data

Data and analytics are imperative to the AOV optimization process. If you’re not tracking your data or are tracking the wrong data, you’ll struggle to improve.

So ensure you set up conversions on Google Analytics to see how many orders you’re receiving and where customers come from. The great thing about Google Analytics is that you can track data in real time — ideal if you want to see what’s happening on your site at any moment.

If you use an ecommerce platform like Shopify, WooCommerce, or BigCommerce, ensure these platforms track orders and order values correctly.

You’re not looking at other website issues

AOV is an important metric. However, if your AOV is low and failing to increase, see if something is stopping customers from buying.

Issues that may prevent customers from purchasing with an ecommerce brand include:

• Poor user experience
• Lack of product information
• Low-quality or insecure checkout process
• High prices
• Confusing return policies or hidden fees
• Bad reviews
• Technical issues like broken links or slow-loading pages

Before optimizing your AOV, optimize your ecommerce website to resolve underlying problems with its functionality.

Checklist: How to increase AOV in 9 simple steps

Increasing your AOV is all about nurturing your existing customers and adding value to their lives. By doing this, they’re more likely to shop with you.

Here is your free checklist for increasing your average order value in nine simple ways:

• Start by auditing your website and marketing channels. Are there any obvious issues that are causing people to abandon their shopping carts?
• Consider your strategy carefully. Slashing prices and launching lots of sales can harm your profit margins
• Introduce free shipping. Free shipping can encourage customers to add more products to their shopping carts.
• Think about a loyalty program. This can boost AOV and make more people aware of your brand
• Consider upsells and cross sells. Look at your sales data and customer purchase history to identify the right add-ons to promote
• Personalize your marketing channels. Offering a unique shopping experience and products customers want to buy will increase your AOV
• Use A/B testing. Try different things and see which leads to the biggest increase in AOV
• Monitor your AOV regularly. Monthly or weekly calculations make it easy to identify small issues before they become major problems
• Use AOV alongside other KPIs. Combining AOV with other metrics like LTV will give you a more comprehensive understanding of how people are buying

The takeaway

Alongside important metrics like customer acquisition cost (CAC), LTV, and return on ad spend (ROAS), AOV can show how your ecommerce store is doing, and how to keep shoppers happy.

Providing an exceptional, highly personalized online experience will not only keep your AOV high but also improve your brand awareness, boost your SEO, and build trust with your customers.

If you want to increase your average order value, our expert team at HawkSEM can help. We worked with ThriftBooks to increase its AOV by a fantastic 50%. We did this by analyzing their audience segments and creating a targeted marketing strategy for each one.

Want to see how we can grow your AOV for your online retail store? Get in touch today.