There are two ways to grow your Shopify store revenue.
- constantly drive new traffic to your site and convert well.
- ensure your existing customers spend a bit more.
While you spend money constantly to drive brand-new traffic, increasing your average order value (AOV) can have a compounding effect on your profit margin.
Making your existing customer spend a little more will bring you more profit.
In this guide you will find six actionable tactics that you can implement immediately to increase your AOV.
Let’s jump in and start by calculating AOV.
What is Average Order Value and how to calculate AOV?
The metric = average order value (AOV) tracks the average dollar amount spent each time a customer places an order on your Shopify store.
Here’s a simple, 9-step process to calculate your average order value.
- Start from your Orders page on your Shopify dashboard.
- Select ‘all orders’ and export it as a CSV file.
- Shopify will email you with a link to download the CSV file.
- Open the CSV file in either Microsoft Excel or Google Spreadsheets.
- Create a filter at the top.
- Create a new sheet and create a cell named ‘Average order value’. And move your cursor to the next cell.
- On this empty cell, use type formula =average(
- And use your mouse to go to the first sheet that contains all your sales data. And select the entire total sales column, and hit enter.
- The output you get on the blank cell on sheet 2 is your average order value.
NOTE: This average order value will be for the entire lifecycle of your store.
If you want to calculate the AOV for a specific category of products, or for a specific year or month, then you need to filter your total sales value by the desired category or timeline.
Once you filter the sales of a product category or timeline, follow the same 9-step process to calculate the AOV.
Benefits of increasing average order value
As an ecommerce store owner, you spend money to acquire customers.
You may do this by creating:
- organic content on social media
- or you may run paid ads once in a while
Every customer acquired comes at a price.
If your AOV is $30 and you spend $10 to acquire a customer,
you would want to get maximum returns for spending $10 to acquire that customer.
Simply put, increasing your AOV puts more money into your profit margin.
I am going to give you six super actionable tactics to increase your AOV.
But before that, you should also look at ways to convert your site visitors into paying customers. Better conversion leads to more sales and a higher profit margin.
Let’s jump onto the seven tactics to increase your AOV.
AOV tactic 1 – Optimize your delivery options
Create a Free Shipping threshold.
You often hear or read about the need to offer free shipping across all products.
But, what you can do is say “hey! you get free shipping on all orders above $(your target AOV amount)”.
Say if your current AOV is $90 and you want to push it to $110 – then offer free shipping for orders above $110.
Before you decide to put a threshold on free shipping, you have to spend time to calculate your ideal AOV.
This ideal AOV should cover your shipping expense and should be a realistic amount.
It’s one thing to grow from an AOV of $90 to $110/$120 – but completely another to aim at an AOV of $300. You get the drift, right?
AOV tactic 2 – Offer discounts on an added product or spend, over a certain amount
You may offer your visitors a 20% discount if they bought an additional quantity or another product.
You may also offer a discount if customers are willing to match your ideal AOV.
It is true that discounts hit your profit margin.
But look at it this way.
By making this visitor spend a bit more – you will increase the AOV and reduce your Customer Acquisition Cost (CAC).
What if you could influence the purchase and nudge customers to buy that additional product or spend a little bit more?
You can use Autochat to monitor your visitors in real-time.
And the moment you see visitors move to the checkout page, you could chat with them and offer a discount. Visit Autchat.io to learn more.
AOV tactic 3 – Gift cards
You can offer a $50 gift card if a visitor’s AOV hits your ideal AOV.
What this does is, it brings the customer back to redeem the gift card, or they may choose to give it to someone else.
So, gift cards can either make your existing customer come back and spend more.
Or bring a new customer without spending a dime to acquire a new customer.
AOV tactic 4 – Cross-sell and upsell products by being proactive
Another tactic is cross selling.
This means you present a similar product – ideally which costs more – that can solve the same purpose as the one your visitor is viewing right now.
You can do this in two ways:
- Showcase related products on each product page
- Or be proactive and communicate with the customer in real-time, as they are on the site and pitch high-value-related-products
But, how do you track and chat with your site visitors in real-time?
The Shopify plugin called Autochat is built to make you a proactive seller.
While online store owners sit and wait while visitors come and go,
Autochat allows you to look at your site visitors who are stuck on a product page for a long time,
and lets you intervene and convert them into a sale. Visit Autochat.io to learn more.
You could also UPSELL by offering add-on products.
You know, like McDonald’s.
“Do want you fries with that?”
You can upsell by adding a complimentary product section on your product page.
Amazon does this well, they call it ‘Customers who bought this also bought this…’.
Cross-selling and upselling can boost your AOV, if you are smart about putting the right products in front of your visitors.
AOV tactic 5 – Flexible returns policy
Most buyers don’t ever think of returning a product while making the purchase.
Clothing products are an exception, I agree.
However, a flexible return policy gives your potential customers a security of returning products if it doesn’t suit them.
Here’s a tip if you sell clothing products and accessories.
Offer flexible returns only on high value products to boost your AOV.
AOV tactic 6 – Use chatbots to personalize shopping
Providing a personalized experience for your customers can be a highly effective method for increasing average cart value.
Let’s say you’re walking around in a clothing store looking for a summer shirt. An employee notices your dilemma, takes you to the right place, and points to a special offer running right now.
The chances of you buying that summer shirt have increased considerably because of the specialized service you received.
Your website can do the same thing with visitors. You can configure apps or plugins to watch a site visitor progress through the store, then trigger a popup to offer help wherever it appears necessary. Here’s how you can do it:
Utilize a live chat feature: If you don’t already utilize live chat features to help guide customers through your ecommerce store, you’re missing out on a significant opportunity for sales growth.
Personalize offers based on the customer’s order history: If a site visitor who’s also a customer has bought pet food from you, they might appreciate it if you notified them of any offers on pet treats or toys. When you recommend products to customers, make sure you leverage purchase history and make relevant recommendations.
Answer customer questions 24/7: This is where automated chatbots can be incredibly helpful. If you don’t have the capacity to hire full-time customer service agents, the next affordable option is to automate that service. You need to be available to your customer at all times.
Personalization can help you upsell and improve your average order value. You may start with getting a chat plugin that can understand your customer history and interact with them by making relevant recommendations.
Increasing your Average Order Value is just one step to turn your Shopify site into a sales machine.
There are so many other challenges that need creative solutions.
This is why we founded Autochat.
Our passion is to empower Shopify store owners. Like you.
Each week, we create actionable content to help you make informed decisions and remove friction in:
- achieving tremendous scale in your business
- and scale your customer service speed, accuracy, and quality
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