The pursuit of more revenue is never-ending for ecommerce brands. Ecommerce leaders and Shopify store owners are always on the hunt for ways to make more money. But they often focus solely on acquiring new customers and getting current customers to buy more often. Those are definitely viable ways to generate more revenue, but there’s another option: increasing average order value (AOV).
We work with direct-to-consumer (DTC) ecommerce businesses day in and day out, so we see firsthand what they’re up against. Our founder and CEO, Raphael Paulin-Daigle, says, “Ecommerce brands are facing pressure from the lack of control of major ad platforms’ algorithms—Facebook, Instagram, Google, and even TikTok to some extent. That's how a lot of these brands are making money.
“Additionally, ad costs are increasing pretty significantly for some brands, so having good control of their customer acquisition costs is always a challenge. There's ongoing pressure to be more profitable on their ad spend, but brands are working against the grain because they're still at the mercy of most ad platforms. So people are nervous that they're spending more on ads but are technically making less money.”
If this rings a bell, you’re not alone. These very issues have led to a huge increase in the number of companies doing conversion rate optimization (CRO) in an effort to increase their revenue and improve profit margins. More ecommerce stores than ever are also looking into increasing average order value since it can also boost revenue and maintain profitability. Brands like yours need all the help they can get to combat the changing landscape.
If you’re going to increase AOV successfully, you first need to know why your current AOV is what it is. Many factors have an influence on this:
And these are just some of the things that impact average order value. Doing customer research (quantitative and qualitative) can help you spot any that are negatively impacting your AOV so you can address them. We’ll talk about some of the many ways to do so below.
We’ve established that boosting order values is important, but what AOV should you be aiming for? Ultimately, any AOV that’s higher than your current one. But a more nuanced answer lies in a chart shared by Taylor Holiday, the CEO of Common Thread Collective, on Twitter:
To be clear, this chart is not gospel. It doesn’t mean that, if you have a high conversion rate, you shouldn’t try to increase your AOV. Conversion rate fluctuates all the time, and generally goes down as brands scale into new channels and increase traffic. So, increasing AOV is something you have to work on continuously, although doing so will naturally make it harder to maintain a high conversion rate.
What’s the idea here, then? The higher your conversion rate, the lower you can afford your AOV to be. While this chart is only an approximation meant to point you in the right direction, try to stay above the red line. For example, if your conversion rate is 2%, aim to get your AOV as close to $150 as possible, if not higher.
Now that you’ve got an idea of what your target AOV should be, let’s get into how to work toward that goal.
We’ve had outstanding success with product bundling to increase AOV for dozens of DTC ecommerce brands. This works especially well for beauty and skincare companies since their customers often buy more than one product at a time.
For one of our clients—men’s personal care brand Dr. Squatch—we tested a two-pack of soap as the default option. Individual soaps were still available, but nudging people to buy two at a time led to an increase of up to 54% in revenue per soap purchaser.
DTC cereal brand Magic Spoon takes a bit of a different approach. It only allows site visitors to buy bundles and gives a choice between all one flavor or a variety of flavors.
Whether you bundle a higher quantity of the same product or a variety of products, predisposition is important. The best products to bundle are those your customers already tend to buy together or purchase more than one of, so keep an eye out for patterns.
Another great method is promoting one-click upsells or cross-sells in your cart. There are many different ways to implement this, as you’ll see below.
Black Rifle Coffee’s side cart features a recommended product that goes well with the one already selected and allows you to change the coffee’s texture and add it to your cart instantly. Black Rifle also gives shoppers the option to donate to charity from the cart or add gift bags and messages for a few extra dollars.
Draper James also uses a gift-wrapping upsell. What we love about this example is that the brand manages expectations by clarifying not just the cost but also the additional processing time needed.
Shoe brand Margaux provides another great example. Margaux cross-sells complementary products ranging from $10 to $30 but, unlike the other brands, features them under the checkout button. By doing so, it creates a clear separation between items in the cart and other available products. Why is this smart?
To be clear, there’s no one ”best area” to feature such sections; you should A/B test to find the best placement for you. But placing a cross-sell right below products already in the cart can sometimes confuse people into thinking it’s an item they’ve added. So just be sure to make a clear differentiation if you place your cross-sells there.
You can also leverage free shipping thresholds to increase your average order value. In other words, offering free shipping once customers’ orders reach a minimum purchase amount.
We have to warn you, though, that there’s no one-size-fits-all threshold; you’ll have to experiment to find the best one. For example, you could be losing a large margin if people frequently order lower-priced products that don’t have room to absorb shipping costs. So you’d need to think strategically to avoid absorbing shipping costs for small orders while still providing free shipping on most orders.
Source: RJ Metrics
As a rule of thumb, set your threshold just above the average dollar amount your customers spend. That way, most customers will be close to the threshold, making it easier to incentivize them to add more products to their carts.
Art of Sport does this with its progress bar and a low minimum purchase amount of $30 to qualify for free shipping.
It’s worth mentioning that, in some cases, you may not want to implement a threshold at all. Think about luxury ecommerce. Specifically luxury fashion, where products are in the hundreds (or thousands) of dollars but don’t cost nearly as much to ship. For brands like these, shipping everything free is more often than not the best way to go.
Many consumers are willing to spend more when the perceived risks of buying from you are lower. Knowing they can return items they don’t like at no cost to them can be the nudge they need to add additional products to their carts or buy higher quantities.
Bombas uses this technique to make the cross-sells in its side cart more effective.
Our Place does the same, even linking interested people to a policy page to reassure them that their orders are eligible for free returns (and shipping).
Cross-selling and upselling in the checkout flow are great ways to boost AOV. If you’re on the Shopify Plus plan with the ability to customize your checkout page, both are also easy to implement. (One of our favorite tools for customization is Rebuy, an AI-powered platform for creating personalized upsell, cross-sell, and downsell flows.)
Now for examples of what your offers might look like. One brand we worked with, Primally Pure Skincare, cross-sells various products ranging from $10 to $40—and not just any products. The recommendations vary depending on the products a customer has in their cart, making them more relevant and increasing order values.
Furniture brand Article also does a good job of cross-selling in the last stage of the checkout flow. The use of “Often Purchased With” serves as implied social proof, and drawing attention to discounts on the recommended items makes them more appealing.
However, it’s worth stating that this strategy only works when you feature products that require little to no explanation. Once visitors are about to complete a purchase, there’s no time for lengthy product descriptions and multiple images. At most, you can get away with a small thumbnail image, the product’s name, and maybe a short description. That has to be enough to persuade people.
Plus, in addition to being self-explanatory, upsells and cross-sells have to be priced right. If your product is at a high price point where it’s hard for someone to add it to their order without much thought, your cross-sell or upsell take rate will suffer. In contrast, if the product is under $10, you might get volume, but the additional revenue generated may not be optimal.
Our extensive testing shows that products between $10 and $30 perform best. However, this is highly industry-dependent, so you’ll have to test it for yourself to maximize your revenue.
Is the last step of the checkout flow your last shot at making more money? Not at all! Using a tool like Rebuy, you can create and display one-click upsells and cross-sells after people place their orders. This works because it targets people whose motivation and additional conversion potential are already quite high. Plus, it's frictionless; customers don’t have to reenter their payment info and can simply click to add another product to their order.
Dresswear brand &Collar takes advantage of this on its thank you page. It also leverages a countdown timer and trigger words like “limited time offer,” “your special offer ends in,” and “save 25%” to create time pressure and inspire fear of missing out.
When there’s real urgency, time pressure can also work for you. (Otherwise, attaching urgency to items customers can buy anytime at the same price will cost you trust.)
Pro tip: If you’re employing other upselling strategies, avoid repeating products mentioned in other upsells or cross-sells that visitors didn’t add to their carts. You don’t want to seem pushy or desperate for money.
Across the various strategies we’ve talked about, here are some best practices to remember.
We’ve talked about several ways to do both but that doesn’t mean you need to upsell or cross-sell at every possible turn. A/B test different placements and numbers of offers to see what works and what doesn’t. Also, beware of pop-ups, calls-to-action, and other elements used for upselling and cross-selling that look spammy or aren’t customized for your brand.
The list above will give you a solid starting point, but you can and should test the effectiveness of other strategies as well. For instance, you may be able to increase AOV through your website’s live chat functionality since you’ll be able to give personalized product recommendations. Alternatively, you can offer a coupon on shoppers’ next purchase if they spend a certain amount of money today.
You can’t track improvements to AOV to the exclusion of everything else. Here are some other key metrics to watch:
Especially if your profit margins are taking a hit due to rising ad costs and such, you may feel pressure to increase average order value right away. That’s understandable, but you will need to be patient.
If you test several strategies for improving AOV at once, you’ll have a tough time figuring out what works and what doesn’t. You’ll either end up with warring strategies that stunt your results, or spend unnecessary time scrapping and then reimplementing strategies that you didn’t realize were actually helping.
Speaking of testing, another critical component of setting yourself up for success is formulating test ideas based on data. That way, your chances of making adjustments that have a positive impact increase.
To do this, we recommend using the Testing Trifecta—SplitBase’s own A/B testing methodology that involves three steps:
This process will clarify what improvements are needed most, why certain things are or aren’t serving your business, and help you narrow down courses of action. Not only does this work wonders on AOV-focused projects but we use it successfully on conversion rate optimization projects.
For more on this process and how it could help you increase your AOV or conversion rate, contact our team. We’ll be happy to fill you in on the details and get you a free proposal.
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