AOV

Complete Guide to Increasing Your Average Order Value (AOV) on Shopify

Yash B
February 27, 2024

In the competitive world of eCommerce, everyone talks about increasing Average Order Value to drive profitability and growth. But, what is AOV?

Average Order Value or AOV metric measures the average amount spent by a customer per order on an e-commerce store.

Average Order Value formula is Total Revenue/Total Orders

Increasing AOV is easier said than done! How do you even start after all?

That’s why, in this blog, we are providing you with a complete guide on how to boost your Average Order Value and maximize your revenue. We'll dive into effective tactics, and to provide you with a clearer picture, we'll also highlight examples of brands successfully implementing these strategies to increase their earnings.

Understanding The Benefits of Increasing Average Order Value (AOV)

Calculating AOV is essential for any business as it helps them understand the purchasing behavior of their customers to make informed decisions and improve the revenue of their eCommerce stores.

The benefits of having a high Average Order Value(AOV) are massive -

Increased Profitability

A high Average Order Value means that customers are spending more money per order. With higher revenue per sale, profitability is improved as the store earns more from each transaction. This allows the business to cover costs and invest in growth opportunities easily.

Higher ROI

Return on investment (ROI) is a critical metric for measuring the effectiveness of any marketing campaign. A high AOV means that the store is generating more revenue for each customer acquired. Since the cost of customer acquisition remains constant, a higher AOV boosts the ROI of marketing efforts.

Improved Customer Lifetime Value

Customer lifetime value is the total revenue generated from a customer throughout their entire relationship with the business. A loyal customer’s AOV is around 5% higher than a new buyer’s. A higher AOV indicates that customers trust the brand and are willing to make more purchases, indicating increased customer lifetime value.

Improved Customer Engagement

Boosting customer engagement can be done by increasing the Average Order Value (AOV). Businesses can do this by offering personalized suggestions, bundles, or discounts when customers spend a certain amount to increase AOV. This approach makes shopping more enjoyable and helps build customer loyalty because they feel valued and special.

Reduced Reliance on Constant Customer Acquisition

Increasing Average Order Value reduces the dependence on constantly acquiring new customers to drive revenue growth. With a higher AOV, businesses can generate more revenue from existing customers, reducing the need for acquiring new customers continuously. This leads to improved customer retention and long-term sustainability.

6 Tried-and-Tested Strategies to Increase AOV

There are several ways to increase Average Order Value (AOV). Here are a few strategies we have seen brands get crazy results with every single time!

1. Sell More Items With Build-Your-Own Discounted Product Bundles

Set up a 'build your own bundle' option in your store, which allows customers to create personalized bundles. This feature will guide them through a smooth, step-by-step process, helping them explore different collections and categories and easily add more items to their cart.

Additionally, offer discounts on these bundles to motivate customers to buy more at once.

You can easily implement this using Skai Lama’s Easy Bundles app.

2. Nudge Shoppers to Spend More With Gift Cards and Cashback

Consider providing pre-loaded gift cards to encourage repeat purchases and draw VIP customers back to your store. These cards not only offer a delightful surprise but also tend to lead customers to spend more than the card's value, increasing sales.

Alongside this, offering cashback to all other customers based on their total cart value can be effective. Cashback acts as a financial incentive that encourages customers to return and use the money they've earned from previous purchases, creating a continuous cycle of shopping.

To ensure your offers reach a wide audience, including those who might not have visited your store recently, utilize email marketing campaigns. Sending out well-crafted emails about your gift card incentives and cashback rewards can re-engage former customers and strengthen loyalty among current ones.

All this may seem complicated but you can easily do this using Skai Lama’s GiftKart app, and we will help you set it up.

3. Use cart commitment to upsell at checkout

Personalize upsell and cross-sell product recommendations to sell complementary products or refills for what they are buying. Remember to highlight the benefits or the overall value to justify the increase in items!

Include service offers like priority shipping, insurance, and subscription deals at checkout or a free shipping bar to bump up order value ‘reasonably’.

You can create a high-converting checkout this way which will also help you earn more. And it’s all easy to implement with the Checkout Wiz app.

Note - You have to migrate your checkout to checkout extensions to use Checkout Wizard to its fullest. To get started, you can watch our video on migrating Shopify checkout in 6 easy steps. If you need personalized help, visit our migration service page and book a call.

4. Incentivise Spending More With Free Gifts on Orders

To boost online sales, offer a free gift or an exclusive item when shoppers reach a minimum cart value. This gamifies the shopping experience, encouraging customers to add more items to their carts.

Use the free gift option to manage inventory or introduce new products, adding excitement and value to their purchases.

The best way to get this going on your Shopify store is by using the Kite App.

5. Offer volume discounts for more number of items purchased

Incentivize online shoppers to add more items to the cart to unlock volume-based discounts, thereby also increasing your overall cart value. Create tier-based volume discounts and offer a one-click functionality to add items to the cart. For easy implementation of discounts on volume bundles, try the Fly Bundles app on the Shopify app store.

6. Create new revenue opportunities with gifting experiences

Give customers the ability to gift wrap their orders, send greeting cards, schedule delivery, or complete a gift set at an additional cost. This will open a whole new channel to generate more revenue per order.

You can easily do this using the GiftLabs app.

Brands That Used These Strategies to Boost Their AOV

Mellow Fellow Made an Extra $1500 By Upselling on Checkout

Mellow Fellow is a renowned cannabis brand. They faced challenges in upselling their products, hence the AOV was less. So, they turned to Checkout Wizard, the ultimate tool to improve the Shopify checkout experience.

Here’s what we did to help them -

  • Implemented rule-based upsells and introduced a systematic approach to upselling. For instance, pairing edibles with vapes based on their respective collections.
  • Conducted A/B testing to determine the effectiveness of upsell offers on the post-purchase page versus the checkout page.
  • Based on the A/B test results, we shifted the same upsell offer to the checkout, as it was working better.

And the results were crazy!

Mellow Fellow initially had 546 views on their upsell block, resulting in a conversion rate of only 3.66% and 20 orders, generating a mere revenue of $160.

After implementing Checkout Wiz, the results significantly improved. They received 2925 views on their upsell block, which led to 288 orders i.e. 10% conversion, showing a 6% increase in conversion rate.

As a result, Mellow Fellow generated total revenue of $1.5k from upsells, showcasing the effectiveness of upsell offers.

You can read more details about the strategies we implemented here.

A Beauty Brand Increased Its Average Order Value by 36% Using a Gift Card Rewards Program

In the competitive beauty sector, customer retention and engagement are as vital as attracting new customers. Especially in times of economic downturn, drying up ad budgets, and diminishing ROI.

To address this challenge, the beauty brand turned to GiftKart, for a seamless setup and management of a reward program.

Here's how the brand orchestrated a successful campaign -

  • Using the GiftKart app, the brand set up a reward program that automatically added a $25 gift card to the cart for eligible orders, followed by an email notification containing the gift card details.
  • To foster a sense of urgency and encourage quick repeat purchases, the issued reward cards had a one-month expiry date.
  • The brand integrated GiftKart with Klaviyo to design a series of email flows. These emails not only notified customers about the reward but also sent reminder emails coupled with product recommendations, creating a personalized and engaging customer experience.The results?
  • The beauty brand witnessed a significant 36% increase in the average order value to $155.68 after implementing the Gift Card Rewards program!
  • From only 175 reward card codes and 1332 gift cards issued, the brand enjoyed a $21.5k upsell revenue, making the campaign a resounding success.

Read the details of how to implement this strategy here.

Wrapping up!

Increasing your Average Order Value (AOV) is a key factor in driving profitability and growth for your Shopify store.

Skai Lama, with its unique advantages, can play a vital role in increasing your AOV and taking your online business to the next level. With Skai Lama's custom integrations, migration support, and dedicated customer success teams, you can optimize your store's performance and effectively boost your AOV.

To learn more about how Skai Lama can help you increase your Shopify store revenue, click here.

Frequently Asked Questions

What are some ways to increase AOV?

You can improve the average order value on Shopify by implementing strategies like offering build-your-own bundles, providing gift cards and cashback incentives, upselling and cross-selling at checkout, offering free gifts for higher cart values, creating volume discounts, and adding premium gifting options.

What is the average order value (AOV)?

Average Order Value (AOV) is a metric that measures the average amount spent by a customer per order on an eCommerce store.

Why is it important to increase average order value?

Increasing average order value is important because it boosts profitability, increases return on investment (ROI) for marketing efforts, improves customer lifetime value, increases customer engagement, and reduces the reliance on constant customer acquisition.

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