The Importance of AOV for eCommerce Businesses | Tips to Boost Your Average Order Value

As the digital landscape continues to evolve, businesses are constantly seeking new ways to adapt and grow within this dynamic space.

In eCommerce, one of the pivotal metrics in understanding your business’s standpoint and financial health is your average order value (AOV).

In this article, we’ll explore the importance of AOV for eCommerce businesses and share some actionable tips for increasing your average order value.

Suggested reading: Read our free eBook, ‘Reducing Cart Abandonment in Fashion eCommerce: A Step-by-Step Guide’, to learn about how cart abandonment can impact AOVs.

What is AOV?

AOV is the average amount a customer spends when making a purchase from your website. It’s a simple yet vital eCommerce metric that not only provides a picture of consumer behaviour on your site, but also offers insights into how you can grow your business.

It’s calculated by dividing the total revenue by the total number of orders:

AOV = Total revenue ÷ Total number of orders

When strategically assessed and targeted, it can help online retailers better understand customers’ habits, preferences, and on-site browsing behaviour. This can then help to form the basis for a data-driven business plan.

Why is a good AOV important?

Increasing your AOV is a sustainable way to grow your eCommerce business and shows that you’re getting the most value out of your existing customers.

This also means you can grow your business without sending your marketing, advertising and other costs through the roof.

Here are three key reasons why AOV is important for eCommerce businesses:

1. It provides a better understanding of customer behaviour: By examining your AOV, you can gain a deeper understanding of consumer trends in online shopping. This allows eCommerce marketers and sales teams to structure their pricing and marketing strategies effectively.
2. It helps to offset acquisition costs: Acquiring new customers can be five times more expensive than retaining an existing customer.¹ This is often due to retailers spending more budget on Google Ads. Improving your AOV will balance out your CAC and allow you to spend your time and resources elsewhere.
3. It shapes upsell and cross-sell strategies: Since customers at this stage in the buyer’s journey are already interested in your products, upselling and cross-selling strategies are perfect for nudging customers towards products that are similar to the ones they’re browsing. Offering genuinely relevant products that add value to the customer’s journey will significantly increase your AOV.

And from a broader perspective, AOV is important because it illustrates the health of your eCommerce site. Low AOVs could indicate that there is an issue with your product, marketing or website. That’s why it’s crucial to regularly assess your AOV against industry benchmarks, and work to improve it if necessary.

Pro tip: Use Salesfire Trends to get live eCommerce industry benchmarking data. As of June 2023, the average eCommerce average order value stands at £103 (based on 12 months of data). 

How to boost your AOV in eCommerce

While there is a range of important metrics that online retailers can use to monitor their business performance, average order value is one of the most crucial.

The key to improving your AOV lies in understanding and meeting the wants and needs of your customers, and subsequently working to improve the eCommerce customer experience.

Below are some strategies and actionable tips to help you increase your eCommerce business’s average order value.

1. Introduce an on-site chat function

Providing a seamless, streamlined customer journey from the moment a user lands on your site is crucial for online retailers.

While a positive on-site experience encourages more users to add items to their baskets, it’s no use if your customers are going to drop off at the final stage in their buying journey.

eCommerce basket abandonment rates currently sit at around 70%, and a huge number of this is likely due to last-minute doubts or confusion that are deterring the customer from completing a purchase with you.² 

Customers who aren’t engaged with your brand or website are less likely to complete purchase, and are also less likely to engage with promotions or up-selling strategies that would otherwise boost AOVs. 

An effective way to boost your AOV and reduce basket abandonment is by adding a live chat function on your site.

Offering immediate assistance to answer any customer queries or providing product recommendations can help you:

• Prevent basket abandonment: Answering any customer questions will give shoppers the confidence to continue their journey and complete a purchase.
• Build a loyal customer base: Since customers will have a positive, informed journey on your site, they will want to return time and again for the same experience. Brand identity and customer retention are integrally linked, and a live chat function will demonstrate your openness and willingness to communicate.
• Improve trust: Providing immediate support to your customers will show that you’re a trustworthy, reliable business. This will improve customer relationships and encourage repeat purchases.

Not only does a live chat on your site aid in increasing revenue and conversion rate, but you’ll simultaneously see an increase in average order values by providing support as and when your customers need it.

Pro tip: In addition to providing a chat function, ensure your FAQs page is up-to-date with accurate, helpful information. This will allow unsure customers to quickly find the information they need so they can get back to shopping and adding items they love to their baskets.

2. Adopt visual search technology

In a sea of products, customers may overlook the items that align perfectly with their preferences.

Customers crave a personalised and seamless shopping experience, and visual search is the tool that is providing the on-site journey that modern shoppers are looking for.

With Salesfire’s Visually Similar Search tool, customers can upload and crop their images to help them discover more of your product catalogue.

By finding similar or complementary products on your site, users will add more to their baskets and increase their overall average order value.

A visual search tool works to:

• Improve product discovery: Visual search makes it easier for customers to find what they’re looking for, thereby reducing search-related frustrations. When customers are able to quickly and easily find their perfect item, they’re more likely to make a purchase. Increasing AOVs through enhanced product discovery is both cost-efficient and highly effective.
• Offer personalised recommendations: Leveraging visual search tools allows eCommerce stores to offer personalised recommendations similar to the items customers search for. This could be similar items, complementary products, or even higher-priced alternatives that work to increase AOV.
• Enhance the shopping experience: Visual search encourages and adds a higher level of engagement and interaction on your site which improves customer satisfaction. Innovative tools like Visually Similar Search help make browsing your store more enjoyable meaning customers will stay on your site longer and will be more likely to add more items to their carts.

eCommerce businesses that offer a visual search tool can provide enhanced, personalised shopping journeys that encourage shoppers to explore more products and make larger orders.

Suggested reading: Learn more about the power of visual search by reading our article, ‘Visually Similar Search: The Future of Visual Search’. 

3. Introduce a loyalty programme

Loyalty programmes are a strategic tool used by retailers to promote repeat purchases and improve customer retention.

Over time, this can significantly impact your average order value. But how?

With a loyalty programme in place, your customers can develop a sense of community and feel valued as your customer. The more a customer feels valued, the more likely they are to continue shopping with you and spend more money on your site.

Here are some more tips for building customer loyalty, improving customer experiences and increasing AOV:

• Reward points: This is a popular points-based model used by various businesses in the eCommerce space. To put it simply, the more customers spend with you, the more points and rewards they receive. Not only does this encourage a larger number of orders, but also increases repeat purchases by users who want to cash in their rewards.
• Referral rewards: Encouraging your customers to refer friends in exchange for rewards or points is a great way to increase your customer base and your AOV. This can incentivise shoppers to invite more users to receive more rewards and spend them by buying more items from your online store.
• Exclusive offers and discounts: Providing exclusive deals or early access to new product launches will further strengthen the relationship with your customers. This reinforces the benefits of a loyalty programme that makes customers feel special, encouraging them to make additional purchases.

By creating an attractive loyalty programme that users want to join, you’re not only improving your customer retention rate but also encouraging an increase in the average dollar amount for each order.

Suggested reading: Gain a deeper understanding of customer loyalty along with tips on how to retain more customers in our blog, ‘Understanding the Value of Customer Loyalty and Retention’.

4. Launch urgency campaigns on-site

Overlays serve as a powerful tool for creating a sense of urgency and incentivising customers to add additional products and services to their shopping carts.

Using tools like Digital Assistant, you can launch an ‘Increase Order Values’ campaign that uses dynamic messaging and Overlays to encourage bigger baskets.

For example, you can influence users to add more items to their cart to reach the minimum purchase in order to qualify for free delivery. Not only will the incentive of free delivery increase your AOV as customers try to hit the minimum order price, but it may also be the final push shoppers need to commit to an order.

Here are some other examples of strategies or campaigns you can use to increase eCommerce urgency and boost your average order value:

• Display limited-time offers: Create a sense of FOMO to encourage customers to complete purchases quicker so they don’t miss out.
• Showcase your discounts: Displaying discount codes will prompt users to buy a product for the satisfaction of grabbing a deal, especially from those impulse shoppers.
• Offer free shipping: Since users are saving money on delivery costs, you may see your AOV increase as shoppers spend the extra money on more items.

Implementing a system for sending real-time basket reminders is especially effective for reducing your abandonment rate by prompting the shopper to return and complete their purchase.

Advice on next steps: You can create your own dashboard in Digital Assistant for free and unlock a variety of urgency campaigns that are available to you right away.

Our quick and easy setup means you can create, review and launch a campaign on your site in just a few steps.

The key to a higher eCommerce AOV

Monitoring, analysing, and increasing your average order value is key to maximising the profitability of your business.

By implementing one of the strategies above, you can work to:

• Encourage shoppers to spend more
• Reduce your basket abandonment rate
• Improve customer loyalty and retention

Being aware of your AOV will allow you to identify what works best for your business or what you can improve on. With these strategies in hand, you are well on your way to growing your total number of customers and overall revenue.

¹  Customer acquisition vs retention costs | Invesp

²  48 cart abandonment rate statistics 2023 | Baymard Institute