How to ensure your Average Order Value (AOV) boosting strategies translate into growth
Having a goal to increase the average order value (AOV) is a fairly common growth strategy in ecommerce. AOV is calculated by dividing revenue earned by the total number of orders for a set period of time. The idea is that by simply aiming to increase the amount a visitor spends, companies stand to benefit from increased revenues and even make each transaction more profitable.
It sounds like a simple and effective strategy, but it's complicated by an extremely dynamic marketplace and buyer behavior that is even more varied and dynamic. Determining what makes people click the 'buy' button is hard enough, now there’s the added challenge of getting them to buy even more before they complete the purchase. Increasing the AOV takes sophistication and well-coordinated strategies. Companies that understand their customers and use data to optimize the customer experience are seeing far greater levels of success.
What’s at the heart of common AOV strategies?
Some common strategies include bundling complementary products or offering volume savings. Others use the good old ‘Fear Of Missing Out' (FOMO) strategy by making exclusive or time-sensitive offers. For some customers, getting free delivery or cash back is really attractive, especially if they feel they’re getting a great deal.
But the question remains, what’s important to that visitor right at that moment when they’re browsing? What will get them to click the add-to-cart button more than once and complete the transaction? And how can using customer data help drive up the AOV without adding frustration in the user journey?
To get value, you need to give value.
Ultimately, people will spend more because there’s value and because it’s easy to buy. So when considering the best AOV boosting strategies to implement, think about what’s behind what you want to achieve in terms of the customer or visitor.
Free delivery or bundling may add value, but how do you reduce friction or buyer anxiety so they don’t second guess clicking the buy button or backtrack when they view the shopping cart total?
How do users shop? Do they simply browse the site, clicking on specials and promos? Do they login and save a cart to come back to later? Do they buy on impulse? Do they respond to complementary up-selling or cross-selling offers when they’re about to checkout? When is the right time to suggest alternatives products or complementary offers? If they’re an existing customer, how often do they purchase and do they buy the same products every time? Many of the answers to these questions can be found in customer data, and if you’re looking to increase the AOV or lifetime value of a customer, this is where the potential to really optimize for growth lies.
Optimizing the customer experience
Imagine you can serve up a unique idea for each visitor in response to how they’re browsing. What’s the potential value in being able to keep one step ahead and offer up products that are relevant and closely aligned to what users are looking for?
Consider how effectively you’d be able to boost AOV if you can find the needle in the haystack every time, even when it changes from user to user or day to day. It may sound impossible, but when you leverage artificial intelligence (AI) it opens up a whole new realm of possibilities with regards to optimizing the customer experience.
Improving AOV cannot always be linked to a single element, offer or idea. Often there are multiple variations influencing the customer journey. Which one to change? How to change it and how does that one change affect other variations that may influence the user? What started out as a simple strategy quickly gets incredibly complex and difficult to pinpoint when an idea is working or not.
The advantage of AI-driven optimization
This is why AI is ideally suited to optimizing the digital customer experience to improve AOV. When you implement ideation at AI scale, it enables you to experiment with multiple ideas, combinations of ideas and include variations of each. It uses complexity to its advantage. Plus it’s not hindered by time or traffic and can produce results quickly.
Being able to track which offers or ideas visitors respond to or which they don’t, enables you to be more agile in the way you optimize the digital experience. The ability to add, change, or remove ideas as part of an AI-driven optimization ensures you’re benefiting from top performing outcomes in real time based on how actual visitors react. This delivers the ability to to present visitors with products or services that are more relevant and offer more value.
AI provides the advantage of tying together strategy and ideation to understand which changes are producing the best results. You’re not making changes based purely on industry best practices or gut feelings, you’re making changes that are specifically aligned with your business and what your visitors and customers want, while simultaneously moving closer to achieving your business growth targets including a better AOV.