Average Order Value: The Answer to your Marketing Budget Woes
Ecommerce is critical to the success of businesses operating in today’s online landscape. In order to exist 10 years or even 100 years from now, companies
have to operate smarter online. AOV, or average order value is a powerful measure for ecommerce retailers seeking tangible data in regards to customer
acquisition costs, return on investment of marketing efforts, and profit margins. Increasing AOV can decrease your vital marketing expenditures (such
as search engine optimization, pay per click, etc…) and quickly increase cash flow. Implement some or all of the following ecommerce techniques to
strengthen your online presence…
Offer your Customer Bundles
If a customer is purchasing a winter jacket, why shouldn’t they be able to buy gloves and a hat all in one nice, convenient package? Offering your customers
bundle packages will increase revenue. These customers will be likely to spend more when these hassle-free packages are made available. Companies like
Nordstrom offer men’s complete outfits for simplistic online shopping. There is no need to
choose multiple articles of clothing, simply choose from dress-wear to casual-wear which saves time and encourages spending.
Free Shipping Threshold
We have all spent more money while online shopping just to reach the “free shipping” threshold. For example, customers will purchase merchandise that they
would normally never put in their online shopping cart if they see “Free Shipping for orders $49.99 and over.” Macy’s offers free shipping every day with a minimum purchase of $99. The standard shipping cost is $9.95 which motivates customers to reach that $99 threshold.
Throughout the ecommerce age there has been a certain stigma attached to paying for shipping online. Customers would rather spend more money
and receive goods than wasting money on shipping. This is a win-win situation because revenue will increase and inventory will turnover more quickly.
This simple but effective practice will increase the average order total.
Incorporate Simple Upsells
A simple card or gift wrap extra can increase revenues without a significant amount of effort. It is advisable to add extras that are relevant to the product
or service that you are selling. Amazon perfects the “upsell”; for example, if you want purchase
a camera and add it to your shopping cart, suggested items will appear including a camera case and lens cleaner. These subtle upsells are not too aggressive
and will encourage customers to organically purchase more product.
Customer Rewards and Loyalty Programs
Offering loyal customers discounts and incentives will motivate them to purchase even more products online. Bloomingdales Loyallist Program members earn points every time they purchase product online. They also receive free shipping with
no minimum purchase and a $25 Bloomingdale’s gift card each time 5,000 points are accumulated. Reward programs like this actually encourage customer
spending and brand loyalty. Happy customers will share their positive shopping experience with friends and family online which will lead to an influx
of new customers.
Incorporate Free Returns
As stated previously, there is a stigma attached to paying for shipping whether for the initial purchase or return. Ecommerce users will purchase the same
product on a different website if their return policy is hassle-free versus the competition. Customers appreciate options: for example, if your company
has both brick and mortar and ecommerce presence, allow customers to return their goods in person or ship them back to your warehouse for free, whatever
their preference. Companies like Costco stands behind their products 100% percent with an industry
renowned return policy. Customers can receive a full refund on anything aside from electronics which must be returned within 90 days of purchase. For
online orders, Costco provides free UPS pre-paid labels for easy returns. Customers always have the option to return their online orders in person
to their local store with a full refund for any shipping and handling costs.
Incorporate some of these simple ecommerce techniques to drive revenue and increase customer engagement. Other general ideas to keep in mind are to segment
your customer base and personalize the shopping experience as much as possible. By segmenting your customers, you can see which group drives the majority
of sales: this group, known as the power players, should be given a personalized shopping experience based upon their preferences and purchasing behavior.