April 1, 2024

How to Increase Average Order Value in 6 Steps


Average order value is one of the most important metrics for business success because it impacts your profitability.

The best part is that you don’t have to spend money to grow your average order value. All you need is a few adjustments to your ecommerce website, and you’ll be able to capitalize on increased returns.

Let’s take a look at how to increase your average order value in six easy steps.

What is average order value?

Average order value represents the amount of money you can expect a customer to spend per transaction. This makes it essential for marketing success because it means you generate more revenue for the same amount spent on marketing.

Calculating average order value

To calculate your company's average order value, divide your total revenue by the number of orders. For example, if you brought in 4,000 Saudi riyals and completed 100 transactions, your average order value is 40 riyals.

6 steps to increase your average order value

Step 1: Bundle products

Have you ever noticed that when you're shopping online, stores will bundle products at a discounted rate? Maybe you're looking for a coffee machine, but you find a package containing a coffee machine, espresso beans, a filter, and other accessories.

This is called product bundling, and it's one of the most effective ways to increase your average order value. It enables you to sell more, and customers won't have to buy products separately.

A study conducted by Harvard Business School found that when Nintendo sold bundled gaming sets and accessories, it increased sales by 100,000 units.

Step 2: Upsell products

The next step is to upsell related products.

Customers are usually looking to buy more than one item. For example, if someone is shopping for a new camera, they'll probably need a camera bag and tripod as well.

Fortunately, upselling products is easy. If you're running a Shopify store, you'll find a pool of plugins on your dashboard that allow you to upsell.

Step 3: Implement a loyalty program

If you have a loyalty program that gives customers cash back every time they buy from you, it'll encourage them to buy more.

For instance, if someone owns a restaurant, they could offer customers a free breakfast after buying 10 meals.

So allocate a budget for your customer loyalty program and start mentioning it in your marketing campaigns. You could also create social media posts about how it works and how many points customers can expect to receive per Saudi riyal spent.

Step 4: Offer discounts

You can go the old-fashioned route and offer limited-time discount offers, as it's a proven way to encourage customers to buy more. By using scarcity to your advantage, customers spend more because the sale won't last forever.

For example, you could add a countdown timer to your website, letting customers know how much time is left before a sale ends. Research by Copyhackers shows that these clocks boost overall conversions by 200%.

Step 5: Offer free shipping 

Providing free shipping for carts above a certain value is another good way to get customers to spend more.

For example, if someone buys something that costs more than 50 riyals, there’s no shipping fee.

The way it works is simple: If someone is about to check out and their total is 40 riyals, they are more likely to go back and buy a product worth 10 riyals so they don’t have to pay for shipping.

Step 6: Emphasize social proof

Social proof is a positive influence created when customers find out others are buying from your brand, and it's a powerful tool to increase average order value. 

For example, when people see customers lining up to eat at a restaurant, they assume the food and service are good, so they line up too.

You can use this effect to boost average order value by featuring industry experts or celebrities in your ad campaigns and social media posts. If you don't have the budget to pay these individuals, you could also incentivize customers to leave a review. 

And since 89% of customers check your review page before buying from your business, this can encourage them to buy more.

Offset marketing costs by increasing your average order value

Boosting your average order value is straightforward but requires testing and a lot of learning. So we suggest implementing basic adjustments like product bundling, upselling, and downselling to see a positive impact on your average order value analytics.