The ultimate goal of your eCommerce is to make money, right? 

The easiest way to increase the revenue and profit for an ecommerce business is to increase the amount customers spend on the store. It is also referred to as increasing the average order value (AOV for short).

But what is Average Order Value and how do you calculate it?

Average order value:

AOV is the average amount that each buyer spends per transaction in your shop or store. In short, it indicates the revenue that comes with every order that is placed. 

Although, there are tools available, like Cartoids, with which you can monitor and grow your AOV, we think you should still know how to calculate it yourself.

You can find your AOV using the simple formula:

Average order value = total revenue / number of orders. 

It is an easy calculation, but with 100s and 1000s of customers coming in, we recommend using Google Analytics to track their AOV. 

You can set it up in 4 easy steps:

1. Enable eCommerce tracking in your Google Analytics

2. Navigate to Conversions » Ecommerce » Overview

3. Identify the AOV chart under the Transactions table on the right.

4. You can also view AOV by traffic source by navigating to Acquisition » All Traffic » Source/Medium and click Ecommerce under the Explorer tab.

Average Order Value is an important metric, with which you can leverage profitable traffic sources and remove the ones that do not perform. 

With a better understanding of such a key metric, let us share 5 ways you can improve your AOV. 

Ways to increase the average order value: 

1. Provide targeted product recommendations

When buyers visit a store, they normally search for the item they want, process the order and drop out. This results in lower average order value along with the smaller carts. 

Instead of creating distractions for them, we suggest setting up product recommendations or complementary products on your cart or product pages. This way, you can catch them with targeted product recommendations when they end up on your product page. 

2. Cross-sell and upsell useful and related products 

Upselling, simply put, is similar to talking someone into getting a more flashier and expensive type of product. The best part is, upselling works!

A good example is the Dollar Shave Club. The store lures people in with the promise of a dollar and then shows them 2 pricier options which offer far more features. 

Cross-selling is recommending a product related to the one your customer is about to purchase. Referring back to the Dollar Shave Club, they sell skin care products along with their razors. 

Offering upsells and cross-sells are the best way to increase your average order value. 

3. Establish order minimums for discounts

Setting up order minimums for free shipping or discounts is a great way to increase your AOV. You can give your customers a huge incentive to increase their spending on your store. 

Organifi has increased their AOV by getting their customers to “buy more and save”. They increase the amount of discount offered on their products when customers place a bulk order. Truly genius!

4. Set up a customer loyalty program

Customer loyalty programs build what they are named after - brand loyalty. They create strong customer relationships and increase average order value. 

Loyalty programs offer discounts to repeat customers, and increases the value of the discounts as the average spending increases. Those who spend most are added into an exclusive VIP club, where they are given exclusive discounts and benefits, normal customers do not experience. 

You can question whether this works. And we will gladly answer: YES! So much so, that loyal customers spend 120% more than new customers, year after year. 

5. Make product packages or bundles

Selling your product as bundles can have a huge impact on improving your AOV. It can be used to not only “complete” your product, but also offer ease to your customers. The ease of having read-made bundles for them to choose from, without getting them to look around for multiple products around the store. 

If we look back to the Dollar Shave Club, their store offers starter sets targeted towards customers who are confused about making their first purchase. 

Well there you go, our 5 best ways to increase your average order value. Hopefully, these tips cannot only benefit you by increasing your average order value but also create returning customers.

Do you think we missed something? Well drop your suggestion in the comments section. We would love to hear from you.