How to Increase Average Order Value for a Shopify Store
What is Average Order Value?
Average Order Value, AOV, is the average dollar amount spent when a customer places an order
How to Calculate Average Order Value
The average order value is calculated by dividing the total revenue by number of orders made. For example, if your total revenue is $200 with 20 orders, the average order value is $10.
Benefits of Increasing Average Order Value
Profit Margin
An increase in AOV means fewer orders but more money. A Shopify store that increases AOV will spend less money filling out orders. A Shopify store with a higher aov will decrease shipping costs and spend less time to fill orders.
A higher Average Order Value leads to a decrease in expenses and an increase in profits.
Customer Data
More money being spent in a Shopify store leads to more customer data. A Shopify store owner can use the new customer data to gain insight to create a better customer experience. A better customer experience should lead to future purchases.
How to Increase Average Order Value for a Shopify Store
A Shopify store has many options to choose from when working on increasing aov. There is one simple option they can choose.
X Away From Free Shipping
X Away From Free Shipping is an app in the Shopify App Store where store owners can set a free shipping limit and a progress bar in customer’s carts at checkout. The progress will show them how much more money they need to spend to achieve free shipping.
X Away from Shipping
Show a free shipping progress bar in your cart to increase average order value
Psychology
X Away From Free Shipping uses psychology to encourage customers to spend more money and change customer behavior.
Gamification
What is Gamification? Gamification is turning non-gaming tasks into a game. The progress bar on the cart page turns free shipping into a game where the customer has the opportunity to win. By spending more money, they can win free shipping. “Winning” free shipping will give the customer a sense of euphoria.
On the Cart Page, customers will see a colorful progress bar that shows them how much more money they need to spend to achieve free shipping. Once the customer adds more to their cart to “achieve” free shipping, the animation changes to celebrate their win. As a video game would when a user beats a level.
Get Something for Free
People like getting things for free. They would rather pay for another product than have to pay for shipping. Since customers do not view shipping as “getting something” but as an expense they can avoid.
For example, let’s say a customer gets to the cart, the customer sees the bar, the customer needs to spend $10 to get free shipping and they don’t care. They go and fill out the shipping information. Once the shipping information is filled out, they find out shipping will cost them $9. This customer will go back and find a product to get free shipping. They would rather have another product than pay for shipping. These customers don’t even care about filling out the bar, they don’t want to feel ripped off. Why pay for shipping? When for $1 more you can get free shipping and another product?
How to Get People to Make Additional Purchases
Now, you’ve installed X Away From Free Shipping and people are engaging with it. They might go to the cart page, stay for a minute or two, and then go back to look for products. But people went to the cart page because they could not find another product to buy. So, the question becomes, how do you get customers to buy more products?
Bundle Products
Sell products together allowing customers to buy several products from one product purchase. The products should relate to one another. For example, a florist might sell flowers on Shopify for $5 each and make the free shipping minimum $15. The florist might create a product bundling that bundles a flower with a pot, soil, and a water pail for $20. The other three products are items someone might need to keep the flower alive. If the customer is new to flower care they might choose one of the bundle deals offered because they need the products and want to avoid paying for shipping.
Volume Discount
Another option for the florist is to offer a discount for ordering multiple products at once.
In this example, let’s say our Shopify florist has made the price for an order of four flowers $4 each. The customer pays $16 total and meets the free shipping minimum. The florist sells an extra three flowers, a larger purchase. The customers will feel they are getting a deal because they get free shipping and $1 off of the flowers.