As I see you like our other article about marketing automation I decided to create another one about an important subject in marketing, stay tuned.
Last weekend, I went to my favorite local juice bar called “The Orange Peel” in Saint George. As soon as I walked in, I saw a pretty-looking cheesecake. So I immediately say to the lady behind the counter, “Can I have a slice of that cheesecake?”. She says, “Sure, would you like one slice or two?”. “I guess I’d like two, please.” And just like that, she’s increased the average order value, rather than having to wait for another customer to come in to buy that next slice.
That’s just an in-place example, but every one of the world’s top online shops has a plan for increasing that cart value: Amazon, eBay, Etsy. The list is endless.
If you have a WooCommerce Store, today’s a great day for you because you are going to join the list of the World’s Top Online Shops. We will work out some strategies to increase your average order value. Let’s see how much you know about this number.
What is not AOV?
“Advertising has us chasing cars and clothes, working jobs we hate, so we can buy things we don’t need.”
That is a quote from the Fight Club movie. I agree the dialog is painful, but the meaning of Average Order Value or cart value lies in the sentence: Creating a need for the customer to buy. This simple sentence expresses the whole concept. Anything that somehow leads to an increase in someone’s spending on your products has increased the cart value.
Although factors such as the number of customers, sales speed, and customer loyalty are based on this simple scale, they are different from AOV. Now, let’s do some basic math.
How to Calculate AOV Quickly?
Imagine running a clothing store, and it costs us $10 to get a customer. It costs us $18 per pair of jeans to supply and arrange the delivery. The income from the jeans and delivery is $40, and the total profit is $12.
$40 – $10 – $18 = $12
Now we decided to add a discount on belts. It costs us $4 to provide a belt. This time, besides the $40 of income, we also get an $8 add-on for the belt. What does this do to our profit? Well, this takes it to $20.
$40 – $10 – $18 + $8 = $20
That was a simple case of how Average Order Value works. AOV can be quickly calculated using the following formula:
Total Income / Total Number of Orders = AOV
For example, you have a WooCommerce store that sells perfumes. Last month, you made $1000 income, and customers placed 100 orders. Your average order value will be: $1000/100 = $10. This amount means a customer spends $10 on average for each purchase from your shop.
5 ways to Increase AOV on WooCommerce
🔸Convert Customer to a Member with Loyalty Programs
A Customer Loyalty Program rewards customers who always buy from a brand. This program can offer customers goods, rewards, coupons, or even pre-sales. The key to a loyalty program’s success is the customer’s benefits. If they are tempting, the program can help increase AOV and encourage the customer to buy again. Otherwise, the program will eventually fail.
Here are two examples of successful loyalty programs.
Target creates a loyalty program based on RedCards. When you are approved for a RedCard in-stores and at Target.com, you’ll get $40 off for your first buy over $40. Then you will receive 5% off on your purchases as long as you are a RedCard holder. This program also offers free shipping for online purchases. Below is a summary of program benefits, and their average order value will rise.
- 5% off every day at Target and Target.com
- No annual fee
- Free shipping on thousands of items
- An additional month for returns and exchanges
- RedCard exclusives including special items, gifts, and offers
- Up to $500 savings per year for purchases from special categories
As you can see, Target’s loyalty program is useful for the customer in various ways, such as permanent discounts, free delivery, and return policies. So, customers see themselves as winners by joining this program.
This food delivery service offers a loyalty program based on Earning Points. Depending on the activity level, memberships are divided into orange and gold statuses. You are in the orange category for one order per month and get 5 points for every dollar you buy. By increasing the number of monthly orders, you enter the golden level, and each dollar gives you 10 points.
Members have exclusive deals, including discounts from selected restaurants and bonus points.
They can redeem their points for between $2.5 and $15 on final checkout. The status will reset monthly, and the points will expire after a year of inactivity. This will make customers have a high purchase at least twice a month and increase the AOV.
After a long search to find the product that matches your desired price, you will face multiple price increases at the time of purchase. What would you do? Probably the same thing over half of all potential customers do, Cart Abandonment. But the good news is, some buyers are willing to get reasonable offers or promotions by increasing their purchase value.
You can use the Smart Coupons plugin to run discounts and promotions on WooCommerce automatically. This plugin allows you to offer fixed amount or percentage discounts, free shipping, and gift coupons. Here are the plugin’s most popular features.
- Time Sensitive Discounts
- Shareable / Social Media / URL Coupons
- Coupon with Product Purchase
- Free Shipping
- Gift Coupons / Gift products via coupon
- Store Credits, Vouchers, and Gift Certificates
- Subscription / Recurring Coupons
- Location-based Coupons
Another plugin that makes the coupon discount a remote process is MC Woocommerce Wishlist; with this free plugin, you can design some conditions depending on the user’s wishlist added and his behavior. Then this WooCommerce Wishlist Plugin encourages users to buy that product with an automatic dedicated coupon that sends to their email inbox with compelling, personalized content.
🔸Offer Exponential Discounts for Less-Popular Products
Some products are hard to sell but make a good profit for your business. You can apply an exponential discount for these products. This type of discount can be increased in proportion to the number or final price of the product.
See this example:
A hat, a belt, and a beanie are some of your less popular items. A 10% discount will be applied to the purchase by adding the beanie to the cart. With purchasing another hat or any other unpopular product, the 10% discount is multiplied by a new number when purchasing another hat or any other unpopular product. This can continue up to the limit you choose.
Many WooCommerce plugins provide this dynamic pricing feature, but Discount Rules for WooCommerce have the best customer support service. This plugin is designed for conditional offers and gives different options to run your favorite discount. You can see some of these discount options here.
- Cart subtotal based
- User role-based
- Product Attributes based
- First and next order
🔸Buy One, Get One Free (BOGO) Offer for Unique Products
Let’s say each shirt costs $30 for your store, and the price is $100 on the market. If you offer a 50% discount, the profit from the sale of each shirt will be $20.
$100/2 = $50
$50 – $30 = $20
Using the BOGO offer at $100, the profit is equal. But this time, two shirts have been sold per purchase. In fact, each order has doubled its profit.
$30 + $30 = $60
$100 – $60 = $40
It is mathematically very simple. You sell two products at a 50% discount, which you usually raise their price before applying a discount.
Sales that offer the second product for free if the first one is purchased make the customer ignore the details. The visitor who sees the word “Free” is encouraged to buy it without calculating its true value.
Fortunately, several WooCommerce plugins include this feature. Advanced Coupons and Dynamic Pricing would be good choices. They provide options like a loyalty program, scheduled tickets, and shipping offers besides the BOGO deal.
🔸Add special discounts for old Products
The logic behind the discount is simple. Some of your products have not been sold for a long time, and you want to persuade the customer to buy them by giving attractive offers. This is the most applicable discount for seasonal products. The following are examples:
- Winter clothing sale at the beginning of summer
- Stationery discounts after school starts
- Mobile price decrease by producing newer versions
These products may not be among the customer’s main needs, so you should use proper tools to offer tempting discounts in your WooCommerce store. Pricing Deals for WooCommerce could become handy in this state. The free version gives you category, catalog, and package pricing options. The Pro version allows you additional choices like filtering discounts and automating the offers.
The Impact of WooCommerce Plugins on AOV
You buy a car. Your car has an audio system, but you want your car to have a video playback monitor. Are you ready to supply the basics of a monitor and assemble it yourself? Of course, this will cost you a lot of time and money. So you choose to go to a car equipment shop and buy a monitor for your car in a few minutes.
The same is true when it comes to managing a WooCommerce site.
Don’t underestimate the impact of plugins on your site! Instead of spending time and money on coding (for example, creating a loyalty program), you can easily use plugins. We introduced some of these plugins in the previous section, but other plugins can also help increase AOV. You can see these plugins and their information in the table below.
|Conditional Discounts for WooCommerce||10,000+||$60|
|WooCommerce Bulk Discount||20,000+||$49|
|WooCommerce Extended Coupon Features||30,000+||$29|
How A/B test Helps to Improve AOV
As an online shop owner, you are probably full of ideas that you’d like to know which one works best on your site. A/B test lets you know which scenario and details have the most favorable effect on the visitors. Let’s say you have a discount on your store’s history books. While customers are finalizing their purchase, you send a special offer for history books. What text can make visitors purchase the book and increase their cart value?
You can use a simple text:
“20% discount for history books”
Or use a more friendly tone:
“Do not miss the special discount on our history books!”
Or create a sense of need in the audience:
“Robert Heinlein: A generation which ignores history has no past and no future!”
And show some of your history books in the discount section.
That is a simple example of just one discount. Increasing AOV requires several experiments, and you must implement an A/B test for each of your store offers. Maybe the Cartflows plugin can help your WooCommerce store with this test. From split testing a headline, or a button, to more advanced tests such as pricing and bundles, CartFlows A/B testing lets you try almost anything.
A Mistake that will Ruin Your WooCommerce Store
The average order value is definitely one of the most important indicators for gaining more profit. But what matters is how this scale works alongside other sales indicators. Ignoring each customer’s purchasing ability, the number of visits each customer has, and even the store’s products can cause your business to fail in the long run.
Besides AOV, figuring out two other metrics can have satisfying results for your sales and profits.
Conversion Rate refers to the number of visitors who make a purchase from the total audience of your website. No matter how well your WooCommerce store is designed or what percent of your visitors are becoming customers, there is always room for improvement.
So if the situation is right, do not be proud of the current state. If not, think about enhancing your conversion rate as soon as possible.
🔸The Average Revenue Per Visitor (ARPU)
ARPU represents the amount of revenue that a customer generates for a store over a period of time. The most common period for calculating this metric is monthly. There is no difference between businesses that provide services or sell products. The amount of money that enters the business over time is important. This index helps calculate profit and estimate future costs.
Don’t get discouraged if people don’t take your AOV trick every time. That’s really not our goal here. And if everyone is taking your average order value trick, then you need to add something else. There’s something wrong if everyone is taking it, keep it by all means, but add something else as well. Your goal is not to get everyone to buy it. Remember, all we need is one in 20 visitors to accept your offer and look at what it does to the average order value.
If this article were helpful to you, we’d love to send the link to your friends to help their businesses. Finally, as always, we are happy to share your experiences and questions with us in the comments section.