I keep banging on about the only 3 ways to grow an online retail business:
- Drive in more targeted traffic – customer acquisition.
- Increase the frequency of purchase – customer retention.
- Getting customers to buy more when they shop – increase average order value.
This article aims to address the third method: increasing average order value (AOV).
Let’s face it, driving up average order value (AOV) is not a one-size fits all silver bullet – the fact is that not all sites need to increase average order value. For single product direct-to-consumer (D2C) ecommerce sites, it is a tough call and your efforts might be better focused on ways of getting more referrals from happy customers or increasing their purchase frequency.
This article aims to provide practical tactics for online stores with 50 product SKUs or more to increase average order value by taking a funnel approach: i.e. increasing AOV from the home page to category pages, to product pages, and to checkout, right before a transaction is made.
HOME PAGE > CATEGORY PAGES > PRODUCT PAGES > CHECKOUT
A. THE HOME PAGE: Driving up Average Order Value
Due to the virtue of the home page being at the top of the sales funnel, it is naturally more challenging to increase AOV from the home page. Here are practical ways to use your home page real estate to nudge shoppers to adding more items to their baskets:
1. Set a Free Shipping Threshold
Academic research proves that the psychological power of ‘free’ is immense – research carried out by Dr. Dan Ariely of Duke University shows that people perceive the benefits of a freebie as higher than a cheaply priced identical product.
Another study by Professor David Bell at Wharton University goes on to show that shipping and handling costs triggered 52% of the abandonment of online shopping carts – this corroborates with research compiled by BI Intelligence (in June 2014) highlighting why so many U.S. shoppers abandon their carts. 58% of shoppers claimed that they abandoned their shopping carts because the total figure they had at checkout was more than they expected or could afford.
[Tweet “58% of online shoppers abandoned their cart because of unexpected shipping fees in checkout”]
With the knowledge that people are drawn towards free shipping, find ways to place your free shipping offer with a price threshold on the home page and/or at a prominent position right across the site – like in the navigation area or header. Here are some examples:
Men’s clothing online retailer, Huckberry, sets a $150 threshold and places the offer prominently on their sticky header bar.
Nasty Gal places their $150 free shipping threshold offer on their home page and just under their navigation area – this is site-wide.
2. Add a sense of Urgency to your Free Shipping threshold Offer
Farfetch shows that they have free shipping on non-sales items, as long as orders are above $150, for a limited time only – thereby infusing an urgency trigger.
3. Home page Offers, Deals with a Price Threshold
The home page provides an excellent platform to funnel in traffic to specific categories or products. The trick is to use a price threshold as a hook for offers you display to shoppers.
UK multi-channel retailers, Argos, does a good job at nudging shoppers into buying items over £100 in their garden furniture section in a bid to getting a 20% discount. This is one of their home page offers.
B. CATEGORY PAGES: Driving up Average Order Value
As you would expect, category pages provide additional opportunities to influence shoppers to add more items to their baskets. Here are a few ways:
4. Build in Personalisation
Online stores with 400 product SKUs or more should consider infusing personalisation into category page listings. Dynamically generated personalisation solutions that ‘learn’ user behaviour patterns tap into numerous data points in order to determine what offers to make in real time to shoppers. They will not only look at products a shopper has viewed or clicked but also their device type, their browsers, their locale, order history and even gender. These metrics are then put together to provide a near complete picture of the shopper so that relevant content is displayed on category pages.
The image above is from ecommerce personalisation platform, Bunting. Dynamically generated content on category pages is delivered to each visitor based on unique data points. Other personalisation solutions worth checking out are from Monetate, Nosto, Barilliance and Sailthru.
5. Browsing History
Another way personalisation can nudge shoppers to adding more items to their baskets is by displaying the ‘Products you recently viewed’ or ‘recently viewed’ browsing history on category pages. This comes in quite handy if a shopper is indecisive about items that should go into their shopping baskets.
The above example from MobileFun.co.uk is their ‘Your recently viewed items’ widget that is displayed at the bottom of each category page.
FarFetch.com has a ‘recently viewed’ unit below each category listing that displays up to 8 of your previously viewed products. They take it a step further by allowing shoppers to delete items from this list.
6. Display Best Sellers, Trending Products and/or Recommended Products
Featuring products above the fold in category pages (especially in stores with a few hundred or more product SKUs) brings them right in front of shoppers.
Featured products that are generated on the basis of their popularity by views or sales will more likely be spontaneously added to shopping baskets.
This ‘featured products’ grid from ThinkGeek.com makes great use of the space above the fold on their ‘gifts’ category by offering further categorisation of their featured items.
On Farfetch, shoppers are served ‘recommendations’ based on their browsing history and other data points.
7. Product Bundling
Photography and DSLR online retailers probably execute product bundling best in the digital world of online retail. We are also all too familiar with how McDonald’s offers ‘extra value meals’ that are more or less product bundles of fries, burgers, and a fizzy drink. Video consoles that come bundled with games encourage purchases and are slightly more expense than consoles sold on their own.
Products that typically have accessories are the best candidates for bundling. According to a Harvard Business Review article, packaged or bundled deals give sellers an advantage from a profitability standpoint.
Here are a few examples of how to use product bundles on your category page:
Photography retailer, Digital Rev, offers a dedicated product bundle category page. Notice how they emphasize the savings in red.
UK online grocers, Ocado, have a dedicated ‘bundle offers’ page – notice again how they emphasize the savings potential in each product copy.
8. Dangle a Freebie
‘Free’ is an incredibly magnetic and powerful word in marketing copy and, as I alluded to earlier, academic research goes on to prove that people generally get more utility from free products as compared to identically priced items.
Here are a few ways to use ‘free’ in your category and product pages, in a bid to rev up average order value in your store:
- Buy one get one free (BOGO) or Buy one get one half price
- A conditional free accessory if you buy the main product (or a conditional price threshold to get free shipping or a product)
- Free Trial (typically for services or subscriptions)
Offering something free might just nudge shoppers to add more items to their baskets.
Fashion retailers Matalan and Forever 21 offer the classic BOGO – buy one get one free offer format above.
Beauty and makeup retailer, Escentual, has a ‘free gifts’ category, most of which are either samples or accessories. They require a minimum spend threshold in order grab the ‘free’ item.
9. Loyalty Rewards Programs
Loyalty programs are an incredibly effective yet under-utilized way of not just increasing average order value but purchase frequency. Not all stores stand to benefit from loyalty programs though. Take, for example, a store that sells wood flooring; a typical customer could have the need to purchase once every 4-10 years from the store and so a loyalty reward program might not necessarily work (it may work on trade customers though).
But a store that sells clothing, beauty products, replenishables or kitchen appliances are perfect candidates for loyalty programs.
Here are a few examples of how brands are using rewards programs to rev up their average order value.
Shoemakers Van-Dal reward their customers additional ‘bonus’ points when they spend over their target average order value of £100. The second threshold for additional bonus points is a spend of £150, which gains double the points from a £100 spend i.e. 80 points.
In a bid to drive customers to buy more steaks, Sayers Brook offers discounts with the customer loyalty points.
10. Price anchoring on Category or Landing Pages
Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. In the context of eCommerce, the initial prices shoppers are presented with affect how they perceive other prices.
Notice how Apple slips in a £519 Apple Watch between the two £479 watches? The £479 prices tag all of a sudden seems affordable in comparison to £559 or £599. Shoppers are likely to be more comfortable selecting the £519 watch. The take away here is to throw highly priced items side-by-side lower and mid priced items in your category pages with more prominence and visibility on your mid-priced items.
C. PRODUCT PAGES: Driving up Average Order Value
Product pages offer ample opportunity for making an upsell or cross-sell as they are one step away from checkout and are the perfect avenue to provide either viable alternatives or complementary add-ons. Here are ways to drive up your average order value on product pages:
11. Building Personalisation through Cross-Sells
Cross selling is a way of suggesting and selling complementary add-on products in a bid to drive customers to spend more money than they originally thought they’d spend. Lets have a look at some examples:
When you buy a Nest Thermostat on Nest.com, you are subtly nudged to buy a Nest Thermostat Stand for about an additional 10% of the cost of the Nest Thermostat. They use a single product cross-sell recommendation on their product page, making it likely to push a £249 basket up to £278.
Dabs.com cross-sells their PCs with easy to select bundles and emphasizes the savings you get when you buy a bundle. From the screengrab above, you might have thought that you were buying a £199.99 computer but the suggested bundles will drive your order total to £249, £222 or £207 (but with savings to be had).
Amazon probably executes cross selling the best – they quite cleverly figure out the best complementary products and bundle them together as an alternative to buying a single product.
I was on the page above looking to buy only an Apple Wireless Keyboard for £65.44. If I had the cash and didn’t own a trackpad and the laptop stand, it would have been really tempting to purchase all three items which is more than double my initial order.
12. Building Personalisation through Up-Sells
Upselling is a way of providing purchase upgrades that offer more volume, better features or better specifications at a higher price. They are ‘the more expensive alternative’ to the product in view, with an intention of maximizing the value of a customer purchase. With an upsell, your objective is to get the customer to spend more money than they originally thought they’d spend. Product pages make the best avenue to make upsells. Let’s have a look at some examples:
House of Fraser upsell products on the left column of their product pages. Notice that they are the most expensive alternative to the product in view.
Paul Smith also upsells to the right of the product page template. Notice the slightly cheaper alternative listed alongside the other upsell belts (anchoring).
13. Cross Sell on your Product page Copy
One often over-looked tactic is cross selling in your product page copy and not just image widgets. This is particularly relevant if you have evergreen products or accessories that complement the product you are writing copy for.
The example above accompanies product copy for a 43” Samsung – they are cross-selling powerlines and a TV optimisation guide.
You could also purchase a TV installation, buy a care plan, or have your old TV recycled for free. This is all text content.
14. For High Ticket Items – Offer Finance
A high price might be the key barrier to purchases of high ticket items. Offering an alternative means of purchase in addition to standard credit cards will likely drive up average order value and encourage more purchases. Here are two examples:
Home appliances retailer, AO.com, offers a finance option to orders over £240. Shoppers are also more likely to add accessories to a finance purchase and as a result increase the order value.
Goldsmiths offers 0% interest free credit on purchases over £750 – it is one reason to add this item to your basket if you are a Tag Heuer fan, like I am.
CHECKOUT: Driving up Average Order Value
Think about the last time you shopped at a grocery store (small or big one) and how many items the store managed to display in the checkout area as you waited in line to pay the cashier. Their product placement at checkout is deliberate; because a percentage of shoppers are guaranteed to spontaneously add items they see at checkout to their baskets.
In online retail, the experience is not too different. The core edge online retailers have over bricks and mortar stores is personalization; their ability to offer highly tailored product recommendations at checkout based on each shopper’s browsing history, cross-sells or up-sells of items in the shopper’s basket, top selling products in the store and several other data-points.
Checkout remains the most effective avenue in the sales funnel for making product recommendations with the highest conversions.
Here are some ways to improve you checkout page and make it a conversion point that will increase average order value:
15. Cross Selling and Upselling at Checkout
Here are a few checkout pages that demonstrate how to cross-sell and up-sell just before shoppers proceed to make payment.
Apple provides a grid of ‘related products’ at checkout. The takeaway from their implementation here is that you should use an ‘Add to Order’ or ‘Add to Existing Basket’ button at checkout, so as not to take shoppers back to the product page and away from checkout.
Blacks implements checkout cross selling really smoothly; have a look at all the suggested list of accessories they recommend when I am about to checkout with a tent.
Although Thomas Pink cross-sells and upsells, you are taken to the respective product pages because you have to choose sizing and colour options.
Another technique B&Q (Diy.com) utilizes, is cross selling as soon as an item is added to your basket (in this case tools required to install a bath) rather than at checkout.
16. BONUS: Use Other Channels to deliver these Tactics: Live Chat & Exit Popups
I will conclude by saying that executing the above tactics should not be on pages alone. Use overlay-pops and live chat as additional channels to push your free product offers, cross-sells, upsells, price threshold dependent free shipping or vouchers/coupons, your loyalty programs and bundled product alternatives.
Train your Live Chat staff on how to cross and up sell without being too pushy but helpful. If they are taught the above principles of increasing AOV, then be sure to reward them when they consistently assist high AOV purchases.
Start Growth Hacking
Most of these growth hacks are pretty simple to implement. Platforms like LemonStand have built-in modules for these features. All it takes is a few minutes of work and you can reap the benefits of higher average order values and higher revenues forever! Instead of throwing more money at advertising, take a couple of hours to try out these hacks and watch your top line grow.