Here’s a brief math lesson: Let’s assume you pay $2 to get a customer to buy $4 worth of products from your site. If you could just get that customer to spend a tiny bit more, say $4.50 instead of just $4, how much of a difference does that make? The answer is – you just grew your profits by 25%! Since it didn’t cost you any more to get the customer, every little bit extra that a customer spends is PURE PROFIT.
How to Increase the Average Order Value (AOV)
At the grocery store, the checkout counter is lined with items you’d never write on your shopping list. Candy, batteries, goofy toys, and entertainment magazines. The reason for that is simple. Any purchase from that aisle is pure profit. It didn’t cost them anything to get you to buy, as you were already standing there with milk, bread, and chicken in your wagon waiting to check out. It increases the average order size by getting you to add those items to cart.
Every page on Amazon.com is graced with “You may also like…” or “Customers purchasing this item also bought…” This is a classic example of a cross sell, which markets similarly grouped items to the items you have already shown interest in.
Upsells are a variation on this theme, in which you tout a similar but higher priced item to replace the item that the customer has shown interest in. By effectively marketing the higher priced item, which also has a higher profit margin, you can increase sales and profits of your site dramatically.
It’s really not hard at all to increase your site’s average order size by 10-20% using these methods. Razorclicks can help you by studying the market to suggest which products to showcase as crosssells and upsells, and how to strategically place them on your site for the maximum effect.
Increasing AOV should be a major part of every online retailer’s strategy. When click prices are skyrocketing, the cost to acquire a customer is higher than ever. Only those with the highest AOV can afford to effectively bid for those customers.