How to Increase Average Order Value in Ecommerce App

Alex Danchenko

As eCommerce businesses strive for sustained growth, understanding and implementing strategies that encourage customers to spend more is paramount. One of the essential metrics marketing professionals use to gauge the effectiveness of such strategies is average order value (AOV). 

A high average order value in eCommerce signifies increased revenue per transaction and reflects the success of marketing initiatives in enhancing the value proposition for customers. Along with return on investment (ROI) and higher customer lifetime value (LTV), AOV provides valuable insights into the health and profitability of an eCommerce business.

In this article, we look into best practices and real-life examples that will help you elevate your AOV and supercharge your overall revenue. 

What is the Average Order Value (AOV)? 

Average Order Value is one of the key metrics in eCommerce that measures the average check of each customer within your app. In practical terms, AOV provides insights into the typical spending behavior of your clients. By understanding the average amount of money spent per order and using data replication to ensure accurate and consistent information, businesses can make data-driven decisions about their marketing strategies, pricing adjustments, and revenue optimization.

Businesses strive to increase their AOV, as it means increased revenue without the need to attract new customers. Also, improved AOV usually means improved customer lifetime value, which is critical for sustained profitability and can bring you additional benefits like word-of-mouth marketing.

How to Calculate Average Order Value

Average order value calculation is a straightforward process that doesn't require deep mathematical knowledge. To calculate it, you need the following data:

  • your total revenue during a certain time period;
  • the total number of orders placed within the same timeframe.

First, you sum up the total revenue generated during the chosen time period, which includes all sales, regardless of the number of transactions. Then, you need to count the total number of orders placed during the same period. Each transaction, regardless of its value, contributes to this count. Once you have the necessary data, calculate AOV by dividing the total revenue by the number of orders. The average order value formula looks like this:​

Average Order Value
Average Order Value

Here's an example of how you do the calculation. Let's say your total revenue for a month is $30,000, and the number of orders is 1,500; then your AOV formula will be as follows:

AOV= $30,000 / 1,500 = $20

This means an average order contributes $20 to the total revenue. Whether it is a bad or good indicator will depend purely on your business specifics. Still, calculating AOV regularly and tracking it over time will help you understand customer spending patterns, evaluate the effectiveness of your marketing strategies, and identify opportunities for increasing revenue per transaction.

How to Increase AOV in Ecommerce App: 10 Powerful Tactics

Now that you know your AOV, let’s take a look into actionable insights and mobile marketing trends that have proved their efficiency for eCommerce leaders like Amazon.

1. Bundle Offers

A bundle offer is a marketing strategy in which several products or services are sold together as a special offer at a discount price. Bundles or packages encourage customers to buy related items together, which not only increases average order value but also enhances the customer's perceived value.

Amazon is a prime example of a platform that excels at product bundling. Through features like "Frequently Bought Together," Amazon encourages users to add complementary products to their cart, increasing the overall order value.

2. Loyalty Programs

Mobile loyalty programs encourage customers to earn points, discounts, or gift cards for higher-value purchases. This incentivizes customers to spend more to unlock additional benefits.

Sephora utilizes a robust loyalty program called Beauty Insider, offering points for purchases that can be later redeemed for rewards. Besides, when customers collect enough points, they get additional bonuses like free shipping, creating further motivation for spending.

3. Volume Discounts

Discounts for bulk in-app purchases are also among the most powerful tactics for increasing average order value. "Buy 2, Get 10% Off" or "Spend $100 and Get 15% Off" and similar offers motivate customers to buy more to take advantage of the discount.

A perfect example is Starbucks' mobile app volume discounts. They encourage users to earn stars for each purchase, unlocking higher levels with greater rewards. This approach motivates customers to buy more frequently to reach the next reward tier and receive further discounts.

4. Upselling and Cross-Selling

You can grow AOV by implementing upselling and cross-selling techniques. These two strategies are somewhat similar in that you encourage customers to spend money to get more out of their purchase. However, upselling is all about making a higher-end product seem more attractive, while cross-selling focuses on complementary items. If you utilize upsale, it makes sense to add higher-end products to the product page, while cross-selling will be more beneficial during the checkout process. Another option is integrating these techniques into customer service processes: here you can get impressive results in terms of returning your investments.

Zalando showcases higher-end running shoes with advanced technologies, better materials, or popular brand names. The fashion retailer also recommends complementary items such as matching shoes and accessories.

5. Free Shipping Threshold

You can increase your overall order value by setting a minimum order value for free shipping. Customers may be willing to add more items to their cart to qualify for free shipping.

ASOS, an online fashion retail business, effectively employs a tiered free shipping strategy. The company provides free standard shipping for orders over a certain amount. This way, customers who are close to this threshold will spend more in order to get free delivery.

6. Limited-Time Offers

Limited-time campaigns, such as Black Friday promotions or "Buy One, Get One 50% Off for the Next 24 Hours" offers create a sense of urgency. They prompt customers to make quick decisions and potentially add more items to their carts.

Best Buy, an American consumer electronics retailer, often features limited-time offers, such as "Deal of the Day" or special discounts during holiday sales events.

Uniqlo Limited-Time Offer Example
Uniqlo Limited-Time Offer Example

 7. Exit-Intent Pop-ups

Exit-intent pop-ups can keep your customer from leaving your app or encourage them to add more items to their carts. Furthermore, last-minute discounts or special deals work great for abandoned cart recovery.

A standard pop-up message looks somewhat like: "Wait! Your style deserves more! Enjoy 15% off your order today! Just one more step to elevate your wardrobe." These messages have proved efficient for many online retailers worldwide.

8. Personalized Recommendations

Data analytics and machine learning are your best friends when it comes to providing personalized product recommendations. When customers see products that match their preferences, they are more likely to add them to their cart.

Verishop Product Recommendation Example
Verishop Product Recommendation Example

9. Dynamic Pricing

Ecommerce businesses often implement dynamic pricing based on customers’ buying behavior, demographics, or purchase history to increase AOV. This can involve offering personalized discounts or promotions to specific segments of a customer base.

Amazon has mastered the art of dynamic pricing. You can find that it adjusts the prices of products in real time based on various factors such as demand, supply, competitor pricing, and historical customer behavior.

10. Gamification

Gamification elements can take different forms but are commonly associated with "spend and earn" challenges or contests. They can engage customers and motivate them to increase their order value to participate or win rewards.

Silpo’s grocery delivery app offers a gamification element, such as an interactive spin wheel. Users are invited to engage with the app by giving the digital wheel a spin and winning a discount for specific types of products when ordering groceries via the mobile application.

Silpo’s Wheel of Fortune
Silpo’s Wheel of Fortune

Increase AOV with the Reteno Customer Engagement Platform

As you embark on the journey to achieve your eCommerce success, consider the Reteno customer engagement platform for increasing average order value. Our platform can become your strategic partner in cultivating a dynamic and lucrative shopping environment. 

Reteno comes with a suite of functions designed to propel eCommerce apps to new heights. The main features of Reteno that contribute to the growth of AOV are:

1. Data-Driven Marketing Campaigns

Reteno's foundation lies in data analytics, enabling eCommerce businesses to craft marketing campaigns rooted in insights rather than assumptions. By leveraging user data, businesses can create targeted and personalized campaigns that resonate with individual preferences and behaviors of their customers.

AOV Impact: Targeted campaigns lead to higher engagement and conversion rates, encouraging users to explore and make purchases beyond their initial intentions.

2. User Behavior Tracking

Reteno excels in real-time user behavior tracking, providing insights into how users interact with the app. This includes understanding which products they view, the time spent using the app, and their navigation paths.

AOV Impact: By analyzing buying behavior, businesses can tailor promotions, discounts, or exclusive offers to specific user segments, fostering an environment conducive to increased spending.

3. Personalization and Product Recommendations

Reteno's algorithms analyze user behavior and historical data to deliver hyper-personalized product recommendations. This feature ensures that customers are presented with items aligned with their preferences, browsing history, and purchase patterns.

AOV Impact: Personalized recommendations act as a catalyst for upselling and cross-selling, prompting users to add complementary or higher-value items to their carts.

4. Deep Customer Segmentation

The platform enables granular customer segmentation based on purchase history, demographics, engagement levels, and preferences. You can then target specific groups with tailored messaging, notifications, and incentives.

AOV Impact: Segmentation facilitates the delivery of targeted offers to segments with a higher likelihood of making larger purchases, maximizing the impact on AOV.

Customer Segmentation
Customer Segmentation

5. In-App Messages, Mobile Push Notifications

Reteno facilitates multichannel communication through in-app messages and mobile push campaigns. This ensures that you can reach users at various touchpoints, keeping them engaged and informed.

AOV Impact: Timely and relevant messages, such as limited-time promotions or exclusive offers, can drive users back to the app, encouraging them to make repeat purchases as well as increase their overall order value.

Mobile Push Example
Mobile Push Example

Final Thoughts

Before you compliment your marketing strategy with any of the above-mentioned ways to increase AOV, it's crucial to recognize that the pursuit of higher AOV is not merely about boosting numbers on a spreadsheet. It's about fostering lasting relationships with your customers.

Remember, your eCommerce app is not just a platform; it's a gateway to a world of possibilities for your clients. As you implement these tactics, consider the impact on the user journey. How can you make each interaction more meaningful? How can you turn a transaction into an experience? The answers lie in the delicate balance between technological prowess and genuine human connection.

One way to reach that is by employing powerful tools, such as Reteno. So, don’t hesitate to unlock the power of strategic insights, personalized recommendations, and targeted promotions and inspire higher-value purchases. Ensure a more profitable and rewarding shopping experience for both you and your customers with Reteno.

Alex Danchenko

|

April 20, 2023

Natalya Ustymenko

|

September 4, 2023

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