The Brainstorm: Measuring & Increasing Average Order Value

Getting more revenue from existing customers who already know and trust you is much easier than acquiring new customers.

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The WBSRocks e-commerce roundtable features industry experts sharing their perspectives on issues critical to the manufacturers' e-commerce journey. In this issue, we ask: how manufacturers can increase average order value to increase sales.

Getting more revenue from existing customers who already know and trust you is much easier than acquiring new customers. Also, getting visitors who are already on your site to buy more would always be easier than attracting new visitors as you have complete control over their journey without any competitive forces. For this reason, the average order value is such an important metric. But before implementing any strategies for increasing the average order value, make sure that you have a deep understanding of their journeys and that complimentary offering will add real value to their buying experience.

Sam Gupta, Principal Consultant, ElevatIQ

Remember the rep who reminded you of the battery pack while buying toys for your kid? While the rep must be trying to upsell subtly, you most likely still appreciated the experience as it saved you a trip and potentially the cost of making the trip. The experience needs to be this subtle while implementing the strategies for increasing average order value.

Also, if you compare the average order value in the e-commerce world with the physical world, all the strategies you used to increase the deal size would be similar even in the e-commerce world. For example, you offered tiered and more favorable discounts for bulk purchases in the physical world. It applies in the e-commerce world as well, with tiered pricing and volume discounts.

The upsell and cross-sell strategies you used at the cashier's desk would be similar to the complimentary offerings presented on the checkout page. Likewise, the BOGO strategies are reasonably comparable in both settings. Even the rule of 3 is to make sure that the buyers don't have too many or too few choices to make their buying experience easier are similar. Finally, the free shipping or loyalty programs that offer free shipping options for bulk purchases would be similar in both settings.

If done well, average order value strategies can increase sales and improve customer experience.

Kristina Harrington, President, GenAlpha

Every manufacturing company I know is looking for new ways to get more revenue from existing customers. Average order value (AOV) strategies help with that.

Increasing AOV in a traditional customer service structure can be challenging because most service reps react to high volumes of phone calls and emails each day. An eCommerce site is a great way to automate and get conversions on AOV strategies, like:

  • Product recommendations
  • Product bundles
  • Establishing order minimums for discounts (like free shipping or credit back)
  • Customer loyalty programs

When looking at AOV, don't make the mistake of only looking at the data in aggregate. I encourage organizations to break it into smaller parts. Segmenting your data by customers or by industry can be a great way to gain more insights.

These segments and the analysis of their order history will help you identify trends that may lead to new cross-sell or up-sell product recommendation opportunities. Also, if your business is still a mix of online and offline sales, you may find opportunities if you compare online versus offline performance. In some specific cases, for example, for equipment and parts manufacturers, offering training classes, extended warranties, service packages, and exchange programs can be a great way to increase AOV, which will result in a larger contribution margin.

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