Average order value is like the middle child of eCommerce metrics.
It has a ton of untapped potential, but it’s often drowned out by its more attention-getting siblings: conversion rate (older, of course) and customer lifetime value (the younger one).
This is understandable. When your team is prioritizing growth experiments, scheduling A/B tests and vying for engineering resources, it’s easy to put AOV on the backburner.
But improving AOV can flip the script for eCommerce Stores. In fact, the impact of improving AOV by 10% drives the same impact as improving conversion rate by the same amount (see the proof below):
So why not focus on improving CR, you ask?
First, because you can reap the same reward with average order value, but with half the effort. It’s easier to improve AOV than conversion rates because it’s easier to get shoppers with high purchase intent to enlarge their buying spent than getting shoppers to convert in the first place.
Second, “a rising tide floats all boats”. In this case, the tide is AOV, and the boats are the other eCommerce KPIs that see a halo effect from that higher average order value.
In this article, we’ll go over six data-backed tactics to boost AOV, we will also explore the power of personalization, why it is so effective for driving AOV, and show how brands are utilizing personalization so effectively to drive sustainable growth.
The Halo Effect an AOV Uplift Has on Other eCommerce KPIs
The Power of Personalization for Improving Average Order Value
6 Data-Backed Strategies to Improve AOV with Personalization
The Halo Effect an AOV Uplift Has on Other eCommerce KPIs
By focusing on improving this oft-overlooked metric, you can:
#1. Improve Conversion Rates
Increasing average order value through the intent-based strategies in this article can pull double-duty and improve your conversion rates, too. The strategies below use AOV-boosting offers as conversion incentives, making it truly a win/win.
So not only do you convert more visitors, but you also squeeze more value out of those additional conversions. revenue per visitor (RPV), regardless of whether your conversion rate remains the same.
#2. Drive Revenue Growth
This is the most obvious benefit of increasing average order value: revenue growth.
You work hard driving traffic, personalizing the customer experience, A/B testing and optimizing the conversion funnel. Too hard not to maximize the value of the conversions you win.
#3. Improve Marketing Channel Profitability
Any time you improve any eCommerce metric, you also see a positive impact on the profitability of your marketing channels, even if every other variable remains the same.
A recent scenario of improving average order value with a client demonstrates this perfectly:
By improving AOV by 20% from $35 to $42 using some of the strategies in this guide, their return on ad spend (ROAS) on Facebook improved from 2.1x to 2.6x, freeing up more cash to invest further in social advertising.
This impact is seen across all marketing channels.
#4. Increase Customer Lifetime Value
Strategically improving cart size can improve your customer lifetime value both for one-time and repeat customers.
One-time customers have a higher value first order, incrementally improving LTV even if they never buy from you again.
Repeat customers experience new products through add-ons, up-sells, and cross-sells. Some are likely to purchase those new products again, even if they wouldn’t have re-ordered the initial product.
#5. Protect eCommerce Margins
Unless you pass shipping costs onto the consumer (which undoubtedly hurts your conversion rate), shipping fees can quickly erode your margins.
Increasing AOV can help protect margins as one-item shipping costs are reduced. Your margins benefit from economies of scale, your customers benefit from your awesome products. It’s a win/win.
The Power of Personalization for Improving Average Order Value
An average of a 20x return on investment[*], increased conversions, more revenue, higher customer satisfaction…these are just some of the benefits of eCommerce personalization.
And it makes sense that tailoring the shopping experience to each customer is so effective.
Personalization provides a more targeted experience based on visitor’s past browsing behavior and other data.
And one of personalized marketing’s most impressive superpowers?
Increasing average order value.
The data agree:
- Almost 50% of online shoppers report making an impulse purchase after seeing a personalized promotion from a brand[*]
- 20% of shoppers admit they spend more than $50 on a single purchase from a personalized offer
- 7% spend more than $100 from a personalized incentive.
NamoGuru Tip: When you can leverage machine learning to dynamically adapt to each visitor, you’re able to identify those most likely to spend more with your brand, and put tailored promotions, products and add-ons in front of them to enable that.
Now that we’ve reviewed how personalization can improve your brand’s average order value, let’s jump into the fun stuff: the “how”.
6 Data-Backed Strategies to Improve AOV with Personalization
Below, we’ll outline 6 methods of increasing AOV by personalizing customer journeys, and leveraging shoppers’ behavior, intentions, motivations, and considerations.
I’ve A/B tested many AOV-lifting strategies in my past roles leading eCommerce teams with impressive results, driving improvements in average order value and many other eCommerce KPIs.
But these are the six most effective ways to drive basket size up by utilizing personalization.
#1. Implement a Minimum Shipping Threshold & Improve AOV and Margins at Once
Amazon offers a ton of benefits to consumers.
- A personalized shopping experience? Yes, please.
- A convenient one-stop shop for nearly any product you could ever want? You had me at “one-stop”.
But one thing Amazon normalized that’s great for online shoppers, but changed the landscape for other online retailers? Free, fast shipping.
Amazon’s ability to offer free shipping with fast delivery times has shifted eCommerce norms. Consumers now expect free shipping from all online retailers. And if a brand doesn’t offer it? They may jump ship in favor of a brand that does.
Read More: Digital Shopping Cart Abandonment: A Data-Driven Guide
In fact, nearly 80% of online shoppers cited free shipping as a key factor driving their purchasing decisions[*].
As mentioned, for brands, taking on shipping costs can quickly erode eCommerce margins, especially for single-product shipments.
But with this trick, you can give customers what they want (free shipping!) while simultaneously improving margins and boosting your store’s average order value.
The strategy? Offer free shipping over a minimum cart threshold.
Check out how one of Namogoo’s customers has a free shipping threshold in their cart.
Rather than surprising customers in the checkout with a shipping charge, a free shipping threshold instead incentivizes the customer to add additional (or more valuable) products to their order.
You can test this strategy without any dev time by implementing it on a website pop-up.
Choose a minimum cart value of just over your existing AOV, and consider the price of complementary products. For example, my AOV is currently $52.46.
It costs my company around $8 to ship a single product, but adding an additional product only costs an incremental $1-$2.
My average product price is $32. Most of my complimentary products are between $14-$29, but the most common order is a $32 product and a $29 product for a total of $61.
Using my store as an example, I went to the Intent-Based Promotion campaign settings and set my minimum shipping threshold to somewhere between $54 and $59:
NamoGuru Tip: Be mindful of your audience targeting when you’re setting up your free shipping threshold offer. Fulfillment and shipping costs are much higher for international orders, so I’ve refined the campaign targeting settings to only display for US-based visitors.
#2. Serve AOV-Building Promotions Strategically
Some promotions meant to drive average order value appeal most to high intent customers who are already going to convert with your brand.
You have the conversion in the bag, so now you just need to maximize cart size.
But consider the visitors who aren’t as certain.
Perhaps they’re more price-sensitive, or maybe they landed on your site with low intent, but after browsing, begin to warm up to making a purchase. You want to seize this moment and leverage it by offering free shipping right when they are at a pivotal moment in their journeys.
For example, a well-recognized AOV-building strategy is the Buy X,Get Y incentive. But in this case A “Buy X, Get Y” offer isn’t the best fit for these customers. They’re on the fence about placing an order, so offering them a higher-ticket item or more products is unlikely to be as effective as a small discount or free shipping offer.
And then there are your casual, low-intent browsers. Think those in the research phase or comparison shoppers. Serving this group any promotion may harm their perception of your brand, and increase their price sensitivity when you retarget them or might be intrusive and annoying more than helpful.
So what’s an eCommerce team to do?
Only serve AOV-building promotions to those most likely to take advantage of them.
Offering dynamic, personalized promotions to each individual ensures not only that just high-intent customers will be incentivized to increase their cart value…
But that each of those high-intent customers will be served the exact incentive they need to spend more with your brand.
This strategy drives impressive results. The average AOV uplift Intent-Based Promotions clients see is 13.4% – and many of those clients are focusing on other KPIs, making that number even more impressive.
To get started on this strategy, create a new intent-based promotion campaign (or, if you don’t yet have an account, schedule a call here). Select the campaign you wish to create.
Under “Campaign Type”, choose Intent-Based.
Choose the promotion type you want to offer and a template.
Hint: Choose one of the strategies in this article to supercharge your campaign. I chose “Discount” to set up a Spend More, Save More campaign for this example.
Set the discount range you would like to offer. For my Spend More, Save More example, I set the range to 18-23%.
Set your campaign limits. To stick with my previous example, I set a minimum cart value of $59.
NamoGuru Tip: Set your Display Rules for your campaign, but be careful not to narrow the guidelines too much. The power of intent-based promotions is in the AI-powered Prediction Engine, which analyzes billions of data points to calculate each online shopper’s purchase intention during each session to predict and serve the most effective discount to each shopper.
Allowing a wide range of promotions gives you the power to offer lower-value offers to those who’ll act on them, while also allowing you to convert shoppers who you wouldn't have converted without a more generous offer.
Customize the copy, colors, and design of your campaign:
And finally, hit “publish”.
Watch the high-value conversions roll in! (while acquiring new customers you can later focus efforts on AOV uplifting).
#3. Offer a Free Gift with Minimum Purchase
By now, you know all about the power of “free”.
Getting something for free is magnetic to consumers, regardless of your brand’s industry, products, target audience, and the type of customers your brand attracts.
This strategy leverages our obsession with “free” by offering a complimentary gift when shoppers meet a minimum order value or buy a specific, high-value product.
Besides driving AOV by encouraging customers to spend above the minimum order value to get their free reward, this promotional strategy also:
- Protects brand perception by avoiding the need to drive conversions through discounts.
- Improves customer retention. By giving customers a chance to try your product for free, you’re introducing them to a product that a portion of them will come back and repurchase.
The best part? The gift you offer doesn’t have to be expensive. It doesn’t have to cut into your margins. It doesn’t even have to be a full-sized product.
The freebie could be an inexpensive piece of branded merchandise (free marketing!), a travel-sized version of a popular product, or even samples. Check out how Thrive Causemetics offers a free makeup bag with purchase:
Giving away a free, branded makeup bag with each purchase complements Thrive’s product offerings and helps them stay top of mind when customers are using them.
You can implement this strategy in just a few minutes and enjoy the improvements to your eCommerce KPIs for months to come.
To get started, start a campaign in your promotion app. I’ll use Namogoo’s Intent-Based Promotions in my example below. Intent-Based Promotions will soon have the option to offer shoppers a free gift based on intent.
This is so powerful because you wouldn’t have to offer freebies to everybody. Only the shoppers that need an extra push to get them to buy would receive the free gift offer.
To get started, start a new campaign in your promotions tool. If you’re an Intent-Based Promotions user, select Intent-Based, and when available, the Buy X, Get Y promotion type.
NamoGuru Tip: Set your Display Rules for your campaign, but be careful not to narrow the guidelines too much. The power of intent-based promotions is in the AI-powered Prediction Engine, which analyzes billions of data points to calculate each online shopper’s purchase intention during each session to predict and serve the most effective discount to each shopper.
Allowing a wide range of promotions gives you the power to offer lower-value offers to those who’ll act on them, while also allowing you to convert shoppers who you wouldn't have converted without a more generous offer.
Choose your template. I chose a Bar template rather than a pop-up, so the user can be reminded of the free gift as they navigate the site.
Under Campaign Limits, set the cart value threshold that you want to activate the free gift. You might want to set it higher than your other thresholds because a free gift can be seen as more valuable.
Select the product you want to give away for free:
NamoGuru Tip: When choosing your free gift, think strategically. Don’t just offer clearance items from last season or a swag product your team ordered too much of. Play the long game and choose a product that will:
- Improve customer retention: Offer a high-retention item to introduce customers to your most “sticky” products that customers are most likely to re-order. This can be a sample-sized version of the sticky product, or, if the lifetime value of the customers who purchase that product is high enough, you might even consider offering a full-sized version for free.
- Help customers get the most out of the main product they ordered: Complementary products, especially ones that improve the customer experience with the core product they ordered are great choices for free gifts because they increase customer satisfaction and improve the likelihood of the customer leaving a positive review, referring friends, or repurchasing.
- Make your brand top of mind. Branded merchandise that complements the core products your customers purchased can subtly remind customers about your brand as they go about their routines. For example, a health supplement company might offer a branded shaker bottle as its free gift, so every time a customer heads to the gym with the bottle in hand, or opens a cupboard to start their supplement regime, they’re reminded of the brand. You know what they say: “out of sight, out of mind”. These gifts make sure you’re never out of sight for long.
Then, tailor your display rules and audience for the campaign. Unlike some other AOV-increasing offers, this promotion can be appealing to both new and returning customers alike.
Customize the design of your campaign, and ensure the copy is clear and engaging.
Then, launch your campaign!
#4. Follow Up with Personalized Post-Purchase Offers via Email and SMS
Skill-testing question: Which email type gets the highest open rates across any industry?
If you guessed any email with the word “FREE” in the subject line, you’re underestimating my spontaneity.
The answer: Order confirmation emails.
With an average open rate of 70%[*], these boring, transactional emails are one of the most opened email types any brand will send.
If you’re not harnessing this valuable, attention-getting real estate by re-engaging customers to come back for more, now’s the time to start.
Referred to as a “post-purchase upsell”, giving customers the opportunity to add items to their order after they check out is still one of the little-known and overlooked AOV-boosting tactics available.
Check out this example from the subscription cosmetics brand, Ipsy:
The Shop Now button takes subscribers to a landing page where they can add more items to their bag without having to pull their credit card out again.
The add-ons are packed with the original shipment, so Ipsy protects its margins and the customer gets it all together in one order.
Skillfully executing this strategy starts with getting your customer’s email addresses. So to set this campaign up, start a new campaign with your promotion app. In Intent-Based Promotions, select Grow Subscriber List.
Set your promotion up. We suggest only displaying this promotion to new visitors:
Then, set up your email integration.
Select the list you want to add your new subscribers to:
And then add additional fields so you can collect data about the customer in your email service provider. This will allow you to personalize the post-purchase upsells you offer.
Then, you can set up a couple of basic flows or drip sequences in your email service provider to encourage your new contact to add personalized products to their carts!
#5. Offer Tiered Discounts When Customers Spend More
Tiered discounts, such as a Buy More, Save More campaign subtly encourages shoppers to increase their cart value by rewarding them with more generous discounts the more they spend.
Beyond increasing AOV, these types of promotions work well for two reasons. They:
- Help you clear out more inventory at once, and
- Eliminate the customer’s “guilt” of spending more (because they’re also saving more money).
The nice thing about offering tiered discounts is that your margins can better sustain the increased discount because you avoid shipping just one unit at a discounted price.
And when you pair this strategy with personalizing the discount dynamically, you take away the guesswork around the best discount tiers to offer.
You can launch a tiered discount campaign in just a few minutes. Login to your promotion tool, and start a new campaign.
If you are able to select the type of campaign, choose discount. If you’re an Intent-Based Promotions customer, choose Intent-Based to tap into the power of the Prediction Engine.
Set the discount range you would like to offer. The idea here is to incentivize these users to spend more with a more generous discount.
If the regular minimum discount you offer is 10%, set your campaign’s discount minimum above that. I set the range to 18-23%.
Next, set your campaign limits. It’s important to consider your current average order value, the minimum cart value and your discount range together to come up with a tier that makes sense.
Crunch the numbers to assess the impact on your margins at the top end of your discount range and the bottom. If your maximum discount is 30% on a minimum cart value of $45 for example, you could probably stand to scale back your discount offer.
To stick with my previous example, I set a minimum cart value of $59.
Set your Display Rules for your campaign. If you use Intent-Based Promotions, we recommend letting the AI-powered Prediction Engine decide who, which, and when to display the discount.
Customize your campaign design, making sure to be clear in your copy that customers who spend more will receive a more generous discount:
And voila! You have yourself a dynamic, intent-based, AOV-boosting campaign!
#6. Reduce Cart Abandonment and Grow AOV With an In-Cart Incentive
This effective promotion not only improves average order value, but can also reduce cart abandonment rate by serving visitors a highly relevant promotion on a complementary product right before they abandon their carts.
To set this up, head to your promotions app and create a new campaign. If you’re using Intent-Based Promotions, you can choose between an Intent-Based Campaign, and a Grow Subscriber List campaign.
I chose a Grow Subscriber List campaign to collect phone numbers for SMS marketing.
Under Campaign Type, you can choose either Intent-Based or Rule-Based. Again, to leverage the power of intent, choose Intent-Based and let the Prediction Engine decide the minimum promotion to offer to convert.
Set your discount range. I set it at 15-20% for this example.
Under Campaign Limits, choose whether you want to serve the promotion based on number of items in the cart, or the cart value. I chose a cart value threshold of $59 to stick with my previous example.
Next, choose the add-on product you would like to offer the promotion on.
NamoGuru Tip: You can narrow down the audience for the campaign or better yet, let the Prediction Engine figure it out!
The magic happens for this campaign in the display rules. Under Guidelines, set the limit option to Inactivity, and trigger the campaign to display after a set time. I chose 30 seconds for this example.
Not sure what the right timing would be? Let your analytics guide you. Check Google Analytics to see the average amount of time a cart abandoner spends on the cart page, and set it to 10-15 seconds before that. That way, your visitors will be served the pop-up just before they’re most likely to bounce.
Under URL display, set it to display only on your cart page.
Customize your promotion design, making sure to write descriptive copy so the user knows what they’re being offered.
Publish your promotion, and voila!
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