For retailers are struggling with low Average Order Value (AOV) despite good conversion and high traffic volumes, here are six easy ways retailers can increase their AOV and optimize their return on ad spend.
Bundle Deals
This tactic works best if the discount is significant. Retailers can create product bundles that offer a combination of complementary items at a discounted price. Promoting these bundles through paid advertising can encourage customers to buy more items in a single transaction, increasing the AOV. You can create value perception by having three bundles for each “type” of bundle. Having a small, medium, and large bundle will lead to the medium size bundle being perceived as the most bang-for-your-buck bundle; make sure to use higher margin products in the medium bundle if possible.
Targeted Upselling
Use customer data and targeting options in paid advertising platforms to identify high-value customers or those with a history of larger purchases. Then, you can tailor your ads to upsell these customers with relevant and more expensive products. For Google Ads, you can create custom audiences in GA4 that you push into Google Ads automatically based on customer behavior.
Time-Sensitive Promotions
Use paid advertising to create a sense of urgency through limited-time offers, flash sales, or special discounts. This can encourage customers to make larger purchases to take advantage of the offer before it expires. Specifically, target these offers to non-brand paid search and prospecting social audiences to avoid margin depletion from your core customers using UTM parameters and a personalization software.
PLA-Style Landing Pages
If you’re an e-commerce brand, consider moving the “You Might Also Like” product recommendations to the top of your PDP (even ahead of the core purchase elements) to show the variety of products your store offers. Customers are used to Google Shopping recommendations being at the top of the page and it will reduce the bounce rate from PDP landing pages as well as increase your conversion rate and return on ad spend.
Free Shipping Thresholds
Advertise free shipping offers for orders above a certain amount, enticing customers to add more items to their cart to qualify for the offer and thereby increase the AOV. It is especially important to make this free shipping threshold (if it is already not more competitive) higher than your trending AOV. For example, if your AOV is $80, set your free shipping threshold to $100 or more to drive additional revenue per transaction.
Gift With Purchase
Retailers can promote special offers through paid advertising where customers receive a free gift or additional product when they spend a certain amount. This encourages customers to spend more in order to receive the bonus item. There are many ways to push a Gift with Purchase item; for example, if you receive a product that doesn’t meet quality assurance standards — in a way that customers would likely never notice — and you will no longer sell the item at full retail, make it a gift. By adding this item as a gift when a customer spends more than 300 dollars on their order, you can create value perception. If you don’t have a similar QA opportunity with Gift with Purchase, consider offering a recently launched product category as a way to introduce customers to a product outside of what you “typically” sell.
By engaging with customers in these ways, retailers will be able to increase their AOV and increase profits.
Ryne Higgins is senior director of digital strategy of Dallas-based Eyeful Media.
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