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    Boosting Average Order Value (AOV): Why Will Shoppers Pay More?

    6 minute read
    Boosting Average Order Value (AOV): Why Will Shoppers Pay More?

    The math is simple.

    If shoppers pay more per order, but the number of orders remains consistent, brands can boost their average order value (AOV) and increase overall revenue.

    But numbers alone don’t tell the whole story. While raising prices is one path to higher AOV, this approach comes with several caveats.

    Raise prices too much, too quickly, and customers may reduce the amount they order to keep costs down. Raise prices without offering clear benefits to consumers, meanwhile, and they may take their business elsewhere.

    Sustainable AOV requires a customer-first approach that focuses on communicating product value as the foundation for increased AOV. Here’s how.

    What Is AOV?

    Average order value is exactly what it sounds like: The average amount customers spend per order. To find this value, select a time period — for example, the last six months. Add up the value of all transactions, then divide this by the number of orders to get AOV.

    One benefit of this metric is eliminating outliers. There will always be customers with significantly higher-than and lower-than AOV.

    Focusing on these segments ignores the larger average middle, which is the core of brands’ customer base. By finding the average order volume, companies can set a baseline for sales and marketing strategy.

    The Power of Price

    When it comes to item pricing, brands must balance consumer and company interests. Lower-cost items help customer budgets go further, while higher-priced products benefit the business's bottom line. As a result, companies can choose to charge the top edge of what the market will bear, opt for a volume-over-AOV strategy, or find a middle ground.

    The ideal option varies by brand, product, and location. For example, brands with high name recognition can often charge more per item because of their popularity, while those with superior-quality products can trade on the strength of their reputation.

    Location, meanwhile, is a component that companies don’t control. Consider recent Statista data, which found that in Q2 2022, the AOV of online shopping orders in the U.S. purchased via a desktop was $155.75.

    In Great Britain, Statista data shows a slightly lower value at $126.49 for the same period. Ecommerce Germany reported that Germany outpaces the rest of the EU at $167.62 AOV, while Austria comes in significantly under at just $107.45.

    Common Factors That Impact Average Order Value

    So what impacts AOV? According to Salsify’s "2023 Consumer Research" — a survey of consumers across the U.S., Great Britain, France, Germany, and Australia — several common factors can influence AOV.

    Price

    Ninety-six percent of consumers said that rising costs now influence the way they shop. For example, 73% are buying less or delaying large purchases, while 51% now spend more time researching before buying, and 17% have opted for store-brand products over more expensive brand-name alternatives.

    As a result, brands and retailers must put in the work to pinpoint optimal price points for their target market.

    Product Quality

    Consumers will pay more for high-quality products, with 81% of customers saying that product quality keeps them loyal to brands they love. If this quality isn’t clearly communicated, however, brands may find AOV flatlining. Consider that 55% of customers now say they wouldn’t purchase a product online due to bad product content.

    In other words, even high-quality products may look undesirable if product detail pages (PDPs) are poorly designed and maintained.

    Reputation

    Online commerce has helped even the playing field by allowing both small brands and large enterprises can now compete in global markets.

    As a result, reputation is a critical component of perceived value, with 62% of shoppers saying they research a company’s reputation before making a purchase. This makes complete, accurate, and up-to-date product information a necessity.

    If customers feel that they’ve been "catfished" — shown one product but delivered something else entirely — they won’t be back.

    Online Shopping Experience

    Fifty-five percent of consumers say the online shopping experience impacts their loyalty and, therefore, their willingness to spend more. Sites that are hard to navigate and difficult to search can, in turn, drive down AOV, even if product quality is high.

    Delivery and Discounts

    Along with product quality, delivery and discounts impact AOV, with 73% of customers looking for either discounts or free delivery before they make a purchase.  

    Finding the Market Sweet Spot: 3 Tips to Improve AOV

    Establishing, maintaining, and slowly growing AOV is an ongoing process. Here are three tips to help brands find the market sweet spot.

    1. Make Pricing Transparent

    Both manufacturing and supply chain costs have impacted the price of products. Charging more because the market is changing, however, can hurt AOV unless companies are willing to be transparent. This means providing data about why products cost what they cost, and what sets some products apart from the competition.

    2. Prioritize Product Content

    To increase AOV, brands need product content that is accurate, appealing, and actionable. In practice, this means being up-front about inventory levels and shipping times, ensuring that all product pages include complete item details, clear images, and video where applicable, and giving customers a reason to buy ASAP.

    This could take the form of free shipping, bundle discounts, or early access to new product releases.

    3. Meet Buyers Where They Are

    It’s also important to meet buyers where they are. This means finding a balance between brick-and-mortar and online storefronts.

    Salsify found that while 68% of buyers in the U.S., Great Britain, France, Germany, and Australia still plan to shop in-store, 38% are using mobile devices to compare products and prices before and during their purchase experience. As a result, product pricing, content, and availability must be consistent no matter how consumers choose to shop.

    Better Than Average

    Bottom line? Charge too much, and customers won’t come back. Charge too little, and AOV may not be enough to drive sustainable revenue (and have the knock-on effect of customers under-valuing your products).

    In practice, boosting AOV means brands need to consider what they’re selling, how they’re selling it, and where it’s being sold to help find the sweet spot between price, purchase, and repeat customers.

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    Your customers don’t just want to feel satisfied at checkout — they want to be fully engaged. Download our guide for actionable, step-by-step approaches to elevating your customer engagement.

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    Written by: Doug Bonderud

    Doug Bonderud (he/him) is an award-winning writer with expertise in ecommerce, customer experience, and the human condition. His ability to create readable, relatable articles is second to none.

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