As an eCommerce business owner or marketer, you face various challenges every day.
Increasing your AOV is a great way to boost revenue, gross profit, and add value to your customers.
It's a helpful eCommerce metric for determining how much money your customers typically spend with you.
In this article, you will learn:
- What AOV is and how to calculate it
- Why AOV matters in eCommerce and to retailers
- How email marketing, specifically, can improve your AOV
- Examples of how to increase AOV with email marketing
What is average order value (AOV)?
Average order value is the average dollar amount spent per online customer order. This critical metric shows how your customers move through your buyer's journey can help optimize your strategy and, as a result, increase your ROI.
How to calculate AOV?
To calculate average order value, take the total revenue over a specific timeframe and divide it by the total number of orders within that same period.
For example, let's say you want to calculate the AOV of the last month, which yielded $50,000 in revenue and 1,000 orders. When you divide $50,000 by 1,000, you get an AOV of $50.
Why average order value matters in eCommerce
Because average order value reveals part of your customers' shopping behavior, you can make better decisions around your pricing strategy.
When you improve your pricing strategy, you increase your profit and revenue growth.
Average order value also helps balance your customer acquisition costs, meaning you can boost your ROI and reallocate those dollars into your marketing spend.
AOV also helps with other aspects of marketing aside from pricing. Let's take a look!
Increased AOV = Increased Revenue
Increasing your average order value means generating more revenue per sale without reconfiguring your marketing budget.
For example, let's say 100 customers add an extra $15 worth of products to their shopping carts. So instead of spending $50, they spend $75. An extra $15 per sale might not seem like much, but $15 multiplied by 100 customers is an extra $1,500 that wasn't there before.
Plus, the jump from spending $50 to $75 might not be such a big deal to customers—only if the product carries that value.
It's important to note that you don't have to upsell expensive items to boost your AOV. The key is to know your audience and their spending limits.
Reduce Marketing Costs
Increasing your average order value means boosting your bottom line without having to add other marketing tactics to the mix.
The key to increasing your AOV is to understand what products will tip customers to "add to cart." If you know the buyer psychology behind how and why your customers shop, the opportunities are endless.
Email marketing is a great way to tap into that psychology and reach customers with the right message depending on their stage in the buyer’s funnel. Let’s dive in!
8 Ways to boost AOV through Email Marketing
Email is a powerful marketing channel for several reasons, a major one being that it's a direct pathway to your customers.
Statista predicts that the number of email users will spike to 4.3 billion by 2023. What's more, the average email marketing ROI for eCommerce per $1 spent is about $45, according to a HubSpot Research report.
That's a lot of potential reach. Because of that, email marketing is an excellent way to increase average order value (AOV). Here are some of the most significant ways to leverage email marketing to increase your AOV:
1. Personalize your product recommendations
What's better than getting an email full of personalized recommendations based on your shopping behavior? Not much, in our opinion.
Personalized emails not only make customers feel seen by brands, but it's a smart way to nudge customers to checkout. SmarterHQ reports, 70% of millennials get frustrated when brands send irrelevant emails. Also, 91% of customers say they're more likely to shop with brands that provide relevant recommendations.
Personalization + the convenience of email = a major win-win.
2. Leverage existing relationships with audience segments
These days, customers rarely give out their email addresses to just any brand. So chances are, by having your customers' email addresses, you have an existing relationship built on trust and interest. Or, are working your way towards one!
How you talk to customers varies from audience segment to audience segment. As a result, your emails will vary depending on who you're targeting.
For example, if you want to increase AOV across your loyal customer segment, you might consider creating an email campaign around a new, exclusive product release or discount with purchase.
If you're trying to increase AOV with first-time buyers, offering free shipping or a free gift with orders exceeding $X may work best.
3. Experiment with your marketing strategies
There's no denying the versatility of email as a marketing channel. Brands can experiment with countless ways to reach their audience, making it the perfect platform to cross-sell. Measure, optimize, and repeat.
An email marketing platform like Sendlane offers multivariable segmentation—or the ability to segment your lists by customer behavior. Whether you want to create a campaign for customers who've made a purchase within the last 30 days or who have spent a specific dollar amount, it's easy to create the perfect audience segment.
This flexibility opens the doors for brands to test various campaigns, behaviors, messages, and more.
4. Bundle products that accompany one another
Communicating your products' benefits and features is critical, but what about showcasing how your products are better together?
This tactic is an excellent way for customers to link other products rather than only focusing on an individual—better known as cross-selling.
5. Offer free shipping to subscribers who spend $X+
65% of customers research free shipping thresholds before adding items to their shopping cart, according to the National Retail Federation's Consumer Review report. What's more, 29% of shoppers have abandoned a purchase because two-day shipping wasn't free.
The bottom line: People don't just love free shipping; they expect it.
So how can brands push customers to complete their purchase while increasing their order value with email marketing?
One simple method is to offer free shipping to email subscribers who spend at or above a certain threshold. Not only does this type of email nudge customers toward making a purchase, but it also demonstrates the value of being on your email list.
6. Recover sales with engaging, dynamic abandoned cart emails
There are tons of reasons why customers abandon their cart—distractions, high shipping costs, technical issues, and browsing, to name a few.
That’s why shopping cart abandonment emails are an excellent way to get customers to follow through with purchases and buy other products.
This is another prime real estate location for those personalized product recommendations.
7. Create upselling offers based on customers past purchases
Like product recommendation and product bundle emails, upselling emails highlight other items that might be of interest to customers. However, these emails are unique because marketers can send them to customers who may not be actively shopping.
Upselling emails typically include related products based on the customer's past purchasing behavior and other supporting data, like demographic information or preferences. These promotions usually include products set at a higher price point and persuade customers to "swap" the lower-priced item for a higher-priced item.
8. Add discounted upsell offers after order completion
Similar to the strategy above, but this offer will take place directly after checkout before the shopper exits your site. You can display related or complementary products at a discounted price that shoppers can add to their order before time runs out!
For this you'll need a third party tool like Carthook to set these up.
5 Examples of AOV-increasing emails
1. Blume bundles complementary products
This email from BLUME does an excellent job explaining the benefits of using (and buying) two of their products together as a bundle: clearer skin and money saved.
(Source: Really Good Emails)
By positioning these two products together, BLUME explains that customers can expect to see clearer, more nourished skin thanks to both products' unique properties. The customers who might have initially been interested in only Meltdown—one of BLUME's best-selling products—may now be interested in Stargirl as well, which can lead to a bump in AOV.
Not only are customers enjoying better skin, but they're saving money by purchasing both products together as a bundle. That's a win-win.
How to implement
- Identify the value of purchasing multiple products together in a bundle. Show why customers should consider buying not just one product but also another that pairs well.
- A few things you can include in your product bundle emails are:
- The added benefits of both products together
- The amount of money customers will save by buying a bundle
- Social proof from previous customers
- A strong CTA to entice shoppers to visit your online store
2. Bombas leverages free shipping threshold to boost sales
This email from Bombas is packed with incentives for customers to make a purchase and add at least $50 worth of items to their cart in order to cross the free shipping threshold.
(Source: Really Good Emails)
The clear copy leaves no room for miscommunication: customers know they have to spend at least $50 to make the free shipping threshold. To jumpstart shopping, Bombas provides links to popular sock packs and includes how much customers can save by purchasing a pack.
But $50 may seem like a lot to have customers spend on socks—especially new customers. However, email subscribers also receive an extra 20% off code as an added incentive.
How to implement
- Analyze your current average order data to determine a realistic spend threshold. Keep in mind, you want this magic number to be high enough to cover shipping costs but low enough that customers will complete their purchase.
- Consider what combinations of products customers might be interested in purchasing.
- Leverage your customer data, and don't be afraid to A/B test a few product combinations or spend thresholds.
3. Asics takes a personal approach with recommendations
As we mentioned above, one of the best things about email marketing is that you can provide customers with the ultimate personalized experience.
In fact, Sendlane customer Skybound Comics increased their open rates by a whopping 80% using personalization and segmentation tactics.
Personalization fosters a connection between brands and customers. It's a simple way to show you care about providing customers value at every touchpoint.
Let's look at this example from the athletic shoe company, ASICS.
(Source: Really Good Emails)
In addition to the items in this customer's cart, this email includes best-selling options the customer might also be interested in browsing—or might like better. By providing more options, or cross-selling products, ASICS creates an opportunity to increase their AOV while delivering added value.
How to implement
- Mine your customer data for popular or specific products your customers will be interested in exploring. This way, there’s no guesswork involved; let the data guide you in your product selection.
- Create an eye-catching email campaign with personalization woven throughout—from the product recommendations to the copy and imagery.
Pro Tip: Think about what products might pique your customers' interests. This might vary depending on the season, time, or what's going on in the world.
4. Bones Coffee Co. saves cart abandoners with timely offers
This example from the coffee company Bones Coffee Co. is a great example.
Not only does this abandoned cart email remind the customer of the product, but it does so in a creative, on-brand way through copy. Bones also includes a 10% off discount code to help motivate customers to revisit their cart.
How to implement
- Build clear, engaging emails that encourage customers to keep shopping.
- Be sure to include images of the product(s) in their cart, a link for customers to navigate back to their cart quickly, and language that creates urgency.
- Set your email cadence. If you send an email too late, the customer may have already lost interest. If you send an email too quickly, you may come across as desperate. A good rule of thumb is to send the first email about four hours after the customer has abandoned their cart, then wait 24 hours before sending the next one.
For more about abandoned cart funnels, download our Definitive Guide to Abandoned Cart Emails for eCommerce ebook.
5. Dollar Shave Club showcases related products with upselling emails
This email from Dollar Shave Club hits the critical components of a successful upselling email:
- Related products
- Transparent pricing
- Buttons for quickly navigating back to your online store
(Source: Really Good Emails)
This email includes product recommendations and serves as a "heads up" email to notify customers they have an order queued to ship. An email like this makes it easy for customers to make last-minute additions to their order which will increase your AOV without them needing to spend time chatting with customer support.
Dollar Shave Club's transparency with this email positions them as a brand that genuinely cares about its customers and ensures they have everything they need to receive the best brand experience.
How to implement
- Similar to personalization emails, analyze the data for the specific audience segment you want to target and determine what products might be best to upsell.
- Examples of products to feature include a new version of an existing product, exclusive product releases, or subscription/package upgrades.
Pro Tip: Demonstrating to customers the reason(s) why they should consider the higher-priced version may encourage them to purchase.
Focus on Value, Not Pushing SKUs
Average order value is an important (and powerful) KPI to track. It’s a great way to boost your revenue, and it doesn't require a lot of extra budget for success. It's a subtle way to make a significant impact on your bottom line.
Testing AOV-increasing strategies with email marketing allow marketers to tap into buyer behavior and optimize campaigns for the best ROI.
When thinking of ways to start boosting your AOV, define the value you're adding to your customers' shopping experience rather than focusing on moving products (of course, that's important, too!). Without a clear value proposition, it will be challenging for customers to click "add to cart" on items they weren't planning on purchasing.
This value-add doesn't have to be complicated—the simpler, the better.
Here are a few ways to show this value in your next email campaign:
- Social proof from past customers
- Unique features or qualities of the products you highlight
- Visuals that encourage customers to learn more
Don't be afraid to test, test, and test again! The more you test, the more insight you'll have on what resonates best with your customers.
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