Average Order Value: Learning from The 2020 Q3 Rundown Report

Your average order value tells a story about the health of your offer and its potential. Read on to find out more about how you can improve and increase your AOV numbers.

Average order value (AOV) is a key metric that all vendors need to pay attention to when monitoring the status of their offer. However, just like conversion rate, it doesn’t tell the whole story. You may have a high conversion rate and an abundance of traffic, but profits may be lagging. If this is the case, you may be interested in learning how to increase the amount of money people are spending on an order. There are a few ways to do this, but first, let’s dive into some definitions and data. 

What is average order value?

Average order value is total revenue divided by number of orders. For example, if your total revenue was 5,000 and you sold 100 orders, that means that–on average–each order was $50.

Of course, keep in mind that this number could be skewed by one or a couple high value orders. Or, inversely, skewed by one or a couple low value orders.

If you have the capabilities, it’s a good idea to look deeper at the data and throw out any outliers that may be pulling the average to one end or the other. Segmenting the data can also help build a more accurate picture of what may be affecting the AOV calculation.

Two Parts of AOV

For direct response marketers, there are often two parts to AOV: the average initial order value, and the total order value. Looking at these two values independently can help sellers figure out where there is potential to increase their revenue. 

ClickBank had a chance to do their own data analysis on top vendors from Q3 of 2020 and discovered that average initial order value plays a critical role in getting order value numbers up.

The insights were shared in the quarterly publication The Rundown Report. According to the report, it may not be prudent for product owners to rely too heavily on their upsell: 

“The best of the best don’t rely on upsells to increase their order value. Instead, they focus on their initial cart value. In fact, the top 10% of ClickBank Top Earners have an average initial order value of $406.52.” 

Click Here to Download the Full Q3 Rundown Report FOR FREE 

An average initial order value that large may seem unrealistic if your top priced product is $75, but take the ratio into perspective: 

The same group that had an average initial order value of $406.52 only relied on upsells for 8.45% of their total AOV. That means for someone with an average total AOV of $50, their average initial AOV would be $48.78.

Don’t Rely on the Upsell

While numbers and spending thresholds vary wildly between industries and niches, for ClickBank data analysts, the big takeaway from the recent data was that the pros and top earners don’t always rely on upsells to increase their AOV. The focus must start with the initial order.

So what are some ways you can take what you learn from your own data analysis and increase your average initial order value? 

Top Five Ways to Increase Average Initial Order Value

Tactic 1: Create or raise your order limit for free shipping. 

These days it seems like everything ships free so it can be nerve wracking to create or raise an order limit for free shipping. But with the right combination or products or an optimized offer funnel, you can effectively move buyers to increase their initial order value to reach that threshold.

One way to make sure you’re increasing average initial order value and not cart abandonment is to make sure strategically priced items are front and center and attractive as an impulse buy. If people are trying to reach a free shipping price threshold, they likely do not have the patience to shop sizes, colors, and cuts to find just the right item to put them over the limit. 

Tactic 2: Consider Your Current Buyers 

Another way to increase your average initial order values is to go back to the basics and do a little more market research. If you have enough data to calculate a meaningful and statistically significant AOV, then you have enough data to figure out who your primary customers are.

With your new insights you can tailor your products or your offer to better fit your current buyers as well as any new buyers you may attract. Market research is a priceless tool that can help you leverage up and coming trends as well as classic marketing tactics that can create and maintain customer loyalty.

Tactic 3: The power of bundling.

Bundling is a powerful tool that, when done right, can make a big impact on your average initial order value. The key to offering an enticing bundle is to communicate the value of the bundle correctly. Take the example Derek Gleason uses in his article, “Product Bundling Strategy: How to Get it Right”: 

Here’s the classic example: A $750-per-night hotel charges $10 for a bottle of water. Consumers feel ripped off. However, that same hotel room for $760 per night including water seems like a reasonable deal.

If you have a product of value that has some “major friction”–as Gleason says–adding into a bundle with the more expensive main item can reduce buyer apprehension. 

This is only one of many bundling tactics. Bundling, like many marketing practices, has deep psychological roots that delve into human behavior. While the science is fascinating, if you don’t have time to read a peer-reviewed paper, it’s wise to consult some experts (or at least their blog posts) when you start offering bundles. 

Tactic 4: Personalized plans.

If you have the capability to add personalization to your offer, then you may have found your golden ticket to increase your average initial order value. 

Eccommerce has largely stripped the buying experience of the intimacy that people might get with a one-on-one in-person sales encounter. You can add a dash of that back in by offering customizable elements to your products or offers flows.

Individualization is the preferred meal of the ego, so the potential to feel special can help your buyers spend a little more. However, if the quality of the personalization feels gimmicky, you risk a poor product experience. 

Like bundling, do a little research when it comes to personalization options and find the one that works best for your product and offer. 

Tactic 5: Focus on brand experience.

The last suggestion on our list is the most important: 

You have to focus on brand experience. From your UX design to your product quality, focusing on brand experience is the only long-lasting tactic to retaining customers who will buy more because they trust your sales process and your product. 

A study by Dimension Data found that 92% of companies who focused on improving customer experience saw a growth in revenue. 

Customer trust starts at the first brand touch. One bad experience can turn a potential or current customer off for a lifetime. By focusing on brand and customer experience–from start to finish–you’ll have people coming back and, over time, you’re guaranteed to see the needle move on your average order value.

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