What is Average Order Value (AOV)?
Average order value is the average amount of money that a new customer spends with you when they go through your entire sales funnel.
Let’s say that last month your business did $30,000 in sales from 1,500 transactions.
To calculate your AOV, you just divide $30,000 by 1,500 and you end up with $20, which means that your average order value is $20.
Now, let’s say you want to go from a $20 AOV to a $25 AOV.
That would be 20% growth taking you to $36k in a given month.
Most people who don’t understand average order value think that if they want to make more money, they need to go out, buy more traffic and get more customers.
Even though this could get you the number you’re after, it will also increase your expenses as well and would probably cause an overall headache, while your net profit may be the same.
But what if I told you it was possible to increase your AOV without having to buy more traffic?
You could easily add 20% at no additional cost.
Is that something you would be interested in? I’m sure it is, at least it would be for me if it’s the first time I hear this, so without further ado, let me show you the 8 ways to increase your customer’s average order value.
Before we go through each of the ways individually, I would like to mention that this part is discussed in our book called “5 Pillars to 5X Your Revenue”.
Besides ways to increase average order value, there are a lot of other useful strategies that would directly impact your revenue when you put them in use, so if you have not read that book yet, my warm recommendation to you is to do that – I promise you won’t regret it.
Now, let’s go over the ways to increase the average order value.
1. Increase the offer price
One of the most important rules in marketing is “never assume what your market thinks”.
Nothing you do with your marketing should be based on assumptions.
Sometimes, you will see something works, and you will have no idea why it actually works.
Always test your prices!
You’re foolish if you think that $7, $9, $47, or $3.97 is too much or too little.
You’re foolish if you assume that that price is a threshold.
Until you’ve proven it with numbers and tested it, you have no idea how much money you could be leaving on the table.
This also includes your upsells, downsells and add-ons.
You might have an upsell for $97, and maybe you raise it to $197, or even $397.
Maybe you even raise your upsell to $797 – you have no idea which price is optimal for your offer.
Even though increasing your price might mean cutting the conversion rate in half, it can bring you more money overall.
That’s the first thing – increase your price and test different prices.
2. Increase the number of offers
I know this one isn’t that revolutionary, but I often see businesses simply don’t have enough offers.
Don’t overcomplicate things.
Just put more offers out there.
It is one of the easiest ways to fix a business.
More times than not, there are missing gaps in a lot of funnels and campaigns.
If you have one upsell, add a second one.
If you have an upsell and that’s it, add a downsell.
There are opportunities everywhere.
Very often do I hear my clients saying, “I don’t want to hammer my customers with offers.”
As I mentioned earlier in this book, one of the rules we follow is, if you get two NO’s from a prospect in your funnel, take them out of that funnel.
In other words, they buy your main product and click on the add-to-cart button.
They go to the order form, they fill in their information, and then they press the checkout button.
They come to an upsell offer, and they say no.
Then they come to a second upsell offer, and they say no for a second time.
In this case, you want to take them out; they’re done.
Bring them to a thank-you page.
Anything more is simply hammering them for sales.
You’re going to damage the relationship with a brand-new customer.
But one of the biggest mistakes I see marketers and entrepreneurs make is they lose customers because they’re not giving them enough opportunities to buy, and the customer goes and finds another place to spend their money.
If you’re thinking right now that you don’t have another product to offer, then go ahead and think about how to deliver more value to your customers.
Find something, create something, make something, license something.
Or partner with somebody – whatever works for you.
But of course, make it valuable.
3. Always add a bump offer
Bump offers are the little offers that you see on the order form.
Here is a rule of thumb… If you have a frontend offer that is an inexpensive one, then your funnel should have a bump offer.
If you do not have a bump offer, you are leaving money on the table!
The right bump offer can add significantly to your average order value.
I want you to think about this for a second, and I want you to visualize the value this bump offer could add to your business.
We’ve had bump offers that converted as high as 50%, 52%, even 53%.
Let’s say the average is 50%.
That means that one out of every two buyers took advantage of the bump.
Now, for the sake of the example, let’s pretend that we are selling a book for $10.
If we had no other offers, no bump, nothing… that means the average value of a customer is just $10.
Now, let’s say we add in a bump offer, and let’s just say, to keep the math simple, we price it out at $20.
And it could be something like an audio version of the book, videos, private notes, etc.
Let’s say that it performs really well, and it converts at 50%.
That means one out of every two buyers buys.
What that means is that having a bump offer adds $10 of average value to every customer.
But the magic is not simply in having a bump offer.
The magic is in what the offer is!
If you have an extra bump offer and it’s an extra three bucks for a pile of dirt, then you’re not going to sell a whole lot.
Somebody will buy it. But you’re not going to sell a whole lot.
What you’ve got to ask yourself is, “What’s the sexiest thing I can offer that will make these people go wild?”
That’s how we operate.
The offer is ‘make or break’ element in any marketing campaign.
Most marketers don’t realize that. They don’t understand the weight and impact the offer has.
4. Utilize add-on offers
I’m sure you’ve heard a phrase, “Do you want fries with that?”
A simple, easy-to-say phrase that doesn’t raise any eyebrows, but yet so effective marketing tool that increases McDonald’s average order value considerably.
By not making a big deal of asking the fries question, McDonald’s reassure you that buying fries is not a big deal.
There’s no fancy pitch or gimmick, just a humble suggestion.
Buying this is guilt-free; no harm will come to your financial situation.
With carefully selected add-ons, you’re not leaving the decision making to the customer. So, think about the customer journey and create strategic add-ons for your funnel that would be of great benefit to your customers.
5. Add thank-you page offer
Thank-you page is another name for the confirmation page.
Needless to say, it is still a page; thus, it is a valuable asset where you can put another offer.
Thank-you page offers usually have a high take rate because it doesn’t look like an upsell page anymore.
It looks like they’re done with the campaign.
So, they breathe a sigh of relief. Their guard goes down.
And before you know it, they’re taking advantage of another exciting offer.
You should never have a page that’s really a dead end.
Just so it’s called thank-you page doesn’t mean you should use it to only say thank you for signing up, registering, purchasing… whatever it is.
When I see other marketers or businesses do that, I call it being lazy.
Alright, sometimes it might be a problem to come up with another product, but it doesn’t mean you should leave it empty.
You can always put affiliate offers related to the product or service you’re selling in that funnel.
But you always want that affiliate offer to be the best of the best!
It has to be quality.
It has to be in your audience’s best interest.
Plus, it needs to be something that is non-competitive to you.
Something that you don’t offer.
But you’re foolish if you’re not giving folks the opportunity to invest in something that they could benefit from that you don’t provide.
Because many times they end up buying it anyways.
So, why not to profit off of it in the first place.
Go out there, work out your affiliate partnership, and put it on your thank-you page.
The other road to go down on is, instead of using that real estate for affiliate offers, you can give your customers a second chance to get the offers that they skipped.
So, if they skipped one of your upsells, donwsells, or if they skipped the bump offer, you can show them those offers again.
And of course, you can have an offer wall.
This means you can have three or four different offers on there.
Give people the opportunity to buy. You’d be surprised.
An offer wall is not going to make you rich. But it’s going to add money. And the money that it adds can significantly impact the average order value.
6. Monetize on post-purchase offers
Post-purchase offers are second chance offers.
Let’s say that someone buys some product from you today, but they skipped your bump offer.
You can go back to them as part of your campaign to get them to take it.
We usually send them emails over two or three days; and we send them back to a page where we give them the ability to take advantage of the offer that they skipped.
The key to making this work is that you want them to do it for a limited amount of time.
So, if somebody skipped your bump offer, for example, you would send them back to purchase it.
But only over the course of the next 48 hours.
They only have 48 hours to take advantage of this.
And it’s one click. So, that means they don’t have to re-enter their credit card details.
Again, this is another benefit of using the right technology. Software I’m about to introduce to you in the next lecture can do this without the need for additional email marketing tools if you use their built-in email software.
7. Using post-sale credit offers
Basically, it is giving people the ability to apply what it is they paid for one product to the next product.
Meaning, let’s say you sell a light version of your 8-week coaching program. And it’s $200.
But your main product is $500.
One of the things you want to do is you want to give them a limited opportunity to apply that $200 credit to get the $500 program.
You can say something like this…
“Listen, for $200, you just purchased the light version.
And we’ve got a percentage of our people that want the best results, so they take advantage of our main, full program.”
“And so, here’s what I want to do for you… for the next 48 hours, I’m going to give you the opportunity to apply a full credit on what it is you just bought.
That’s like getting the light version for free.
And I’m going to give you the ability to apply that full credit to the main product.”
“It’s normally $500. But for the next 48 hours, you can get it for $300.” So, the beautiful thing is that it doesn’t take a whole lot of sky-high conversions in order to produce big results.
8. Offer different payment plans and finance options
A lot of people can’t generally afford to drop a load of cash on a high-cost item.
Sometimes, when you demand payment in full, you won’t get as far as if you offer a couple of different options for payment plans.
For example, instead of selling an online course for $297, offer them an option to pay in three monthly installments of $99.
You can even split test and offer the option to be paid in monthly installments that, when combined, are slightly more expensive compared to paying in full.
For example, an online course that you charge $797 when paid in full, divide into three monthly installments of $297, as an option.
Although it is more expensive, it gives them an opportunity to divide one bigger price into three smaller pieces that they can pay with each month’s salary. By offering the customer the ability to pay in installments, you can boost your average order value by up to 40% (according to our internal tests) while securing the purchase with you – limiting the chances of them going elsewhere for the same offer.
Okay, those were the 8 ways to increase your customer’s average order value, which can mean for your business the difference between struggling to make a single sale or crushing your goals big time.
The great thing about all of these strategies, is they allow you to increase your revenue without having to purchase more traffic.
When you maximize the return you get on your existing customers, you are truly getting the most out of all you’ve got.
If you have any questions or would like to get our help in creating a sales funnel for you (or consult you on existing one), don’t hesitate to schedule a free consultation with us.