By having customers buy more than one item in each order, thereby spending more money, you can increase sales and revenue for your e-commerce store.
The amount of money spent by customers each time they place an order through your online store is called Average Order Value. Your store’s Average Order Value can be used as an indicator of how effective your marketing efforts were based on money spent to obtain each order.
It is, in fact, one of the most effective methods to increase revenue for your web store. When compared to tactics such as increasing site traffic, it is a much simpler process, usually only requiring the installation of an extension or a plug-in. An increased AOV will help you achieve a balance between site traffic and revenue. Some easy-to-implement methods which are proven to increase your AOV are discussed below.
Bundling multiple Products together
A common and effective tactic is to sell similar products together in a bundle. These pairings are usually a primary product (e.g. Laptop) grouped together with its accessories (e.g Headphone, Mouse)
Likewise, there are multiple methods in order to create product bundles.
The convenience of providing a set of items prepackaged together provides an incentive for customers to buy bundled products. We can provide further incentive by offering a discount for bundled products although this may not always be necessary.
In Magento, you can Bundle products through Catalog>Add Products>Create Product Settings by:
1. Creating a Bundle Product.
2. Completing the product information.
3. Adding the Bundle Items.
Up-selling and Cross-selling similar Products
These are two methods which are used to great effect in e-commerce marketing.
In Up-selling, the customer is recommended a similar but more expensive product compared to the one they are currently viewing.
In Cross-selling, suggestions for additional products related to the one being viewed are shown.
In Magento, Up-Selling and Cross-selling can be achieved through Product Attributes feature.
Recommendations based on Customer needs
By providing relevant products to our customers, based on their needs, we are more likely to get a response. The key to this is personalization based on each individual customer. Personalization may be done across multiple levels, from a personal welcome message to a landing page which shows products and promotions tailored to each customer.
For those customers who do not know what exactly they need, Recommendations are a powerful tool, which can be used to help them find the products they want.
The information which is required for us to personalize the customers shopping experience can be obtained from:
1. Recommending products based on the customers Search Queries.
2. By looking at the customers Geographic Location.
3. By looking at the Past Purchases of the customer.
4. From the purchases of customers with Similar Demographics.
There are several extensions for Magento, such as Recolize which generates personalized recommendations.
By offering rewards to our customers, we can provide an incentive for them to spend more money on our online store and thereby increase our AOV.
Some ways in which we can provide this incentive are through Promotions/Discounts, through which we offer discounts to customers who spend more money or buy additional items and provide services such as free shipping.
Another way is to reward customers with points based on the amount of money spent. These points can be saved up and redeemed later on for discounts, gifts, and other rewards. This method also helps us build up customer loyalty.
Magento provides a rewards point system through its enterprise edition promotions tool.
Providing Easy Returns
One major concern for customers while shopping online is that they can not inspect the product beforehand. They want to know that returning the item will be an easy and hassle-free process. Statistics show that an easy return policy actually leads to customers buying more products as they feel that it is less risky.
One way to do this is by providing free shipping on both orders and returns.
Extensions for Magento such as Magento Product Returns (RMA) can be used to process Return requests and offer great flexibility in setting conditions for product returns.
Each of the above methods, while different in implementation, all provide your store with the benefits of an increased Average Order Value by both simplifying and personalizing your customer’s shopping experience.