How to Increase Average Order Value with Personalization

Personalization is a sure way to keep visitors to your eCommerce store, encourage them to make repeat purchases, and, most importantly, improve the average order value. Read more in this article

How to Increase Average Order Value with Personalization

Ever wished customers bought more from your eCommerce store than they originally intended every time they placed an order? If yes, you’re in the right place.

This comprehensive guide introduces you to an important eCommerce metric called the average order value (AOV) and strategies to increase it and boost your profits. The strategies are based on personalization, which is all about tailoring the products and messaging according to your customers' needs.

Research suggests that 77% of online shoppers prefer a personalized customer experience. Another study confirms that 72% of customers will engage with a brand only if the messaging is tailored to their interests.

Therefore, there’s no denying that eCommerce personalization is the need of the hour. This article thus explains how to leverage personalization to increase your AOV.

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What is the Average Order Value Metric?

The average amount of money customers spend when ordering on your eCommerce website is called the average order value. It’s a critical eCommerce metric that drives important business decisions like product pricing, store layout, and advertising spending.

Here’s how the it is calculated:

Average Order Value = Revenue/Number of Orders

Let’s clarify with an example. Suppose your revenue for May 2022 was $31,000. You also received 1,000 orders in that month. Now, if you divide the revenue by the total number of orders, you’ll get the AOV for May 2022.

For this example, the AOV is $31. Similarly, you can calculate the AOV for any time duration. Doing so will help you understand customers' purchasing habits and revaluate the pricing and marketing strategies.

Why Does It Matter?

Sometimes eCommerce marketers lay too much emphasis on boosting the traffic when they would benefit far more by improving the AOV. The former also incurs a significant amount of cost compared to the latter. Since the average order value directly affects your store’s revenue, taking measures to increase it will amp up your profits.

If you’d like to know how much Americans spend on online shopping, here’s a statistic that can help. In Q4 of 2021, the AOV of the orders placed via mobile phones in the US was $144. The products you sell on the eCommerce store also influence the average order value.

Research reveals that commercial and electrical equipment bring the highest AOV. That said, you can implement certain personalization strategies to improve the AOV irrespective of what you sell and where you sell it.

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How is eCommerce personalization implemented?

Do you manually create tailored emails or recommend personalized products for your customers? How does eCommerce personalization work?

You can get away with manual recommendations when your online store is new. However, this approach isn’t sustainable. You must utilize AI-based eCommerce personalization engines like Vizury.

Vizury specializes in personalized digital engagement with customers. With the main focus on conversational commerce, Vizury helps you drive conversions and boost brand loyalty.

6 Strategies to Boost Your AOV with Personalization

Now that you know what average order value is, why it’s important, how to calculate it, and what influences it, we’ll reveal the key eCommerce personalization strategies to increase it.

1. Launch a Loyalty Program

A great way to boost the AOV is to create a loyalty program. You can introduce a reward points system for your loyal customers. For instance, for every order over $100, you can award 10 points to your customers, and when they’ve collected 100 points, they get 25% off the next purchase or a freebie.

That way, you encourage repeat purchases and increase the average order value by setting $100 (or any value) as the minimum order value to obtain the points. Moreover, it’s important to ensure that each customer's loyalty program is personalized.

You could leverage customer segmentation to identify people who typically place high-value orders on your eCommerce website and offer rewards points, lucrative discount codes, and exclusive offers through email marketing. In those emails, including the products that they’ll love based on their order history, previous visits, wishlist, and items viewed.

If you don’t have their email, you can leverage exit-intent pop-ups on your eCommerce store, encouraging them to input their email address for reward points and exclusive offers. You can then push tailored emails afterward.

A Cool Anecdote!

Did you know that 70% of people are more likely to advocate for a brand if it has a good loyalty program? Therefore, if you don’t have a loyalty program yet, now is the time to create one to promote word-of-mouth and enhance the average order value.

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2. Leverage On-Site Personalization

Email is not the only place where you can implement personalization to boost the average order value. Your eCommerce site is perfect for showing customers personalized product recommendations. Fashion Nova is one of the leading eCommerce brands that utilize this tactic to improve their AOV.

Though you can include product recommendations on the homepage, the best place to show them is the product pages. When someone visits a product page, they have already demonstrated their interest in buying the specific item.

Note that the product recommendations are either similar to the main product or something that will complement the main product. For instance, if a potential buyer is viewing jeans, the recommended products could be tops, t-shirts, footwear, handbags, or glasses that will go along with the main item.

If the visitor adds the glasses and t-shirts to the cart along with the jeans they originally intended to buy, you’ve successfully increased the average order value for that customer. That’s how incredible eCommerce personalization is!

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3. Offer Limited-Time Promotion

Let's use an example to understand this strategy. Put yourself in the shoes of your customers. Imagine those stylish boots you’ve been eyeing for a long time. They are on your wishlist, but you haven’t purchased them because of how expensive they are.

One day, you receive an email notifying you of a flash 50% off on those boots for the next 24 hours! What’s the next step you take? You buy them, of course, without giving it a second thought because you don’t know if you’ll ever get such an amazing deal again on those boots.

That’s what limited-time promotion is, and that’s what you have to do as an eCommerce marketer to ramp up the average order value on your site.

Take note of these key points while implementing this personalization strategy:

✅Use the exact products that you know customers want

✅Offer a limited-time deal on those products, and use a countdown timer on the product page to instill a sense of urgency

✅Stretch your limited-time offer by including free shipping for customers who increase the AOV by adding complementary products (like insoles and extra laces). Set a threshold order value for customers to unlock free shipping. You can run a countdown timer on free shipping as well.

Make use of Messenger and WhatsApp!

Email is not the only channel to notify customers of limited-time promotions. You can also leverage Messenger and WhatsApp to do so. With emails, there’s always a chance that the customer (or potential customer) might miss it.

Abandoned cart alert on WhatsApp

Messenger and WhatsApp typically have high engagement rates, and the probability of them receiving a message is quite high. WhatsApp Business, for example, has a 70% engagement rate and a 99% open rate.

Who could have thought that WhatsApp could help amplify your average order value?

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4. Send Cart Abandonment Alerts

Research suggests that 69.57% of shopping carts are left by visitors without making a purchase.

The prominent reasons why they do so include:

✅Visitors need to create an account to complete the purchase

✅The price of the item is too high, which made them change their mind

✅The checkout is too long

✅The pricing is unclear

✅They don’t trust the website

Some issues (like slow checkout and security) are technical and can be resolved by hiring a competent developer. For others (like the need for account creation), you can allow guests to place orders on your eCommerce site. After all, if they can’t even place orders, it’s impossible to think about improving the average order value.

For expensive items, visitors can be enticed with a discount code or any special offer through email (after cart abandonment) or during checkout (before cart abandonment). This tactic will reduce the cart abandonment rate and amplify the AOV.

You can, again, upsell and cross-sell products during checkout to boost the average order value through personalization.

Remember Messenger and WhatsApp?

Besides sending the cart abandonment email, eCommerce brands can also follow up with a personalized message on WhatsApp or Messenger. Ensure that the content is tailored to the customer and has the image of the product(s).

5. Personalize Customer Journey

Personalizing the entire customer journey is one of the best ways of augmenting the average order value. You have three opportunities in the customer journey to do so.

Pre-checkout

The personalization opportunity begins when potential shoppers visit your eCommerce store. It’s important to ensure that the home banner shows applicable promotions and speaks to the personas. Moreover, you can also implement the on-site personalization we discussed earlier at this stage.

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During checkout

You’ve got the shoppers excited with promotions and products. They will now proceed to checkout. This is when you have the second opportunity for personalization. You can use personalized messages during checkout to communicate delivery and shipping options. This will help decrease the chance of them abandoning the shopping cart.

Also, leverage customized cross-sells (complementary products) to boost the AOV. Make it as easy as possible for customers to add complementary items to the cart. Using checkboxes is a popular method used by eCommerce brands like Augustine Bader to enable frictionless cross-selling in their store.

Post-checkout

At this point, the online shoppers have already submitted the order. But if the cart value isn’t that high, there’s one last option you can try. Shopify offers post-check-out upsell add-ons. When customers submit their order, this add-on will enable a pop-up on the screen.

The pop-up can then prompt shoppers to pick a high-end version of the product they’ve selected for a relatively small price. This is also known as upselling, and it’s an excellent method to amp up the average order value. Moreover, upselling is known to boost the revenue by 10-30%!

6. Provide Financing Options

Not everyone can afford lavish products. We’ve mentioned that price is a major reason behind card abandonment. They’d love to buy an expensive item but don’t feel comfortable spending an excessive amount in one go.

To make things easier, your eCommerce store must offer financing options. If customers have the option to pay in installments, they’ll be more excited to complete the purchase and thus increase the average order value.

Moreover, the Buy Now, Pay Later (BNPL) payment option increases the average ticket size by 30-50%. You can integrate Klarna, Afterpay, and Affirm with your eCommerce store to facilitate BNPL.

Here are the reasons why customers love financing options:

  • 4% choose BNPL to avoid paying hefty credit card interests
  • 4% of people use it to make purchases that won’t fit their budget otherwise
  • 3% don’t prefer using credit cards
  • Others don’t have credit cards or bank accounts

Giant eCommerce brands like Apple provide financing options to their customers. The brand offers a $50 gift card with a personalized message to make the proposal even more exciting. They also use a countdown timer on the gift card.

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You can use the same strategy in your eCommerce store. We shared an upselling example in the preceding section. Since the product is a higher-end version, combine it with attractive financing options, a gift card, and a countdown timer to increase the average ticket size.

That wraps up our top six strategies to boost the average order value through eCommerce personalization.

Key Takeaways

Personalization is a sure way to keep visitors on your eCommerce store, encourage them to make repeat purchases, and, most importantly, improve the average order value.

By adopting the strategies discussed in this article, you’ll notice a great difference in the average order value as well as profits. Are you ready to boost your AOV? Book your demo with Vizury today

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