THE goal of any online retailer is to increase revenue and emphasis is often made on increasing conversion rates (rightfully so in most cases). However, many disregard the ability to increase the bottom line by increasing the customer’s average order value (aka basket size) which in many cases requires only online merchandising work, analytics reporting and some elbow grease.

A part of my work at Conversion Counts which falls under e-commerce development is to help online retailers increase average order. The list below includes some of my favorite methods which any online retailer big or small can implement quickly. 

1. Product bundles – the idea behind product bundles is to combine complimentary products which the combine price of the new bundle product is slightly less than the price of the two (sometimes three) products separately. Product bundles appeal to many online shoppers, especially bargain hunters and to become a successful online retailer you should always cater for as many demographics as possible.

2. Cash back over a certain amount – cash back offers are a great incentive for encouraging customers to spend more. The idea is the set a minimum order value for when the cash back comes to fruition and is quite easy to set up. If you’re using an affiliate network you can work with one of the cash back sites or if you’re accepting PayPal setting up cash back is a 10 minutes work.

3. Free delivery over a certain amount – online shoppers place great emphasis on the delivery and shipping costs, and I often find that excessive delivery costs are a direct cause for high drop off rate during the checkout process. Bearing this in mind, customers are easily encouraged to spend more when the delivery cost is waved.

4. Price discount over a certain amount - similar to the above, a discount offer over a certain threshold tends to create the desired effect. When implemented wisely in a tier structure and placed during the checkout process (i.e. from the moment a product is added to the basket) it could be kept in place for some time. For example, when a customer’s basket has a value of £50 offer 5% should the basket exceed £60, if a customer’s basket has a value of £70 offer 10% should the basket exceed £80 etc so you’re in fact creating a global site promotion system.

5. Price increase - no joke, when did you last looked at your margins and competitor prices. Sometimes a slight price increase is the answer, just avoid site wide price increase which might have an opposite effect.

6. Add new products – one of my favorite methods is the ability to increase basket value by introducing new desirable products which either have a higher value than the site’s average order or compliment the site’s current range of products. For example, if you’re selling LCD monitors, you’ll be looking to add premium cables in addition to the standard cables (complimentary products) or introducing new monitors which have a higher value like a premium brand. To find these ‘desirable’ new products, I often look at the internal site search queries to see what customers are looking for, especially when no results are found. You can also use Google Analytics to view your internal search results by enabling site search.

7. Cross selling other products – a great cross selling scheme depends on two things (well more, but let’s keep it short for now). First where the cross selling products are placed on the site and second how well you’ve defined the synergy between various products.

8. Limited edition products (limited stock) – creating a sense of urgency is a great way to push customers towards the right products. Assuming you’ve got your hands on a limited edition or limited stock product with high desirability this method has been known to increase basket size, though granted you’ll find it hard to maintain the uplift due to the nature of the offer.

9. Drive more qualified traffic – if you’re looking at your average order in total and not based on traffic sources, you’re not seeing the big picture. Some traffic sources will convert better and spend more while other traffic sources will convert less and spend less. For example, you might find that your affiliate marketing channel has a high average order compared with social networks so naturally you should invest more in this qualified traffic source.

10. Launch a reward system – tier based reward system is normally associated with increasing conversion rates, however I found that implemented in a tier structure based on the number of products in the basket together with its total value, a reward system can increase average order value as well. There’s also that little issue of what value these points have i.e. what is the reward, which is a subject of another blog post

11. Bonus tip – give some back! Offer to give a percentage of any order value above a certain amount to charity. I’ve had some experience trialling this method and the results were great, though we’ve only implemented it for a few days and tied it with a calender event such as red nose day.

Whether you’re looking for conversion rate optimisation or crafty ways to increase your average order value Conversion Counts can help so do get in touch today. If you’re interested in ways to increase conversion rates, read my post 25 ways to increase conversion rates.

This entry was posted on Monday, March 16th, 2009 at 8:57 am and is filed under e-commerce. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.