When you really boil it down, there are two ways to increase the revenue at your eCommerce store (or the stores you build and manage for your clients). Option one: Bring in lots of new customers. Option two: Get your customers to spend more money.
Let’s look at option one. When it comes to bringing in new customers, well, that can get very expensive very fast. According to Propeller, customer acquisition costs (CAC) can be as much as $395 for some industries. For consumer goods companies, the CAC is lower—an average of $22—but that’s still quite expensive for most eCommerce stores. And customer acquisition isn’t getting cheaper; digital advertising costs have gone up as much as 12 percent on average in just two years.
The alternative to spending lots of money on customer acquisition is spending lots of time. You can increase traffic to your online store by improving your SEO, writing guest blogs, appearing on podcasts, maintaining a robust social media presence, and other free (but time consuming) methods—but it can take time before that traffic comes in, and even more time before that traffic turns into revenue.
That’s why we’re going to focus on option two: get your customers to spend more money. If you want to make your eCommerce store more profitable, you should put in some serious effort into increasing your average order value (AOV). (Average order value is calculated by taking your revenue over a given period and dividing it by the number of customers in that period.)
By increasing your AOV, your store will be able to generate more revenue without increasing its number of visitors, customers, or products. When done right, you won’t need to raise your prices either.
In this article, we show you how to increase the AOV at your WooCommerce store by providing you with some actionable tips and introducing you to some extensions that can encourage your customers to spend more in each transaction.
The wrong ways to increase AOV
There are good ways to increase your AOV… and there are bad ways. Before we get into the good ways, we’ll take a quick cautionary look at the bad ways.
- Adding new products to your store. Adding products certainly can bring in more revenue, but if the products aren’t appealing to your target customers, you may just find yourself sinking money into inventory that’s stuck in your warehouse. Beyond the financial aspect, developing, sourcing, and launching products can be a very time-intensive process.
- Raising prices. Yes, if you raise your prices, your average order value should go up. But if those high prices turn off your customers and drive your number of orders down… then the equation stops making sense.
- Lowering prices through lots of discounts. A great discount can often bring a rush of customers to your store. And your hope is that the customers will use the discounts to buy more products than normal, thus leading to higher average orders even if the products themselves are discounted. While that all may be true, it’s dangerous to become reliant on larger and larger discounts to drive sales. You can wind up in the discounting death spiral, where you train your customers to only spend when your products are on sale. You want to increase AOV on a daily basis, not just on special occasions.
The right ways to increase AOV
Now that we’ve covered the wrong ways to try to increase AOV, here are five of the best ways.
Display relevant cross-sells for items a customer has added to their cart
Displaying additional products to your customers just before they check out is an effective way to encourage extra purchases and drive up AOV.
There’s a sales principle called the 60×60 rule which states customers will add on a product (or two) 60 percent of the time for 60 percent of the original product’s price. So if you hit your customers with targeted add-ons that complement the product they’ve added to their cart, there’s a good chance a lot of them will add those items to their cart as well.
Check out the Cart Add-ons extension ($29/year at WooCommerce.com), which allows you to display additional products on the cart page. To maximize its effectiveness, you can define exactly which products should be displayed based on what’s in the customer’s cart.
While the cart page is a popular spot for displaying cross-sells, this extension works in other places around your site as well thanks to its configurable widget and shortcodes. (You can check out the documentation for the available shortcodes.)
When using the widget and shortcodes, it’s easy to define how many add-ons are displayed, whether or not the name and price are shown along with the product image, and if an “add to cart button” is shown.
Developers can use the following code to show the recommended products anywhere in a theme:
For more information on how this extension can be configured, check out the online documentation.
Upsell during the checkout process
While the Cart Add-ons extension will cross-sell products in the cart and around your store, another approach to increasing AOV is to sell extras as a customer is about to complete their purchase.
When you present items at checkout, you’re increasing AOV by upselling—that is, having the customer pay a higher price for the product they already intended to purchase. According to some reports, upselling can be 20 times more effective than cross-selling—so it’s well worth considering for your eCommerce store.
The WooCommerce Checkout Add-ons extension ($79/year at WooCommerce.com) is useful for handling upsells during the checkout process. You can use this extension to give customers the chance to quickly add a tip, add insurance to their order, or choose to have their items gift wrapped. All these little extras can add up, making it an effective way to increase AOV.
This extension is highly customizable, so you get a lot of control over which add-ons are displayed, when they’re offered, and how they’re presented to your customers—all through the extension settings.
Developers can use the extension’s filters (along with some code snippets) for even more control over when specific add-ons are displayed.
You can also upsell add-ons before the checkout process using an extension like Product Add-ons ($49/year at WooCommerce.com). This extension gives you the ability to offer specific, relevant add-ons for individual products on their product page. For instance, you could use this as a way for customers to enter text or upload a photo for personalized items.
Upsell to higher-priced items before checkout
It’s great to upsell during the checkout process—but you don’t have to start upselling there. If you offer similar products with different features—and different prices—you can increase your AOV if your customers opt for a higher-priced version of an item rather than a lower-priced one.
One good way to guide customers toward that decision is by letting them compare products side-by-side, so they can get a clear look at the difference in the features and benefits—and see why the higher-priced item is superior.
The WooCommerce Products Compare extension ($49/year at WooCommerce.com) adds this functionality to your eCommerce store. Once activated, your customers can choose which products they’d like to compare.
The extension will then display them side-by-side.
Although the extension will take on the styling of your theme, you can edit the template files directly to customize the appearance of the product comparison tables.
As this extension has no settings, once it’s installed, there’s nothing to configure. This gives you an effortless way to add product comparisons to a WooCommerce store. However, developers can use the hooks to control the output, such as configuring the maximum number of products that can be compared at a time and what’s displayed in the comparison table.
Here are the details of the hooks, taken from the documentation:
apply_filters( ‘woocommerce_products_compare_end_point’, string )– sets the endpoint of where your compare products page displays.
apply_filters( ‘woocommerce_products_compare_max_products’, int )– sets how many products can be compared at one time. Default is five.
apply_filters( ‘woocommerce_products_compare_cookie_expiry’, int )– sets how many days to keep the compared products list per user. Default is seven.
apply_filters( ‘woocommerce_products_compare_compare_button’, html )– filters the display of the compare products button.
apply_filters( ‘woocommerce_products_compare_meta_headers’, array )– filters the headers displayed on the compare products page.
Support deposits and payment plans
The multi-trillion-dollar credit industry is predicated on the fact that we love buying expensive things and paying for them gradually. So when you give your customers the option of putting down a deposit for an order or paying in installments, that could encourage them to order more items or purchase more expensive ones—and therefore, increase the AOV at your store. In fact, one study reported 67 percent of shoppers said they would be more likely to make bigger purchases if they’re able to pay in monthly installments.
There are a number of companies now offering installment payments for eCommerce stores, including Klarna (free extension at WooCommerce.com) and Affirm (free extension at WooCommerce.com). But if you want to bring the entire process in-house, you can use an extension like WooCommerce Deposits ($179/year at WooCommerce.com).
You can use that extension to create one or more custom payment plan so your customers can place an order without paying the full amount upfront.
The payment plan builder of this extension is extremely flexible so you can define how the balance will be paid. The deposit and payment plan options can be enabled storewide or on an individual product level.
Create subscription and membership products
There’s a reason subscriptions are everywhere now, from music to software to coffee. When you sell subscriptions and memberships, you’re increasing order value by generating recurring, steady payments from your customers.
There are some powerful extensions available that can add this functionality to WooCommerce, including WooCommerce Subscriptions ($199/year at WooCommerce.com) and WooCommerce Memberships ($199/year at WooCommerce.com).
You can use Subscriptions for physical or virtual products, including things like food box deliveries or monthly software billing. You can also combine Subscriptions with Memberships to add recurring payments to learning and education sites, purchasing clubs, premium content sites, and more. (Memberships is also a great way to restrict access to certain products and offer membership discounts on specific items at your store.)
With online advertising costs going up, SEO and social media taking time to deliver results, and the potential to turn off customers with product price increases, it’s important to figure out smart ways to increase the average order value at your eCommerce store to become more profitable.
Thanks to a number of extensions available for WooCommerce, you can implement AOV-friendly features on your site—and then customize those extensions to make sure they’re working in the ideal way for you.
Our recommendations for increasing AOV are:
- Display relevant cross-sells in cart. Show targeted products that are related to an item a customer adds to their cart.
- Upsell during checkout. Offer things like insurance or gift wrapping when a customer is checking out to provide a useful service and increase AOV.
- Upsell before the checkout process. Allow customers to compare products at your store to showcase why they should choose a more expensive option.
- Support deposits and payment plans. It’s easier to spend more money if you can spread the payments out over time.
- Create subscription and membership products. Subscriptions and memberships can bring in recurring revenue as opposed to just a one-time purchase.
The following extensions mentioned in this post are included at no additional charge in the GoDaddy Managed WordPress eCommerce hosting package:
- Cart Add-ons
- WooCommerce Checkout Add-ons
- Product Add-ons
- WooCommerce Products Compare
- WooCommerce Deposits
- WooCommerce Subscriptions
- WooCommerce Memberships