Increase Average Order Value with Loyalty in 2023

Tracking and increasing average order value is a key method to help you make more money from each transaction and in turn make your store more profitable. Often, when customers shop online, they’ll only buy exactly what they’re looking for. Having a loyalty program in place can help increase your average order value. Each time a customer shops, they can earn points or discounts just for being loyal customers. In this article, you’ll learn how to create more great product rewards and offers in order to generate more sales from each order. Read on to learn exactly what average order value is and how to increase it with loyalty rewards!

What’s my Average Order Value?

Average order value (AOV) is the average dollar amount a customer spends in a single purchasing transaction. 

(Total Sales Revenue)/(Total Number of Orders) - graphic

You can calculate your store’s AOV by dividing your business's total revenue by the number of orders taken. This formula is the easiest way to calculate it. 

Why is AOV important?

Average order values are important for many reasons but the key ones are: 

Increasing revenue and profit: As the average order value grows, you’ll see an increase in revenue and profit. The more you can earn per order, the more your business makes altogether. If you can see a positive uptick in AOV, you can safely reinvest more money into your business’ growth and pocket more too.

Better customer data: Tracking average order values allow you to gain a better understanding of your customers in a variety of ways, such as knowing:

• How they shop and if they only visit their desired product pages or if they browse and often make purchases from different categories?
• What items do they purchase and how often do they buy them.
• How much they’re willing to spend and when spending above their average order value, what makes them do so.

5 Ways to Increase Average Order Value with Loyalty 

If you’re a relatively newer brand  (under around 6 months in business) the majority of your customers will be first-time visitors. Offering specific rewards to new visitors can help increase average order value. You can provide this particular audience with a one-time discount when they buy multiples of a popular product or exclusive bundle deals just for people who haven’t shopped with you before.

If your customer orders multiple items and loves what they receive, it’ll be even easier to entice them to shop again. They will have already have experienced shopping on your site first hand and you’ll have a better chance of turning them into repeat customers.

Providing value in the form of transferable rewards points can help increase your average order value. For example, 30 bonus points when you spend $50 or more. This strategy is lucrative because it encourages shoppers to add extra items to their cart, or will encourage them to purchase a higher ticket item. Offering extra rewards points can not only help you increase your AOV, but it can encourage repeat customers that will want to continue accumulating points for larger rewards down the road. 

While some businesses want to stray far away from providing discounts, this strategy can help boost your average order value. However, when offering discounts, be sure to add a minimum spend. For example, get $10 off when you spend $75 or more.

Some brands also have volume discounts. This is when specific order value brackets result in a particular discount. For example, get $10 off when you spend $75, get $15 off when you spend $100, and get $25 off when you spend $150 or more.

Free Shipping Thresholds

Hands down the easiest and most popular way to increase the average order value is offering a free shipping threshold. For example, free shipping on all orders over $75.

Once you’ve calculated your average order value, add 30% to it. For example, if your average order value is $100, with the 30% increase, it becomes $130. This new number is what you’ll set your free shipping threshold at – for example, free shipping on all orders over $130. A study found that a 30% increase to your average order value works best as a free shipping threshold.

You can also add a notification at customer checkout if their purchase is below the free shipping threshold. By adding this notification, you can help increase the average order value.

Creating a time–sensitive deal or offer can help incentivize sales and thus increase average order value. For example, you might have a 24–hour deal where someone gets a percentage discount on specific items when they’ve ordered a certain quantity of products.

Although this isn’t a long-term strategy for boosting AOV, urgency absolutely helps increase conversions. Time–sensitive offers are excellent for boosting average order value during slower periods (like right after the holidays) and they’re relatively easy to execute. For example, with a loyalty program like Kangaroo’s, you can create the promotion to begin and end during a set amount of time and promote the deal on social media or on a banner on your website’s homepage.

Conclusion 

Tracking your average order value can help you understand how well your store is performing. With a loyalty program from Kangaroo, you can try executing some of the marketing strategies above to continue increasing it. Whether you create personalized offers, implement a free shipping threshold or offer bonus points, you’ll be on track to seeing higher order volume on your online store. So are you ready to see those sales soar? Get in touch with a loyalty expert to learn more!