If you own a small business, you can earn so much more money just by learning how to increase the average order value. If it sounds complicated, don’t worry – I’m giving you all the insights and tips you need to watch your business bloom.
As a small business owner, the goal is always to grow, right? It is for me! Thankfully, that doesn’t always have to mean working more hours in order to gain more customers. Instead, once you discover the secret to increasing the average order value, you’ll be able to work the same hours and make even more money.
What Is An Average Order Value (AOV)
The average order value describes how much each order is worth. In other words, when you increase this amount, each customer or order will bring in a higher dollar amount.
If you want to find your average order value, just follow this formula:
Average Order Value = Total Revenue / Number of Orders
You can make this number larger in a variety of ways – which I will show you later on in this guide. It involves more than merely increasing product prices.
Benefits of Increasing Average Order Value
There are two main benefits to increasing your AOV if you don’t have any inventory and sell services (like that of a freelance writer or coach).
First of all, this is a wonderful way to increase your revenue and profit. Just think about it – if each order is a higher amount, your overall revenue will naturally go up. The more you earn per order, the more your business will make overall! Then, you can take the profit and reinvest it back into your business for even more positive returns.
Next, it’s a cost-effective way to increase your marketing return. This is pure math. If you spend $10 on marketing and the average order is $20, you aren’t making a very positive return on this investment, especially after you deduct other costs and taxes too. When the average order amount goes up, and you spend the same amount on marketing, all of a sudden your return is much better!
By the way, sometimes the thing we really need as business owners are time and money. If you are looking for ways to save both, check out this free 5-day course I’m offering!
How To Increase the Average Order Value
Are you ready to find out how to increase your average order value? I have 10 easy ways that will do wonders for your business. You can try to do all of them or pick out the ones that make the most sense for your business model. I do not recommend trying all of them at once, try a few, and only keep the ones that work the best.
1. Bundle Your Services
The first way to increase your average order value is to bundle your services instead of merely selling them individually. When you create packages and bundles, you are making it easier for your customers to buy what they perceive as a huge value for a lower price. This also saves them from having to do the math, it makes it easier for them.
For example, if you are a financial coach, you can create a bundle that includes one-on-one chat, an eBook, and a personalized budget created just for them. If you don’t have a variety of services, you can also offer bundles of 3 coaching sessions instead of selling them hour-by-hour.
People are more likely to buy a bundle than they are to buy the services individually – and this alone increases your average order value.
2. Upsell Your Clients
Next, you want to create some kind of functionality on your website where you can easily upsell as they are shopping. Vistaprint is the pro at this. If you order holiday calendars, they display a limited-time offer that usually expires after several minutes. These items are similar to what you just purchased and they even give you a discount on them. I’ve even bought additional things based on these recommendations.
How does this work for coaches like us?
When a customer buys a coaching bundle, offer VIP perks like video chats or exclusive printable workbooks. Look at what you are selling and reserve some of your services or products as special add-ons.
Conferences are another fantastic example of this. When you register to attend a business conference, they’ll have a VIP pass where you can pay a little extra but get perks like private networking with the speakers, a sponsored happy hour, and other offerings like this.
3. Communicate the Value of Your Services
Another way to increase your AOV is to make sure your customers clearly see the value of your bundles. This could mean pricing individual coaching sessions higher than the bundle.
Don’t merely charge by the hour. This causes decision fatigue because clients have to calculate how much time they think they need when they take out their credit card. When you create the bundle for them, they will appreciate not having to do any math or make any more decisions.
4. Create First-Time Offers
Another way to increase the average order value is to create some first-time offers for the bundles you created. Lots of companies will create pop-ups that give newsletter subscribers an exclusive discount code.
If you are just starting out and most of your customers will be new, then this could be a wonderful way to attract their business.
One very attractive offer you can make is to offer a free 30-minute consultation or even an hour-long one. I had one person I’ve worked with call these “free mini-coaching sessions” which actually is quite appealing to a prospect.
I particularly like this idea because it lets the prospect get some valuable advice or direction, and will usually get them excited about working with you. Plus, this also gives you the opportunity to pre-screen the prospect and make sure they are a good fit for your services.
5. Offer Time-Sensitive Deals to Increase Average Order Value
Lots of eCommerce shops have this next tip down. Offer time-sensitive deals so that they start wanting to spend even more money. If your customer feels like there is an urgency, they might spend more.
This is a great way to use the first-time offer tip. Create a temporary discount code that expires within 24 hours that they receive when they create an account or sign up for your newsletter.
Or, if you have an online course program with an open/close cart, you can offer an amazing deal to join a yearly VIP retreat or mastermind after the online course program is completed. Normally, it might cost $1,000 to attend the retreat, but since the person is buying the online course, it’s only $99.
6. Establish Order Minimums For Discounts
Another way to encourage people to spend more on your services is to create discounts that are only valid with order minimums. Lots of places offer free shipping on orders above $50, for example.
As an online coach, you could offer 20% off bundles of 10 coaching sessions.
If you speak at events, you can also establish a minimum order discount. For example, you can offer the group that has hired you for the speaking event a 15% discount if they purchase 25+ books. You can even take it a step further and up the discount if a greater volume is purchased.
If you are going to start offering discounts, figure that into your final prices and price the non-discounted services high enough that you can still make a profit when you lower the price.
7. Have a Loyalty Program
Loyalty programs are everywhere! There are lots of ways you can create your own. Maybe you can offer something like this, “Free coaching sessions after each 10th purchase.”
Keep track of all of your discounts and make sure that they cannot be combined in such a way that means you don’t earn a profit. Ideally, you want to only allow one discount at a time.
How To Upsell For Better Average Order Value
Honestly, bulk orders and upselling are the best ways to increase your average order value. What is the secret to upselling? How do you convince customers that they should buy more than they came for?
These four tips will help you be more successful at upselling to your customers.
1. Sell More Items Similar To Ones They Already Bought
First of all, you need to find a way to offer things that are similar to what they are already buying. If they are buying a business coaching session, maybe they will also want a website SEO coaching session too.
2. Meet Their Impulsive Needs
You’ll be more successful upselling when you make the product something they just have to have. Change these upselling ideas based on what’s trendy and hot at the moment. If lots of people are trying to learn about Pinterest, offer a Pinterest strategy call to your coaching package, for example.
3. Offer Product Discounts
People love discounts, so when you offer the additional items at a discounted rate, they will be more likely to hit “buy now.” Always price your services so high that when you offer discounts you are still making a nice living.
4. Offer Gift Cards Towards Next Purchase
Finally, you can also upsell by offering gift cards towards future purchases when they hit a minimum order threshold. If your goal is to earn $100 per order, then offer a $10 gift card when they order at least $100.
Higher Average Order Value: Final Thoughts
There you have it! By simply making every single order a higher amount, you will be able to increase your business revenue without having to work any harder. Brainstorm the ideas from this list and implement the ones that match your business the best.