In today’s video, I’m going to walk you through five tips on how to increase the average order value on your eCommerce store. Average order value, that’s just how much people spend on average at the point of purchase. It’s one of the most important metrics. And if you can increase that number, you’re going to have a lot of success growing your business.
Hey, it’s Chin Gregory. I’m the founder to CGM group. And if you’re new to the channel, make sure you go in and subscribe and hit the bell so that you’re notified every single time I make a new video. I make multiple videos a week, all of them on how to grow and scale your eCommerce business. So if you’re an eCommerce owner, and you’re trying to scale your business, trying to get to the next level, you’re not going to want to miss a video. So make sure you subscribe and hit that notifications bell.
So let’s talk about average order value, because it’s honestly one of the most important leavers in your business when it comes to scaling or growing any type of eCommerce business. If you look at the different metrics that we have available, we have traffic, we have conversion rate, we’ve got average order value, lifetime value and customer retention. Five very, very important metrics. Of those five metrics, the one that’s most important when it comes to scaling your business, average order value. Higher average order value, that’s going to mean a higher return on ad spend, which means you’re going to be able to invest more of your ads back into … Invest more of your profits back into your ads, scale the ads a lot quicker. So it’s very, very important when it comes to scaling. If you want to scale quickly, getting your average order value as high as possible is going to be one of your objectives. Now, with that being said, here are five tips to increasing your average order value.
The first method of increasing average order value is by offering free shipping whenever your customers hit a specific spend threshold. Okay. So for example, you’ve probably seen it before, free shipping on orders over $100, right? Works very, very well on increasing the average order value. Question obviously is, well, where should that threshold be? Here’s how you calculate it. Take your current average order value right now, add 30%, and that becomes the threshold. So if your current average order value is 100 bucks, then the threshold is free shipping for any order $130 or more. Real simple. Make that change, you’re going to see a lot of improvement in your average order value.
The second tip is bundling offers together or bundling products together. Okay? This works really, really well if you’ve got a lot of complimentary products. For example, I’m making this on a Canon camera right now. When I bought the camera, the camera’s on its own. I got a discount for buying the lens as well. Obviously I went ahead and bought the lens together. If they had sold the camera and the lens together as one package, it probably wouldn’t have got as much money out of me, but by the fact they were saying, “Hey, if you buy this lens, you get 20% off the lens as well.” Obviously that increased my average order value. Most people are going to buy the camera and the lens. So you’ve got complimentary products that you can kind of bundle together, really, really good way of increasing average order value.
The third way is by adding one click purchase upsells. So a one click purchase upsell is after somebody made a purchase, they put in their credit card details, on the very next page instead of showing them a confirmation page, you show them additional products, which they can purchase just by clicking one time. They don’t have to enter their credit card details again, because if you’ve got your system set up properly, you should be able to just click and it will immediately add it to their order.
This is huge. We had a client who had an average order value of about $68. Just by adding a bunch of upsells, we took them from $68 to $112. And at the volume they were doing, that added up to about an extra 700 grand every single year that they weren’t making it. No additional traffic, nothing else, just by adding this upsell. So it’s really, really cool. Look at some of your products. What potentially could your customers want to use after they buy their product? Or what type of products could make the product they’ve bought work even better? If we use the camera example, let’s say I’ve got the camera, I’ve bought the lens, then it could be batteries, right? Additional batteries. If I’m filming a lot, I’m going to need more batteries. Add an upsell for batteries, it’s going to increase the average order value.
The fourth way of increasing average order value is by using what’s called an order bump. Now you might have seen this around the internet. Some businesses are using it, but I don’t think it’s being used as much as it should be. Essentially what an order bump is, is usually on the add to cart page other complimentary products will pop up and it will say, “Do you want to add this to your order?” And it’s usually things that are significantly cheaper than the original product, but add value you to the product you are creating. So for example, let’s say you are in the paleo or keto industry and you’re selling keto food or paleo food, for example, then a paleo cookbook or a keto cookbook. Something that’s five bucks, 20 bucks, really good to be able to adding as an order bumps to add to the additional order. What we found is that the best order bumps are priced between 20 and $40. Those are the sweet spot. Over $40, you don’t get enough conversion rate from those order bumps. Under $20, they’re not doing enough to your average order value. So the sweet spot for those order bump is between 20 and $40.
And finally, the fifth way, or the fifth tip I’ve got for you today on increasing your average order value is by offering a discount for hitting certain spend levels. So very similar to the free shipping one, but free shipping you’re basically giving them free shipping. With this, you’re giving them a discount. So the discount could be five bucks off for every $75 you spend. 10 bucks off every $100 you spend. 50 bucks off for every $200 you spend. You get the point. That happens quite a lot in fashion websites and in retail. But it works really, really well because it just incentivize … People like to get discounts on anything. And they just incentivize them in spending more. So that’s offering some type of discount whenever they hit a certain spend level.
So this is the recap. Increasing average order value is my go to strategy for scaling an eCommerce business quickly. I’ve ordered different metrics that I’ve got, average order value is one of the ones that are most successful. Five ways to do that. Number one, offer free shipping when they hit a certain spend threshold. Number two, bundling products together. Number three, order bumps. Number four, upsells. I think I’ve gt those two mixed around, but either way. Three and four, upsells, order bumps. And number five, spend threshold discounts when they hit a specific spend threshold.
Now, if you want to see examples of how I’ve I actually applied this to real businesses, go to learnwithchin.com, where I walk you through a step by step strategy of how I’ve taken multiple businesses to six figures per month and some even six figures per day, and one of the big ways I did that was constantly increasing the average order value of every single one of those businesses. So that’s learnwithchin.com, if you want to see that free training and get the process for growing your business.
If you like this video, make sure you hit the like button. If you know anyone that would find it valuable, please go ahead and share it. And if you want to stay up to date on all the different strategies on scaling your eCommerce business, make sure you subscribe so that you’re notified whenever I release a new video. Additionally, if you have any questions, you got any comments about it, please comment below. Are you trying any of these out? Have you used some of these five? Which one of them do you see yourself trying? I’d love to hear your results. I’d love to see how you’re doing with this, because I promise you it’s one of the biggest ways, it’s one of the best ways to increase and help scale your business. So I really want you to go ahead and try it out.
That’s it for me. My name is Chin Gregory. God bless, take care, and I’ll see you in the next video.