What if we told you that the best way to boost Average Order Value (AOV) is to stop focusing on AOV?
Yes, it’s counterintuitive. But when your brand tries to increase AOV just for increasing AOV’s sake, it can often be ineffective and even off-putting for consumers. After all, nobody wants to feel like they’re being pressured to spend more money.
Luckily, there’s an easy solution to combat this — and it all boils down to intention. Your subscribers are human first and foremost, and as is the case with any other relationship, they need to feel valued and appreciated.
By shifting your brand’s attention away from solely increasing AOV and instead focusing on adding real value to your subscribers, you can organically heighten engagement, improve your customer retention, and ultimately increase your AOV.
Note: Don’t miss crucial subscriber data by using Littledata’s app with Smartrr to capture checkout events through client-side and server-side tracking.
Here are the retention-driving, value-adding components that your eCommerce brand should target, which will subsequently lead to increased AOV:
Utilize Personalized Recommendations & Exclusive Add-ons
Cross-selling and upselling are the two main strategies that typically spring to mind when anyone talks about increasing AOV.
When considering a value-adding approach for your subscribers, a different and more effective way to think about cross-selling and upselling is through personalized product recommendations.
In general, personalization is becoming more essential (and powerful) for eCommerce businesses. About 71% of consumers are expecting a more personalized experience from the brands they interact with — so playing up an individualized approach is an effective way to keep subscribers engaged (and organically encourage them to spend more).
Lean into your subscriber data to make specific, personalized recommendations to your subscribers based on products they’ve purchased in the past as well as products that other subscribers have previously purchased together. This way, you’re only recommending highly-relevant products that are significantly more likely to delight each subscriber.
And the best part is that happy subscribers are proven to spend more — which increases your AOV. 54% of retailers reported that product recommendations were a key driver of AOV, and leaning into personalization has been shown to account for a 25% revenue boost for DTC brands. In other words, prioritizing the end consumer is an evidently lucrative move.
As for an effective location for cross-selling and upselling — a good tactic is to display one-time add-ons in your customer account portal. And to take your add-ons to the next level, you can add a layer of exclusivity.
A key component of keeping subscribers engaged is by reminding them as often as possible that being a subscriber unlocks perks that one-time purchasers don’t get.
Featuring a subscriber-only exclusive one-time add-on creates the sensation for subscribers that they’re VIPs, thereby increasing the likelihood that they’ll want access to the product. We’ve seen some businesses even offer merch as a one-time add-on as an additional way to level up the overall brand experience.
ARMRA offers a branded tote bag as one of their one-time add-ons.
Lean Into a Loyalty Program
Loyal customers are the bread and butter of subscription brands, and that’s because they’re accurately known for being the most profitable. Just a 5% increase in customer retention rates has been shown to cause profits to spike by 25% to 95%, and loyalty programs specifically have been proven to increase AOV by about 14%.
Of course, loyalty isn’t something that can be created with the snap of your fingers; it has to be earned, and that takes time. But that doesn’t mean that there aren’t strategies to help the process along.
Loyalty programs are one of the easiest and most effective ways to encourage retention. A strong loyalty program provides valuable rewards as subscribers continue to stay and spend money. Consumers can accrue points with each purchase and exchange them for free products, discounts, exclusive items, and more.
Loyalty programs also put subscribers in control of their experience, allowing them to select whatever is most valuable to them. Take L’AMARUE, for example. Subscribers can decide to redeem 100 points to quickly unlock $10 off, or they can delay gratification and choose to save 475 points for The Face Cream.
By associating spending more money with tangible rewards, you create a positive feedback loop each time your loyal subscribers buy additional products. Much like the name implies, this encourages subscribers to remain loyal to your brand and keep coming back for more.
Offer Free Shipping
Free shipping is a low-lift strategy to add value to your customers, and the ROI is significant. Consumers are fairly adamant about despising shipping costs. One study found that 77% of consumers have previously abandoned a purchase altogether if they weren’t pleased with the shipping options, whereas 84% went through with a purchase specifically because shipping was free.
Additionally, a different study found that 90% of online consumers said that the ability to unlock free shipping directly motivated them to buy more.
For one-time purchases, one of the best value-adding strategies is to institute a free shipping threshold. If you provide free shipping for orders over $50 and a consumer spends only $43, they’re way more likely to toss on an additional $15 product to access free shipping.
Looking beyond one-time purchases, it’s a good idea to offer free shipping for all of your subscribers. For one, this creates a sense of exclusivity associated with your subscription offering, which is a great way to foster loyalty. But it also gives subscribers a sense that they’re saving money with each purchase, especially if you’re transparent about these savings.
Chillhouse lists “Free Shipping, Always” as the first bullet beneath their PDP.
Strikethroughs or clear deductions are an excellent way to illustrate savings. At every chance you get, be sure to highlight the amount of money subscribers save by not paying for shipping. This subconsciously makes your consumers feel as if they have a little extra money to spend, and it encourages them to add on another item. Once again, beginning from a place of providing consumers with real value results in the opportunity to boost your AOV.
Implement Product Bundling
Product bundling is the ultimate paradox. By grouping products together and offering a discount, you give subscribers the perception that they’re getting more for less — when in actuality they usually wind up spending more than they would have if the products weren’t bundled.
That’s because the concept of saving money incentivizes consumers to buy a bundle even if it includes a product or two that they wouldn’t have purchased separately. And an added perk of getting subscribers to try a product they might not have tried is you increase the likelihood that they’ll love the new product and come to rely on it, purchasing it again in the future as a result.
Here are a few strategies to help optimize your product bundles:
- Just like with free shipping, be sure to make your subscribers’ savings evident on your PDP with strikethroughs and/or different colored fonts.
- Allow subscribers to customize their bundles. This way, you can play into personalization, flexibility, and ensure subscribers get exactly what they need.
- Monitor your analytics to see which items are commonly bought together to identify future bundles.
Product bundling has repeatedly been shown to increase sales, and optimizing your bundles to provide your consumers with the best value will only further drive revenue.
Highlight Trending Products
While we’re on the topic of customer account portals, another way to drive engagement and boost AOV is through utilizing trending upsells.
Generally speaking, tacking the word “trending” next to a product automatically adds value to it by tapping into social proof. If subscribers believe there’s buzz around an item, they’ll be more likely to want to try it.
The exciting part is that there are myriad ways to creatively leverage trending products in a way that adds value to your subscribers.
For example, Wholesome Story took advantage of trending upsells to provide educational factoids about a lesser-known product. This “Did You Know” angle spreads necessary awareness before subscribers buy a new product, taking out the need for any research.
Nooma, on the other hand, used their trending upsells as a way to promote a rotating flavor of the month in order to keep subscribers on their toes and give them the chance to sample something new. This adds a level of freshness to subscriptions and keeps customers returning to their account portal each month to see what the new flavor is.
You can also go in another direction and feature a relevant influencer’s favorite products. The endorsement will only further boost social proof, which automatically adds value to your brand as a whole. After all, 61% of consumers trust influencers’ recommendations.
Wrapping Up: Adding Value to Consumers Leads to a Higher AOV
All in all, the best way to approach increasing your average order value is by prioritizing and delighting your end consumer. By creating the best possible experience for your subscribers every step of the way, you’ll encourage retention, grow customer loyalty, and naturally drive revenue as a result.
This post is the product of a partnership between Littledata and Smartrr. Check out Littledata to optimize and scale your DTC brand with key data insights including subscription data, and visit Smartrr to level up your subscription offering and increase customer engagement.
– Written by Gaby Tegen
Gaby Tegen is the Co-Founder & CEO of Smartrr, the leading Shopify subscription app built to increase LTV. In addition to offering out-of-the-box subscription models and a branded customer account portal, Smartrr elevates the post-purchase experience with loyalty rewards, referrals, bundles, and more. Recently, Smartrr raised $10M in Series A funding to further their mission of becoming the first comprehensive LTV platform in the Shopify ecosystem. For more information, visit https://smartrr.com/.