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Increasing Average Orders

May 1, 2009
by Eric Leuenberger

Generating more revenue for your online store is undoubtedly one of the most important long term goals of any business owner. Careful planning and proper implementation combine to help achieve that goal.

Although many business owners have an idea of what they want to reach in revenues (just saying, "I want growth," or, "I want more sales," will get you nowhere), many do not actually put that idea into actual and measurable numbers. How can you plan properly to reach a goal if that goal has not been measured in the first place and has not been tested to see if it is reasonable? The answer is, you can't. You cannot manage what you do not measure.

I know you are looking for ways to increase order value, so let's skip ahead here. Just keep in mind that unless you have a plan, unless you have a reachable and realistic end goal, and unless all those figures are measurable, you might have a hard time getting anywhere fast. You likely will be able to increase your sales using these four strategies, but reaching your goal in the amount of time you wish may be difficult, if you have not planned properly.

Reaching revenue goals.

  1. Increase traffic to your site at your current conversion rate.
  2. Increase the customer average order value working with the traffic you already have.

I'll be focusing on #2 for this article. Point two above says that you can increase the revenue your store generates without increasing traffic at all, by increasing the average order value, based on the traffic your site already receives.

Here are four ways to increase your customers' average order value:

1. Increase Product Price.

This is the most obvious method of increasing revenue, yet you must understand what your market is willing to pay and be conscious of your competitors' prices.

You can offer a similar or same product at a premium price to competitors (I've done this a number of times with great success), as long as you differentiate yourself from them in some form.

You must make the customer see that the perceived value of your product is better than they would receive from a competitor. This can be accomplished a number of ways.

2. Cross Selling of Similar Products.

Cross selling products, just because you can, is a bad idea. I often see store owners cross selling unrelated products in an effort to increase sales. I ask them why, and the majority come back with the same answer: They are convinced that if the customer does not like the first product, they will click on another product that might interest them. This works when the products are related, but often has the opposite effect when the products have little in common.

The question I ask is: would you click on a pack of batteries that were being cross sold to you if the original product you were viewing was a shirt and pants? I doubt it, as the two are completely unrelated. The primary goal of a cross sell should be to increase the customer's average order value by offering them a related item which they can add to their cart, in addition to the item they are currently viewing.

3. Free Shipping Offers with Constraints.

It's no secret that free shipping works. In fact, the majority of Internet shoppers expect free shipping in some form. You can take advantage of this and also increase your average order value by offering free shipping for orders that reach a certain threshold. If you want your average order value to be $45, for example, then you may want to consider offering free shipping for all orders $45 and over.

4. Create product bundles.

A great way to increase average order value is to develop combinations of products that when bought separately would cost more. For example, let's say you sell Apple iPods. You have an iPod Nano for $149.95 and a car adapter priced at $54.95 (a separate cross sell). These items are likely to be purchased together, yet when purchased as individual items, a customer would have to pay a total of $204.90. By creating a bundled product, which includes both items for just $175, you increase your order value from what could have been just $149.95. Think of it as cross selling at a discount. Providing you've priced it correctly, your customers will see it as a deal that can't be passed up.

These are just a few examples of the ways you can increase the average order value of your customers, and increase the revenue your store generates. With proper planning and implementation, you can achieve an average order value with your current traffic levels that will put you well on your way toward reaching your ultimate revenue goals.

Eric Leuenberger is an ecommerce conversion expert and author of a leading Ecommerce Optimization blog (www.zencartoptimization.com). He coaches etailers, wholesalers, distributors and manufacturers to increase their website sales through online paid search advertising, targeted marketing strategies and website sales strategies. Contact him at 1-877-481-2323.

Topic: Business Strategies

Related Articles: online shopping 

Article ID: 1034

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