Average Order Value: Increasing Your ROI In Magento ®

How to increase Average Order Value in Magento

Regardless of which platform is used to develop an online store the owners always wish their business to be as profitable as possible. The specialists in Magento ® share ways of increasing your order value in Magento ® and the steps necessary to be taken by the users.

What "Average Order Value" is

The value of an average order is a sum of money that your customers are ready to spend regularly. Any store owner, whether their business is online or it is a physical store, must know that sum in order to adjust to its increases or reductions. This factor is directly proportional to the efficiency of your marketing strategies. If you have chosen a correct promotional scheme the value of your average order will grow. If not then your monthly customers' orders sum will remain the same or reduce.

It is worth mentioning that increasing your order value is one of the simplest strategies of a successful business. It is very difficult to always increase new clients' base and it is much faster and more convenient to make the existing clients buy more. There are several positive moments in this scheme:

1. You are insured against seasonal traffic reductions. Of course, if your store sells swimsuits you will have fewer orders in winter but generally, the value of the average order will stay the same as in summer.

2. The system does not require large financial investments.  In fact, it can become the source of increase ROI as people ended up making additional purchases that they would have otherwise avoided without the increase in the amount of the average order.

3. You better understand your customers, you know what they need and what they do not usually buy, etc.  This happens by creating a variety of packages and tracking which ones your customers deem to be more or less valuable in their sphere of influence.

Ways of increasing your average order value in Magento ®

In order to increase your order value per month, you do not need to perform any unusual actions. The following simple steps will be enough:

1. Group your products correctly. Depending on the store directivity you can use various product grouping schemes. For instance, offer ready sets or clothes together. A cell phone can go with headphones and cover in a set, and in case of apparel, a set may include a dress, a handbag, shoes, and accessories. In order to attract attention to your sets of products (containing several items), you may offer discounts or other privileges for them (free shipping, promo codes for further orders, etc).

HOT TIP:  Why not include related but non-seasonal items within a package.  For example, you have a winter wear package to offer that includes sunglasses.  While shades are less needed in the winter it will help people remember who you are at all seasons as the weather begins to change and they go in search of their favorite specs which happen to be the ones that came from the package purchased from you.  This is especially effective if you are able to personally brand the items so that when they are found they directly remember exactly where they were able to secure them from.

2. Use Up-Sell and Cross-Sell products. Always offer your customers additional products even if they are not related to the items they order. E.g. most customers believe in the strategy of "better quality for higher price", so offer them similar but more expensive products (Up-Sells), or return to the Cross-Sell products.

HOT TIP:  When someone has opted into securing their credit card in order to acquire an item or items from your site they are your perfect customer.  Why?  Because they have already opted for purchasing your products.  Why wouldn't these self-same people be your absolute best target for suggesting additional items too?  The two most common ways of doing that are up-selling and cross-selling.

Up-Selling:  Suggesting a related higher ticket item that compliments the purchase that is being made.

Cross-Selling:  Suggesting a related item with an equivalent price-point to that of the purchase that is being made.

If your theme allows, create a page of 3 to 5 items which offer a cross selection of both up-sales and cross-sales that are related to the purchase being made.

3. Offer discounts and bonuses to your customers. Many large online stores actively use this strategy and it helps them to increase their sales significantly. You can make sale days or offer discounts to subscribers. Various bonus programs are also successful (e.g. a client made an order for $100 and he receives $10 bonus for the next purchase). You can also offer your clients additional services or discounts if they make a wholesale purchase or order a set of products at once.

HOT TIP: Why not create a frenzy with a giveaway or drawing.  One such idea could be to configure your site to honor a major discount for anyone that refers 3 customers that purchase more than a given amount of goods such as $25.

4. Monitor the requirements of your clients. You must know their wishes, this pleases them a lot. When they open your site it is desirable that they see recommended products, you may use special extensions for Magento ® to add that option. Let’s say a customer likes smartphones, so you can offer them brand new phone models. Another very efficient system is built on a determination of customer’s geographical location and considering climatic data of specific regions (this system especially suits online stores selling clothes).

HOT TIP:  Create a client-centered survey that asks them about various aspects of their shopping behavior with your store but in a fun and insightful way that seems more like a game than simply another boring survey.  Even enter all survey takers into a drawing for an expensive product that is part of your eCommerce store offerings.  Even if you lose on that one purchase you gain targeted eMail addresses that you will be able to stay in touch with as you build long-lasting business relationships with your visitors.  Done right, this is sure to lead to many healthy purchases in the days, months and years ahead.

5. Develop a precise refund system. Any customer will trust your store more if you have strict rules for return or replacement of products which did not fit customers for whatever reason.  Refunding costs to customer’s credit card should not be seen as a hassle. Try to make this process as easy and fast as possible and do not create time-consuming schemes of filling out paperwork.

Even if you are operating from a loss with this one purchase, the easier it is to return items the greater the possibility that your customers will remember you for a long time to come.  In fact, if you do something to go above and beyond the call of duty you're likely to be the talk of the town in a very positive way.  When it comes to word-of-mouth advertising there is absolutely no better way to get your stores eCommerce message out to the masses.

Conversely, if they experience unnecessary hassles with securing a refund that too will be talked about and can become the reason that other potential buyers refuse to make purchasing decisions with your stores' merchandise.

Negative or positive interactions with you, your store and its associated products.  It's up to you.  What you do when customers need help truly can determine which type of publicity you receive.

Concluding Thoughts About The Value of Your Average Order

You may learn more details about this subject in the book “Five Strategies for Increasing Your Average Order Value” written by developers for Magento ®. We would highly appreciate if you share your comments about increasing the averages of your order value in Magento ®.