About This Episode:

It can be difficult to convince new customers to purchase from your site the first time they visit. Instead of driving traffic and new visitors to your site, why don’t you focus on the customers you already have?

This week, Jon and Ryan share how you can leverage nine proven strategies to help you increase average order value. By improving the average order value of your website, you can grow your business without having to invest heavily in additional marketing and advertising. 

Listen to the full episode if you want to learn:

1. How to find out your customer’s needs 
2. Nine proven tactics to increase AOV (with examples)
3. Why social proof is such a powerful tool
4. How to execute limited offers properly
5. Why it’s important to remember post-purchase offers

If you have questions, ideas, or feedback to share, hit us up on Twitter. We’re @jonmacdonald and @ryangarrow.

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Episode Transcript:

Announcer:
You’re listening to Drive and Convert, a podcast about helping online brands to build a better e-commerce growth engine with Jon MacDonald and Ryan Garrow.

Ryan:
Hi Jon. Thanks for making some time today to connect on this wonderful topic you’ve outlined. Pretty excited about it. We haven’t talked a lot about average order value before. Surprisingly, it is a very large piece of e-comm where we both spend a lot of time, but it definitely lies more on your side of the equation. If you want to increase average order value with traffic, just increase your prices, but that might decrease your conversion rate, but your AOV side, hey.
But in talking through this with you, and one of the things you’ve mentioned, I think in a lot of presentations is a great analogy to AOV to kind of kick people’s brains off and thinking through average order value. Is the advice you’ve heard before growing up, or maybe not, but I’ve heard it a lot. Never shop hungry, and when I do, it’s not pretty.
If I go to the store hungry, in Costco, I just eat everything and then I end up buying everything as well. But tell us how you’re bringing that analogy into AOV and into customer experiences on the website.

Jon:
Fair enough. Yeah. I have this bad habit of going to the grocery store hungry. I don’t know why. It’s, I dislike grocery shopping completely, but if I get hungry and I go, then maybe there’s some value. Like you said, if you’re going to Costco you get all the free samples.
But really, I think the idea here is people who go with an empty stomach and they’re hungry end up leaving with a lot more, right? And they just load up their cart with everything that looks good and it’s a store owner’s dream. You can do the same for your e-commerce store, and this is what I want people to get out of today’s episode.
You can identify these things that will make your shoppers, I’ll put it in air quotes, you can’t see it, but “hungry” for your products so that they abandon their lists while they’re on your site. Why wouldn’t you do that? So there are tactics that you can deploy. Some of these are psychological, some of them are just plain easy to implement, but really most e-commerce marketers just ignore this. They ignore the metric.
Number one, you hear about it from some e-commerce managers, perhaps folks do typically know their AOV, but you’d be surprised how many times I ask folks what their AOV is and they have to go look it up. They just don’t know. But I think the idea of this is really, instead of just driving more traffic and new visitors and increasing your customer acquisition costs, you really can draw more value out of the traffic you’re already delivering by increasing your AOV and you don’t even have to touch your conversion. I know… That’s the other thing. I mean, this is a metric that’s on top of conversion rate improvement. So I want to share a few tactics, nine to be exact.

Ryan:
Nine, I like it.

Jon:
That you can utilize to motivate customers to buy more.

Ryan:
This is quite a few options just from a high-level. Nine options. There’s got to be something for almost every single website out there for e-commerce-

Jon:
That’s it. Yeah.

Ryan:
… in your list here. So I’m excited to chew through some of these, but other than when you say hungry, I’m like, “Well, I would just sell food and then I would get more aggressive on my bits on Google the hour before lunch and the hour before dinner.”

Jon:
I love that idea.

Ryan:
To get more traffic when they’re hungry. But how do you equate hungry on a site where they’re actually not likely buying food or actually shopping with pains in their stomach from hunger?

Jon:
Yeah. Well, great. So we can put that analogy aside for now because this is where it starts to maybe get a little muddy. But the reality is, what I mean is by you’re considering your audience’s needs, when they’re in the grocery store and they’re hungry, you’re meeting their needs where they’re at, they want food, right then you’re meeting that need.
So how do you consider the needs of an online shopper? What are their purchase motivators? What is going to motivate them? It’s probably not a hungry stomach unless, well, even if you’re e-comm or unlikely to get it quickly, maybe if you’re Instacart or something, but why should they be hungry for what you’re selling? Why should they really want that product? How can you satisfy that specific need that they have right then? And once you’re able to pinpoint these, you’re going to have a much better understanding of how to tailor your messaging, and that’s what a lot of this is about.
Some of it’s influence through psychologic tactics. Some of it’s just changing your messaging. So the first thing you really want to do is just get started by talking to your customers. I tout this. I feel like every episode I’m talking about, “Go talk to your customers, go talk to your customers.” But you never have any idea about why they’re interested in your products, what their motivators are unless you talk to them. So you really want to open up that direct line of communication and you should run a focus group perhaps and just ask them. “Why are you interested in this product?” “What makes you interested?” “What are you considering as alternatives?” There’s a lot of questions like that that you can consider that will help you tailor the rest of the tips that we’ll talk about today.
User testing is a great way. So send people to your site who match your ideal customer profiles, ask them to complete some tasks, record their screen and their audio and ask them to talk out loud about the experience they’re having. You’ll get a lot of great information. And we have a product that’s The Good, UserInput, userinput.io that you can go to and get this user testing done. And that I think is really valuable to just talk to your customers. So much so that we launched a product.

Ryan:
Oh, yeah. That has been taking off like wildfire inside Logical Position. Not to tout a product of yours that much, but it is very popular.

Jon:
Yeah. You get a lot of great info out of it, right?

Ryan:
Yeah. I think through, when you’re talking about why somebody’s buying a product, I think often in e-commerce, outside of the basic needs, if I’m buying Band-Aid, I’m kind mean obvious there’s something there. But my wife is a good example of this because she just enjoys shopping, so she’s different than me. I shop when I need something and I just get in, get out, I’m the weird one online.
But Hunter Boots for her, those are rain boots, and guess what? She’s not there because she needs rain boots. She’s there because she wants the status of a hunter, or she likes the look and she doesn’t go walk in the rain. She drives kids to school, drops them off, doesn’t get out of the car.

Jon:
Hey, now she might step in a puddle.

Ryan:
Nah, doubtful. But I go buy rain boots, she’ll buy them in the summer just because that she found one she liked or wanted it, but that was there satisfying a very different need for her than just the actual use of the product. I think that’s where many brands can get confused.
Hunter’s big enough, fashion brand, they’re probably beyond some of that. “We sell rain boots to keep people’s feet dry.” But growing up or starting that brand, you would’ve maybe thought you were selling rain boots to keep people’s feet dry. Maybe that’s where you started, but you became more than that and there’s different needs on your site then. So most brands, I think if you’re not doing that already, even if you’re not even thinking about AOV, talk to your customers and a conversation, not just an email, I think, pick it up.

Jon:
Yeah. Oh, for sure. You need to understand. You need to see them. And that’s why we love the video portion, right? Really helps you understand what they’re thinking and that’s important.

Ryan:
Okay, got it. So we understand hopefully at this point what they’re satisfying when they’re on your side or trying to satisfy, what’s the next thing we need to be considering when increasing AOV.

Jon:
Well, the next thing is cross-selling complimentary products. So you just talked about rain boots. So I think here you’re thinking someone who’s interested in rain boots might be interested in a jacket or a waterproof hat or a pair of rain pants, they may. Hunter may be selling for be to your wife because she loves the look, but it rains a lot in Oregon. She probably also needs something to keep her dry.
So this cross-sell opportunity is one I don’t see used enough. And it really you want to use cross-selling throughout the entire site where it makes sense. So many people focus just on the product page or checkout and use it in those two areas.
I like people to think of it as a service that they’re providing, right? This is not an upsell technique. It is, in a sense. But if you treat it just like an upsell technique, you’re going to throw whatever products you think are best on that page. Instead, you want it, think of it as a service you’re providing. This is complimentary. This is something that I’m trying to be helpful for the visitor. If you do it consistently, you can watch your AOV, just really respond to that being helpfulness.
So how do you do this? Well, in addition to having it throughout your site, you also want to create bundles of items that really just make sense together. So if you know they’ll need a reel fishing line in bait to go with that new pole, just don’t let them forget it. Put all of those products together in a bundle.
Now, a nice thing about bundles is it makes it easy. So that’s being helpful. But you can also then kind of deploy another tactic, which don’t often recommend, but you can sell a bundle at a bit of a discount over the products individually.

Ryan:
The discount came out of Jon’s mouth.

Jon:
I know. So what I’m saying here is you don’t overtly say it’s 20% off. You say it’s a better deal if you buy all of these together right now, and that will increase your AOV. One way to find these is to look for trends in your order history. What are people already buying together that you hadn’t thought about? What are their connections that you’re missing? And let consumer actions tell you what bundles to put together.
I guarantee you there’s product combinations that you haven’t thought of, but your target audience is buying together. So just look through that order history, identify the buying patterns, and use that to inform your cross-selling efforts.

Ryan:
Now, one of the things you’ve talked about quite a bit before is reducing friction to check out. They’re there to check out or do something, so do that. So where’s that fine line that you generally want people to be aware of? In like, “I’m trying to cross-sell, cross-sell, cross-sell to get an AOV.” And I could muddy the water too far to conversion that it just doesn’t happen.

Jon:
Yeah, I think that’s a great point. Obviously, if the more helpful it is, the less it’s going to be an annoyance to the shopper. So really that’s why I focus there first and I said, “Hey, you really need to be helpful with this.” And that’s how you should be thinking about it as a service.
If you’re thinking about it as a service, your intentions will be correct and your customers will notice that. But if you think of it as, “I need to stuff the cart as much as I can.” They’re going to be annoyed by that. And this is unfortunately, the poor implementations I see most, where brands are just like, “Oh, you like these shoes? You probably want another pair of shoes.” It’s like, “No, no, no, no, no.” An upsell would be, “Oh, I see you’re looking at a pair of shoes. We have these socks that are matching the same color. It goes well with this belt.” Et cetera. So that’s really how you want to be thinking about this, is how can you be helpful?

Ryan:
So just check your motivation to a degree. Yes, you want a higher AOV. Yes, you want higher conversion rate, et cetera. But if you start with, “I just need to help people, they may say no, that’s great but I’m going to make sure they understand what looks good together, because people like me don’t understand which socks go with which suits or which belt. So you’ve got to help me.”

Jon:
Yeah. It’s a service. Providing a service for the Ryan Garrow of the world who can’t match.

Ryan:
Yep.

Jon:
Clothing.

Ryan:
We need help.

Announcer:
You’re listening to Drive and Convert, a podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers. And Ryan Garrow of Logical Position, the digital marketing agency offering pay-per-click management, search engine optimization, and website design services to brands of all sizes.
If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

Ryan:
Got it. Okay. We’re satisfying a need. We’re going to be helpful in that process in making sure they understand what else could go with that in an upsell scenario. Are there other ways we can upsell? Just trying to be, I guess, helpful.

Jon:
Yeah. The next on the list is upselling an upgraded item. Upgraded version. What I mean by that is when you’re buying coffee filters, you could offer the 50 pack and next to it you could say there’s 150 pack, right? So I use this example because I got hit up with this and fell victim to it, and I say fell victim, but they got me because it made sense.
I make coffee almost every day at the office. I need coffee filters. 50, yeah, sure. Okay, great. That’s what I went there for. But I saw for $5 more, I could get 150. So now mind you, that the 50 pack was 10 bucks. So I was getting three times the amount for $5 more, and it just made sense financially for me to do it. But also it was a convenience factor because now I was like, “You know what? I’m not going to come back here and order this in 50 days. I, now, 150 days.” That’s more time savings for me. I’m saving money and I just don’t have to think about it again. Done.
So a lot of people think an upsell needs to be a bundle, et cetera. What I’m here to say is an upsell could be an upgraded version of the item. So you could also upsell a premium support, something of that sort, depending on your product.

Ryan:
Now, in the coffee filter scenario though, you now don’t have to come back and buy again. So your lifetime value changes, and there could be in theory, a risk that you forgot who you bought from three months because you were buying a 1-month supply, and then three months later you’re like, “I don’t remember who I bought. I got to go search coffee filters again.”

Jon:
Right. And that the solution to that, a lot of people will use subscriptions, right?

Ryan:
Okay.

Jon:
So that, I think that’s a good opportunity, but it does not increase your AOV necessarily to have a subscription. That’s what we’re talking about here. So if you’re a product that is a recurring use product, then you probably want to go the subscription route or make sure that your email’s dialed in so you’re getting back in touch with them.
Or what I love to see lately is a lot of even Amazon sellers are doing this somehow that are fulfilling their own orders. They’re putting in a little flyer or business card size thing that’s like, “Hey, when you’re ready to reorder, here’s how you do it. Here’s a QR code.”

Ryan:
To our website.

Jon:
Yeah. Right.

Ryan:
It’s illegal per Amazon’s terms.

Jon:
From Amazon’s perspective, I agree. But I actually appreciate it because, and I even brought that up because the filter company did that. And so not to, I’m not going to name any names, I don’t want to go and kicked off Amazon, but what I say is, what I’m going to say is they did that and I actually just left a little business card size thing with the filters, and when I needed more, I can just snap the QR code and be right there.

Ryan:
Yup. I like it. Okay, so upsell a better version or different version, more expensive version of the product. All right.

Jon:
Yeah. Next is to amplify social proof throughout the entire customer experience. So everybody knows social proof works, right? It’s not a secret, but there are ways to use it to increase AOV. Obviously we tend to trust our peers more. When Ryan has ice cream and it’s like, “You got to try this flavor of ice cream.” I’m inclined to try it more than just seeing it on TV in a commercial. All right?

Ryan:
Or maybe wine.

Jon:
So, maybe wine-

Ryan:
That’s were my palate, might be better.

Jon:
Yeah, we’re [inaudible 00:15:19] these wine as examples. Yeah, that’s fair. So which we need to get that wine tasting on the calendar soon.

Ryan:
We do.

Jon:
So really, here’s some ways to think about this. First of all, highlight customer reviews and testimonials. Pretty simple. Get the social proof on your site, okay? Include earned media from recognizable brands. Now, this is more than just putting the logo of the morning show or whatever you want to call it on your website. Actually include the clip of when you were on that morning show with you talking about the product.
What happens we found, is that a lot of brands will just include the logo of the magazine they were in or the TV show they were on, whatever. And then everyone just assumes without any proof that you advertised during that show or in that magazine. So if you are truly featured, prove it. Show me a snippet, show me the quote from it, show me a video of you on the show, et cetera.
This is really common with Shark Tank. A lot of companies who are on Shark Tank will inevitably use social proofs that they were on Shark Tank, and it does increase conversions and average order value. So another thing you can look at here is certifications and trust badges. So I know we’ve talked about this quite a bit, but social proof throughout that customer experience, not just in the checkout, will help increase AOV.

Ryan:
Now, do you just put that social proof next to a bundle or an upgraded one to get them to consider a different product or add more stuff to it?

Jon:
That’s fair. I think really what we’ve seen is the correlation, just between having social proof and having a higher average order value, because people are going to feel more comfortable spending more with you because they’re willing to take more of a risk because of the social proof.

Ryan:
So it kind of sits alongside the upsell, cross-sell stuff and allows those to work more effectively to that.

Jon:
Exactly.

Ryan:
Okay.

Jon:
Exactly. And it reduces the barrier of me saying, “Wow, should I spend $50 with these folks?” Or, “Should I spend a thousand dollars with these folks? Well, I’m going to start with the $50 because I don’t really know and trust the product. I want to see how that $50 product is. If it’s a quality product, then maybe I’ll come back and spend a thousand dollars.” So really what you’re trying to do is lower the objections and that helps increase AOV.

Ryan:
Got it. Okay. I bet DJ takes that from you and leverages that. DJ, if you’re listening, social proof buddy. Okay. And you’ve mentioned discounting carefully, which is an incentive, and that’s your next point here is incentivizing without devaluing, which just means you have to be careful about your incentives.

Jon:
Yes. You really have to be smart about it. So if you just rely on an offer that promises a massive 25% discount, honestly you’re just going to hurt your AOV in the long term. You may get people to come in, but it’s just not going to work. So there’s some good examples out there of this though, how to incentivize.
Nordstrom is known for doing this amazingly well. They’re known for not just their pricing strategies but their free gifts. I don’t know how many times I’ve bought something at Nordstrom, I get a free gift, or every single time my wife buys any cosmetics at Nordstrom, she comes home with free gifts. And it’s interesting because we all know what Nordstrom’s doing is they’re giving away samples that they already would receive for free from their distributors, but they’re packaging it up and they’re making it a cool message around how they’re going out of their way to give you something special, and it works.
So there’s a few ways that you can do this. So you can incentivize without devaluing your brand by offering a free gift with purchase at a certain threshold. You’re not doing a discount, you’re adding value. Again, it’s the old adage, I say all the time, add something, don’t subtract. So the first step, the easy button, everybody subtracts a dollars or percentage. If you can’t do that, let’s play the game of constraints. You no longer can subtract to add value. You have to add, actually add to add value.
So what do you do? Free gift with purchase. And you set a threshold, if you spend over $99 or over a hundred dollars, and maybe the best thing to look at here is what is your current AOV? If your current AOV is $90 and you want to get it to a hundred, set that threshold at a hundred and watch you reach that pretty quickly.
Set up a loyalty program. This is a good one where you build points, people can come back and use those, but you’re gaming the system. This is what airlines do all the time. I’m Diamond on Delta because I flew so much last year, but here’s the thing.
I know, I’m going to get bumped up, if I buy an economy class ticket, a hundred percent of the time I’m going to get bumped up to Comfort Plus. But if I get bumped up, I don’t get the extra miles for doing that, so I’m going to lose my status. So instead I just pay for the Comfort Plus, even though I know I’m going to get it because I want the extra miles and et cetera that come with me paying a little bit extra for it.
And so that loyalty program aspect just works, and I now I’m locked in. I only fly Delta because of the status. So you know the program works in multiple ways, and then even giving a buy one get one free deal on certain products, it can work extremely well.
So again, it probably costs you less to give a product away than it does to discount, and it certainly costs less in the mental aspect for your visitors around how they think about your brand, because now they’re not going to think of you as a discount brand. They’re going to think of you as, “Oh, I’m getting something free. This is cool.”

Ryan:
On the BOGO, you would do something like, I’m looking at product A, it’s 50 bucks. Would it be like a banner? Like, “Hey, right now there’s a BOGO on our $75 products where you buy a $75 version of that 50 and you’re going to get something free.”

Jon:
Yeah. And again, Nordstrom does this all the time where they offer maybe a 25 milliliter size of lotion and then they offer a 75 and they say, “If you buy the 75, you get a 25 for free.” Or, “If you buy the 75, we’ll give you another 75 for free.” So then you end up getting double. But if you just buy the 25, you don’t get anything, right? So they’re really incentivizing you to step up.
Now, the margins on those products have to be high for this to work for the retailer, but when you have a high margin product, especially a consumable, this can work really, really well.

Ryan:
No, I agree. I think that’s a good way to present that.

Jon:
All right. Number six, elevate your personalization. So this is product recommendations, typically, I know we talked a little bit about this, but a personalized experience for your customers is just so effective. This is something that you really need to be thinking about. Now, it goes in line with what we talked about earlier. This is something that plays along the other ones and it has the influence factor. So personalized offers based on their order history. This is an easy one.
If somebody you know purchased organic dog food from you, they’re probably going to love you notifying them about organic dog treats. So you know they want organic products, give them more organic products. But if you’re going to recommend new products, you have to make sure they’re relevant to the individual needs. And I think that’s what’s really important here is again, you’re doing a service. You’re not just trying to sell more products. So think of it that way.
Display frequently bought together recommendations. This one, I see happen a lot. It’s easy to automate this. And the reality is there’s usually a really good reason why certain items are bought together. So play that, right? Play it up. Maybe people love almond milk with their coffee, so throw a box of almond milk in if you buy coffee beans. These type of recommendations can work out really, really well.
So also use these to personalize email campaigns. This is one I see not happening often enough. If I buy a product, you know what I bought, and Klaviyo, et cetera, make this so easy. So utilize the tools that are out there and take that extra step and personalize your email campaigns. Integrate these product recommendations into your email marketing strategy, and you will be helpful for consumers. And they will come back and buy more and buy a larger bundle.
They’re like, “Oh yeah, I need to go back and buy more of those coffee filters, but while I’m there, I see that they also have an offer for beans that I might like. Okay, I’m buying filters. It’s obvious I’m going to need more beans eventually.” So that’s something that you could market.

Ryan:
And this technology is advanced enough that it’s become very good. And I would think maybe five years ago it was a little younger, it may not have worked as well, but now you can get the same system to populate your site product suggestions as well as populate your email.
Listrak, I know does an automatic personalization on the site. You go to the site and you’re seeing a specialized portal for you on the site. Also plays into CRO, conversion optimization. When you have somebody seeing a personalized site, you’re basically taking the Nordstrom example and making the site a personal shopper for you essentially, and think of it, and that’s where the service comes into play. You are trying to serve these customers and give them things they’re going to be interested in, not ram products down their throat because you have excess inventory.

Jon:
It’s so true, and I think that it’s as its own tactic works really well, but combined with a lot of these other things, I think you find that it works even better, so. All right, so next is offering free shipping, but setting that to a threshold. And what I mean by that is look again at your average order value it is now, and cite free shipping right above that number and watch your average order value climb up. This is one we see a lot.
Now, it doesn’t work in perpetuity, meaning you can’t say, “Oh, our average order value is a hundred, I’m going to set it to 110. Oh, we hit 110, let’s go to 125.” Eventually it does taper off, but it is a good way to juice your average order value and game that a little bit. In fact, according to a survey conducted by return customer, 93% of people prefer free shipping over other types of discounts. 93% would rather have free shipping than anything else.
So how do you do this? Well, a lot of people are just abandoning their carts because they get to the checkout page and they see that added cost of shipping, and they’re just like, “Well, that’s not what I wanted to pay.” And so they leave, but we are able to help push people through that checkout and incentivize them doing so by setting that shipping threshold a little higher than your current AOV.
So a great way to do this is Skims offers free shipping in the US for all orders, every $75. If you go to their site, most of the items are under $70. So what happens is you end up having to buy two items to get free shipping, but then psychologically you look at that and you say, “Oh, well, okay, so really yes, I’m saving $5, but I’m also saving whatever the shipping cost is. I might as well put that to the new product.” And then you start doing the math and you’re just like, “Yeah, this is, I’m getting basically a deal.” And so consumers look at it that way. It kind of psychologically turns from a offer of free shipping to, “Now, I’m getting a value because I’m getting this other product for less because I’m not having to pay for shipping.”

Ryan:
That $5 shipping is a sunk cost. I have to pay that if I want the product.

Jon:
Right. And then a survey conducted by comScore and UPS found that 52% of Americans will add items to their cart to meet the required amount out to be eligible for free shipping. 52% will do this.
So if you think 93% prefer free shipping over any other type of discount, and then 52% will actually take advantage of it, that’s a hell of a way to boost your AOV.

Ryan:
I get into the shipping conversation a lot, because it’s a frustrating thing for e-comm business owners because they’re paying for shipping regardless of what the site is doing. There’s no way to get around UPS, FedEx, USPS, they’re going to get banned. They don’t offer free shipping.
And a lot of companies are stuck in the old way of thinking through shipping maybe 10, 15 years ago where, “Hey, I have a really good UPS rate. I am marking up my UPS rate to make that a profit center for my business.” And then they get addicted to that and say, “Oh, well, that’s our revenue. We can’t take it away.” That company will likely be drastically smaller three, four years from now.
Because people are not going to accept that they’re going to become more and more familiar with how much things cost to ship, and they’re going to start shopping you, if you have shipping charges on your site and it gives you the opportunities to pay for a click, get them to the site, get them to go to the cart, get pissed, go back to Google, find a competitor. And when you look at Google shopping, which is still for most of your brands listening, one of the best ways to get new visitors to your site, Google’s algorithm favors lowest total cost.
So he doesn’t care if your widget is a hundred and your shipping charge is $10, but somebody is selling with free shipping $105 widget, they have a lot of benefits on Google in beating you in shopping because their total cost to purchase, that’s 105 versus your 110. And so it’s better for you when it comes to shipping, find ways to give free shipping, even if you have to increase your pricing a little bit, be smart about it by doing some research with your competitors, but I am a hundred percent into that 93%.
I hate shipping charges and I have ownership in a shipping company. I know people pay for shipping, but as consumers, we don’t want it. And so you have to find how to make that math work for your brand, but show customers free shipping.

Jon:
That’s great. That’s great. So number eight. The next one is leveraging limited time offers to create a sense of urgency. So there’s a great study out there by Psychology Today, and it found that people’s fear of missing out tends to press them to purchase button, more than an immediate need for a product.

Ryan:
FOMO is massive for me too.

Jon:
FOMO is real, but look, I want everybody to keep in mind that limited time offers don’t necessarily mean having a flash sale or offering discounts over a period of time. I think the easiest and smartest way to think about this, is fast-food.
Look at how McDonald’s and Burger King do this, and it’s really interesting. Some items that McDonald’s sells that are really popular, the McRib or Burger King has chicken fries when they don’t do it year round, they come out at certain times and it makes the news. It’s free PR for them. “Oh, McRib’s out, better go get it.” Or, “Hey, we have our Shamrock Shake.” And you’re just like, “What is going on here? Why do I care that they have this special? And why is it such a big deal every year?” But customers tend to flock to the store to get it before it runs out.
And so I think, that that’s something to keep in mind that limited time offers just, they’re not intended to increase order values for long durations, but they do work. So if executed correctly, align it with your low season and will help give you a boost when you need it. So urgency and FOMO is real. You should use it, but use it in the right way and think about when you want to play that card, because you can’t continually play it.

Ryan:
You can’t go going out of business every weekend and get that to work.

Jon:
Yeah, unfortunately not.

Ryan:
And if you have to use a pop-up to do it, it’s probably not a good limited time offer.

Jon:
Agreed.

Ryan:
Just generally speaking,

Jon:
A pop-up or a countdown timer or any of that is really just reducing trust.

Ryan:
It’s going to be a gimmicky and people will see through.

Jon:
Yeah. Exactly. You don’t see McDonald’s debranding a commercial for the McRib, and they put a countdown timer up, right?

Ryan:
No.

Jon:
They’re not doing that.

Ryan:
They say it’s a limited time.

Jon:
They’re just saying available for a limited time.

Ryan:
Yep.

Jon:
That’s right.

Ryan:
Because once, they might sell it out in a month or it might take them a month and a half, but they’re not going to put an end date on it.

Jon:
And you have no idea, that’s why you want to get there right away and get it, right?

Ryan:
I like it.

Jon:
All right. Number nine, don’t ignore the power of a post-purchase offer. I think too many people missed this one, so I want to make sure we call it out, but right when you do a purchase, there’s this euphoric moment of like, “Okay, great. I got what I needed. I’m excited about it. Can’t wait for it to arrive.” The post-purchase regret hasn’t set in yet that everyone has. It comes later, not immediately after you purchase.
So take advantage of that high. That happens right away by offering discounts, bundles, incentives to customers who have already made a purchase. You can encourage them to continue shopping with you. There’s some great options out there that will say, “Hey, turn this into this bundle and you save money.” Or, “Hey, you know what? If you add five more dollars to the cart that you just went through, and we’ll throw something else in.” Or, “Add this other item and we’ll ship it overnight for free.” So there’s a lot of options there that you can do, but you want to personalize your offers.
So things we’ve already talked about, make it relevant, you want to make sure you time it up appropriately. So I wouldn’t say following up post-purchase right away via email, but doing it on site right away works well. And then maybe you could follow up in a day after the purchase with the email, but probably wouldn’t go much more beyond that.
And thirdly, make it easy to redeem. A lot of these post-purchase checkout tools that are out there and plugins that allow people to add onto the order before it’s fully been processed, they work really, really well. They make it easy because it’s one click to add this extra item in, so it’s a great way to increase your AOV.

Ryan:
Yeah. I actually love that one. It’s one of my favorites because it’s so often overlooked. Again, you’re serving with it. You can’t just throw something against the wall and get them to do something, but if it’s considered and it actually makes me as a customer be like, “That does make a lot of sense. Yeah, I should put that in there.”
And have somebody highlighted, “Risk-free, money back. If you don’t like it, don’t worry. But put this in because we think it’s going to complete the look. It’s a great easy one in fashion. You bought this, you’re going to like this. We know it and you should try it.” And I want to remove every vary, that’s where you pay attention to Jon’s other CRO. Things like all friction gone. If I click a single button and I can have no regret because I can just return it, risk-free, free returns.

Jon:
There you go.

Ryan:
I would have very little reason not to be like, “Okay, that makes sense.” Because again, it’s that high. Take advantage of it. Okay, so we had-

Jon:
Awesome.

Ryan:
… nine points, Jon and anybody listening here, I guarantee there’s something in here you can be putting to work on your site very quickly to see some of these increases in AOV. Started with you’ve got hungry people on your site, hungry for your product. Maybe not hungry physically, but find out what it does.
So that’s just talking to your customer. And if you haven’t done that before, just stop the podcast. Go do that now. Just pick up the phone. Go face-to-face with somebody and talk to somebody that’s a customer already and find out why they bought and what they like about your stuff. Cross-sell complimentary products. You can upgrade or upsell to a different version of a product on your site that has a higher AOV, hopefully.
Social proof needs to be everywhere through the process, not just in one specific spot, make sure people know that you are a trustworthy brand. People like your products. Don’t discount. Find ways to incentivize without taking away. We’ve now, Jon has already told you, you can no longer subtract. Now, you have to get creative and find out how you add to add value.

Jon:
Yes.

Ryan:
No more subtracting. Elevate your personalization of product recommendations. This is just going deeper with your customer, if you can find ways to really be that Nordstrom personal shopper for them. Avoid cart abandonment by offering free shipping. So this is, free shipping can be such a powerful lever when done right, and it might take some time and testing to make it actually what’s going to work for you. But there’s almost all of you listening can make an improvement to what you’re doing with shipping.
Limited time offers, you can create some urgency. Think about McDonald’s McRib. It’s just limited. There’s no countdown timer. There’s no gimmick. It’s just, “We have this much of them and it’s limited.” And make it specialized for your company.
And then post-purchase, make sure you’re taking advantage of that high. Once they’ve clicked buy, you now have a very excited human with a lot of those fun dopamine things running through their brain. You can get them to push another button and complete the order. That’s going to actually make them happier, or it should make them enjoy your products more, but take advantage of that, and there’s some easy plugins that can do that, no matter what platform you’re on.

Jon:
Awesome. Great recap. Thank you.

Ryan:
Yeah. That was the cool one, Jon. It’s something we definitely hadn’t hit on enough, I think, in what we talked through.

Jon:
Awesome. Well, I’m glad that you found some value in it, and I appreciate you chatting with me about it today.

Ryan:
Yeah. And somebody should send us an example of one of these they implement and the AOV increase, because I’d love to see some examples of one of these or two of these implemented on a site and the data they got out of that.

Jon:
That would be amazing. Yeah. We’ll talk about it too.

Ryan:
Yeah. We’ll call you out on the podcast.

Jon:
Boom. Perfect. Thank you, Ryan.

Ryan:
Thanks Jon.

Announcer:
Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.

The post Drive and Convert (Ep. 085): Nine Strategies to Increase Average Order Value appeared first on The Good.

Grocery shoppers that visit the store with a rumbling stomach end up ignoring their lists and loading their carts with anything and everything in sight.

It’s the store owner’s dream! And what if I told you that your ecommerce store could identify things that make your shoppers “hungry” for your products so they abandon their proverbial lists while on your site?

Ecommerce marketers might scoff at this, but grocery shopping is the perfect way to illustrate how to increase average order value (AOV).

Shoppers are already on your site, and your job is to show them products they are “hungry” for beyond their original shopping list.

Instead of driving traffic and new visitors to your site (and battling your customer acquisition costs), you can draw more value out of the customers you already have. Meaning you can grow your business without having to invest heavily in additional marketing and advertising.

In this Insight, we’ll be sharing nine tactics that you can utilize on your website to motivate customers to buy more.

What is Average Order Value (AOV)?

Average order value (AOV) measures the average dollar amount spent every time a customer places an order on your website. To calculate your website’s AOV, simply divide total revenue by the total number of orders.

Let’s say you sell $10,000 of products in a month, and that revenue was created by 500 customer orders. Your AOV would be 10,000/500 = $20 per order.

Average order value is a crucial ecommerce metric to track because it provides a window into the purchasing behavior of your customers. Improving the average order value of your website will have a direct impact on your sales margins and profit while also providing you with critical insights into the behaviors and buying patterns of your audience.

You should be looking at ways to drive more value from the traffic you get to your site. If you don’t track AOV, you won’t know if it’s working.

Nine Tactics to Improve Your Average Order Value

Motivating your customers to spend more on your website can be achieved by delivering a better customer experience.

1. Identify what makes your audience “hungry”

Consider your audience’s needs. What are their purchase motivators? Why should they be hungry for what you’re selling? How can your products/services satisfy their specific needs?

Once you’re able to pinpoint what makes your audience “hungry”, you’ll have a much better understanding of how to tailor your messaging.

Get started by talking to your customers. Opening up a direct line of communication with your audience is one of the best ways to learn about customer behavior and what motivates them to purchase.

Consider running a small focus group to understand what makes them “hungry” for your products/services. User testing is another great way to learn about your customers and can play an important role in helping to increase your average order value.

If you’re looking for a customer research tool to support your efforts, check out UserInput.

2. Cross-sell complementary products

Someone purchasing a heavy raincoat may also be interested in getting a waterproof hat or a pair of rain pants.

• Cross-sell where it makes sense. For complimentary items, develop add-ons and recommend them to your visitors. Cross-selling isn’t just a product page or checkout tactic. It’s a service you provide. Do it consistently and watch average order values respond.
• Create bundles of items that make sense together. You know they’ll need a reel, fishing line, and bait to go with their new pole, don’t let them forget! Create a bundled offer to make it easy for people to buy all the additional products they need simultaneously.
• Look for trends in your order history. Are there connections you hadn’t realized before? It’s very likely that there are product combinations you haven’t thought of because you can’t think like your target audience. Look through your order history to identify buying patterns to help inform your cross-selling efforts.

Columbia Sportswear is a great example of a brand that knows how to cross-sell. On their product page, once you scroll past the product details, you’ll see a section labeled Complete the Look. Here they suggest items that complement the one the customer is looking at, exposing them to more options and potentially enticing them to make additional purchases.

Don’t leave it up to the customer to remember everything they need when shopping on your website. It’s your job to help them out.

3. Upsell an upgraded version of the item

Upselling is a time-tested method for increasing average order value, and it’s widely used by both retailers and ecommerce businesses.

When you’re buying coffee filters, why would you buy the 50 filter pack when you could just as easily spend an additional $5 and buy the 150 filter pack?

4. Amplify social proof throughout the customer experience

Leveraging social proof on your website can be a surprisingly effective method for improving average order value. We tend to trust our peers more than we trust brands. Every ice cream company will say their product is superior, but when a fellow shopper confirms that claim, you’re apt to believe it.

Here are some ways to use social proof to increase AOV:

• Highlight customer reviews of products and customer testimonials
• Include earned media features from recognizable brands
• Feature certifications and trust badges

Take the cosmetics brand Rare Beauty, for example. Their product pages offer a ton of social proof that comes in the form of customer ratings and reviews. They also added badges that feature product awards. This beauty brand knows how to create trust by letting its customers do the talking for them.

The best ecommerce and lead generation sites cultivate social proof in their marketing strategy, then develop ways to implement that strategy.

5. Incentivize shoppers without devaluing your brand

Be smart about how you incentivize a purchase. Relying on an offer that promises a 25% discount will only hurt your AOV in the long term.

Nordstrom is known for their pricing strategy and “free gifts” with a purchase over a certain threshold. They’re essentially giving away perfume samples they already receive for free from their distributors, but the messaging makes it seem like the company is going out of its way to offer you something special.

Here are some ways to incentivize purchase and increase AOV (without devaluing your brand):

• Offer a free gift with purchase at a certain threshold
• Set up a loyalty program
• Give a buy one get one free deal on certain products

Chewy has found a great way to not only increase AOV but keep customers coming back for more. They offer a $30 free eGift card for those with an order of $100 or more. The free eGift for the store assures them that the customer will return for future purchases while also enticing them to buy items worth $100. It’s a great win-win strategy!

These are starter ideas, but the list of possible incentives could be huge. Here’s a list of 20+ ways to increase sales without discounting.

6. Elevate your personalization with product recommendations

Providing a personalized experience for your customers can be a highly effective method for increasing average cart value.

• Personalize offers based on the customer’s order history. If a customer recently purchased a bag of organic dog food from you, they may also appreciate you notifying them of a new promotion you’re running for organic dog treats. If you’re going to recommend new products to your customers, make sure those recommendations are relevant to their individual needs.
• Display frequently bought-together recommendations. There’s usually a good reason certain items are bought together. Maybe shoppers always purchase plant milk to go with their coffee beans. Suggesting products that are often bought together delivers a better shopping experience and increases AOV.
• Use product recommendation engines to personalize email campaigns. Integrate product recommendations into your email marketing strategy by sending personalized emails that base product recommendations on their recent purchase history.

Tarte Cosmetics understands this tactic very well, as they have makeup sets specifically created to save customers the time and effort of having to order products separately. They’ve started pairing makeup products with brushes (for easy application, duh!) and the best color combos for lip liners and lipsticks. They really know how to help out!

You can also start with the basics and take it as far as you want, but the potential here is staggering. Product recommendations are one of those “get on the bus or get run over by it” concepts every ecommerce manager or executive should consider.

7. Offer free shipping at a certain threshold

Customers love a good freebie, and the lure of free shipping is a proven way to increase average order value.

In fact, according to a survey conducted by Return Customer, 93% of people prefer free shipping over other types of discount. Why? People often abandon their carts when they get to the checkout page and see the added cost of shipping. By offering free shipping, the amount they see throughout the shopping experience and at the checkout page is more or less the same.

The smart way to do this is by allowing customers to unlock the perk once they reach a certain amount. For example, SKIMS offers free shipping in the US for all orders over $75.

In a study about the benefits of free shipping conducted by comScore and UPS back in 2015, they found that 52% of Americans add items to their cart to meet the amount required to be eligible for the free shipping option.

8. Leverage limited-time offers to create a sense of urgency

Psychology Today found that people’s fear of missing out tends to make them press the purchase button even if they do not have an immediate need for a product. However, keep in mind that limited-time offers do not necessarily mean having a flash sale or offering discounts over a defined period of time.

Look to Mcdonald’s or Burger King for the easiest and smartest way to run limited-time offers. Some items are not available year-round, like the McRib or the Chicken fries, so when they do release it, customers tend to flock to the stores before time runs out.

The only thing to keep in mind is that limited-time offers are not intended to increase average order value for long durations. However, if you execute it correctly and align it with your low season, it will help give you a boost when you need it.

9. Don’t ignore the power of a post-purchase offer

The euphoric moments that come immediately after a customer makes a purchase are often overlooked by ecommerce brands.

By offering discounts, bundles, or other incentives to customers who have already made a purchase, you can encourage them to continue shopping with you.

To make your post-purchase offers sing, follow similar guidelines to what we’ve already covered, including:

• Personalize your offers. The more relevant your offers are to your customers, the more likely they are to take advantage of them.
• Time your offers. While you don’t want to follow up immediately post-purchase, don’t wait too long either. You want to still be top of mind when you do reach out.
• Make it easy for customers to redeem your offers. The easier it is for customers to redeem your offers, the more likely they are to do so.

Bonus Tip: Implement clear, flexible, and creative return policies

While not directly related to increasing AOV, we have a bonus tip for you to consider.

Most brands forget that returns are still a part of the customer journey.

Some may see this part of the customer journey as negative because, if all goes well, then there shouldn’t be any returns, right? Whether it’s due to a customer getting the wrong size or the wrong color of something or an error on the part of the seller, it’s unavoidable. Instead of dreading it, use it to your advantage.

Creating a flexible return policy will provide a better customer experience and increase the chances of someone becoming a repeat customer. 92% of customers agree that they’re more likely to buy again if the business has a great return policy.

But you can also implement other strategies during the return process to increase average order value.

• Include an option to have their product exchanged. When creating the policy on your website, make sure to highlight the option for customers to have the product exchanged instead of receiving a complete refund. This not only keeps the revenue in your store but opens up the opportunity for you to cross-sell and upsell. Offer an incentive for a higher-priced alternative to make them consider other items or arrange for free shipping for the return to minimize barriers that would keep them from choosing to have the item exchanged.
• Offer a store credit or gift card instead of a refund. Again, this strategy will keep the customer coming back to your ecommerce store for their future needs and give you the chance to increase AOV by encouraging them to make additional purchases. By offering a slightly higher amount of store credit compared to the refund amount or offering a bonus credit for future transactions, you can entice customers to avail of this option.

How to Increase Average Order Value (& Your Conversion Rate)

Now you know how to get started.

• Identify what makes your audience “hungry”
• Cross-sell complimentary products
• Upsell an upgraded version of the product
• Amplify social proof throughout the customer experience
• Incentivize shoppers without discounting
• Elevate your personalization with product recommendations
• Avoid cart abandonment by offering free shipping
• Create urgency with limited-time offers
• Don’t ignore the power of a post-purchase offer
• Bonus tip: Remember that returns are part of the customer experience

If you’re looking for actionable ways to improve average order value on your ecommerce website, you may want to consider investing in an optimization program.

At The Good, we’ve spent the last 15+ years helping ecommerce brands improve their key website metrics, including average order value.

Hundreds of millions in revenue generated with our strategic optimization programs.

But don’t take our word for it. Hear about the amazing results from 15+ years in business, straight from the source.

SEE HOW

The post Nine Strategies To Increase Average Order Value appeared first on The Good.

About This Episode:

If you haven’t already started testing cross-selling and upselling options in your store, you might be leaving money on the table. In this week’s episode, Jon and Ryan talk about what the tactics are, their benefits, and how exactly to implement them on your website. 

Listen to the full episode if you want to learn:

1. How cross-selling and upselling are different
2. How other brands are using them to their advantage
3. What downselling is 
4. Where you can use these tactics on your website

If you have questions, ideas, or feedback to share, hit us up on Twitter. We’re @jonmacdonald and @ryangarrow.

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Episode Transcript:

Announcer:
You’re listening to Drive and Convert, a podcast about helping online brands to build a better eCommerce growth engine, with Jon MacDonald and Ryan Garrow.

Ryan:
All right, Jon. Here we are towards the end of 2022, in the midst of holiday chaos, us in the e-comm world, busier than we like to be, but always doing good things, hopefully. Lots of conversations happening around, in fact I had one this morning with a client wanting to talk more about cross-selling, upselling, specifically with the goal of increasing AOV. I don’t think I’ve ever had a client that’s like, “No need to get more AOV, we’re fine. If it goes down, who cares?” It’s always, “What more can we do?”
And so it’s fresh on the top of my mind, and you brought up this topic, so it’s great. So I’m sure you’ll probably help me see where I maybe didn’t advise as great as I should have this morning, and I’ll follow up with the client with an email.

Jon:
There you go.

Ryan:
So, let’s start with, generally what’s your theory on cross-selling, upselling, because it has to have an impact on your conversion rate. If you do too much of it or not enough of it, or …

Jon:
100%. I always like to answer your questions with another question. I think that just creates a more interesting conversation for everybody. I’ll ask you this though, what if you could elevate the customer experience and generate extra revenue at the same time?

Ryan:
Well, you ask very easy questions, Jon. I think I should probably say yes to all your questions. Of course. Yeah, I think that obviously would be the goal. [inaudible 00:01:44]

Jon:
And that’s probably what your client you were talking to this morning was interested in. Cross-selling and upselling, they generally offer a way to convert those one-time buyers by serving relevant upgrades and complimentary products that increase both the average order value and customer satisfaction. And I think that’s key, because there’s a lot of ways to do this that are black hat, and we want to avoid those.
So more specifically, if you’re looking at just cross-selling, we’ll start there and then I’ll go into upselling. But cross-selling is an eCommerce strategy like any, that really just recommends complimentary products. So it’s for a shopper who’s already made a purchase or has items in their cart. At that point, maybe let’s think about an example. So if you suggest to a shopper to add boot polish to their order and they’ve just bought a pair of boots, maybe you suggest batteries to go with a camera. So it’s complimentary products that enhance the experience.

Ryan:
Wait, so if I buy boots, I should have-

Jon:
Buy polish.

Ryan:
… batteries with my camera. Oh. Oh, okay.

Jon:
So if you’re buying boots, you get polish. If you have a camera, maybe you get batteries, right?

Ryan:
Okay, got it. Now it makes sense.

Jon:
I didn’t say that very well. Excuse me. So look, I think successful cross-selling here really thinks about products that are highly relevant, and that’s where the customer service angle comes in.

Ryan:
Do you start to cross-sell once it’s in the cart, or does it start on the product page if they came from shopping, on the boots page?

Jon:
You can do both, and you should. I highly recommend doing both. And one of the things I have in our notes for the show today is a whole bunch of examples we can talk about.

Ryan:
Oh, love it.

Jon:
So we will get into all of those. But I do think that the idea here is to make the consumers’ lives easier and better. So if they buy boots, they’re going to need polish eventually. If they buy cameras, they’re going to need batteries. So why not just offer it to them right then? And that’s called cross-sell, because you’re selling a separate item that you can bundle, essentially. And bundling is a cousin to this, for sure. Think about it this way, if you buy that camera, nobody wants the camera to arrive without batteries. And you don’t want to realize that you don’t have the right batteries, because then you can’t use the product you’re super excited to get, and you want to just start taking photos.
The second half to this is upselling. So upselling is used by retailers to encourage people to upgrade their orders, to upsell their orders. So instead of recommending additional products like batteries for a camera, or polish for boots, really what you’re doing here is inviting shoppers to invest in a more expensive product or a better version of the item they were looking at. So you’re getting them to sell more by upselling them a level to the next product. For example, you might suggest a roller suitcase with added pockets and security or more coffee, for extra price. So-

Ryan:
Got it. I get up-sold all the time, because I’m like, “Oh, well the cost per pound of coffee is this, sell me an extra half pound. I’ll buy less, get one shipping rate and it’s cheaper per cup of coffee.” [inaudible 00:04:58]

Jon:
That’s exactly it. That’s exactly it. And I do this all the time too. I just had to buy filters for my coffee machine yesterday, and Amazon is the king of this. They were like, “Well, if you subscribe and save, we only offer subscribe and save for the 50 pack. You were looking at the 25 pack. But if you get the 50 pack and you subscribe and save, you’re going to save a lot of money.” And it shows you the per-item price. And that’s what got me. I was like, “Oh, you mean it’s a few cents each versus 20 cents each? Fine, I’ll do it”. So, it makes a big difference.

Ryan:
Got it. But upselling and cross-selling, they are similar, but I can see how terminology-wise, you can probably have a lot of people get confused on, “Do I need to focus on one not the other? Do I do both at the same time because they are-“

Jon:
Right. Cross is additional products. You’re you’re not staying on the same product, you’re crossing into an additional product. Upselling is the same product, but better. An upgrade. So that’s why it’s an upsell. You’re upgrading the consumer.

Ryan:
Okay. Upgrade, upsell. I think I can get that in my vernacular. Upgrade, upsell.

Jon:
Awesome.

Ryan:
Okay. Being similar, is there a direction that you think people should focus on one first versus the other? If I’ve not done either one of these before, is one easier to pull off on a site than another or they should always be both, always be upselling and always be cross-selling?

Jon:
Well look, upselling will grow revenue by promoting higher tier products. Pretty simple. Cross-selling suggests more items that a buyer could buy. So I don’t think … The key difference really is in the purpose. And I think this is where you need to decide as a brand, do you want to … Well, do you have a product that it can be an upsell, first of all? Because if you don’t have a product that’s an upsell, just shelve that one. And some brands don’t. But technology is a good one.
Apple is really good at this, where you go to buy a certain Mac and then you go to that product page for that MacBook Pro, for instance, and it has, “Here’s all these additional upgrades and how much they cost.” So you can get a bigger, faster processor, bigger hard drive, more memory, whatever. And you can play around with it and see what the total cost will be. That’s just 100% pure upselling, because they’re just showing you additional products you could get that increase your average order value. So they’re really good at that. So you have to think about, do you have the option, first of all?
The other thing is, cross-selling advises shoppers to purchase items that maybe they never had thought about, they had no previous interest in buying it. So I came to a camera site, I wasn’t looking for batteries, but you’re telling me that it requires these special batteries that I really can’t just go to my local drugstore and buy, then I probably am going to get them from you right then, so I have them. So again, it’s a complimentary item and the idea there is, “It’s going to make my life easier.” I think that’s the two key points of cross-selling.
Upselling on the other hand, is really about leveraging the fact the consumer has already chosen a product. I’ve already said, “I’m going to get this MacBook.” Now, I get in and I say, “Oh geez, you know what? I could have a faster processor, more RAM or memory. Do I need those things? What does this mean for me?” And I’m already sold on buying one. Now I’m just configuring what I want. So it’s all about recommending the same product or service, but better. And I think it’s a key that the consumer’s already going to buy.

Ryan:
Okay. So in both these instances, we have, hopefully, more revenue and higher AOV to a business that’s doing these techniques. Have you ever seen a company randomly decide that it makes sense to down-sell? What if there’s more margin on another product, they’re like, “Yeah, they come in on this a lot, but even though it’s cheaper, I make more money on this one, so I want to force them to that one?”

Jon:
Usually not for that reason, usually for the reason that a consumer could be … And again, Apple does this really well with their MacBook Pro. They have several lines of laptops, and the MacBook Pro is the top of the line. And then you could get just the MacBook or you could get a MacBook Air and you could keep going downgrading. They have these different tiers. They do the same thing with their phones. They are very good at this strategy, all in all. And they down-sell you if you are like, “Hey, the MacBook Pro is too much power,” or “I’m not going to be using it for these purposes that are listed.” They clearly say, “For business,” it’s really pushed for business, video editing, hardcore processor-intensive stuff.
But if you don’t need that, then they say on the product page, “Have you considered our MacBook?” And they list, starting at $1000 as opposed to $2,500 or whatever the MacBook Pro is. So really the idea of down-selling is not something that you want to do, but it’s an alternative. Again, you’re aiding the consumer and saying, “Okay, you were going to abandon because you didn’t want to spend $2,500 on a MacBook Pro, but don’t worry, we have this $1000 laptop here that’s just as good for your needs.” So that’s one way to do it.

Ryan:
Which would be better than, for a lot of brands, probably, if you’ve got the product depth of course, but the default for a lot of brands I talk to, and maybe you as well would be, “All right, you got this in the cart, nah, you haven’t checked out, you want 10% off.” It obviously cheapens your brand because discounts are the easy button we talk about. But if you have a product that is 10%, 15% cheaper, just suggest that, because it might meet their needs, and you don’t have to actually give a discount on your brand, and plant that seed for the future. Again, I think I mentioned my wife is notorious for walking away from her shopping cart just to see what emails will come through with discounts.

Jon:
She’s been trained like everyone else. But here’s the thing, this is such a missed opportunity, because so many people will just send an abandoned cart email with a discount. And what you really should do here is send an abandoned cart with maybe a down-sell option. Maybe they abandoned it because it costs too much. And this is a big reason why people abandon, that I think a lot of people forget about. So I highly recommend that abandoned cart emails maybe offer a lower-priced version, a smaller version, some incentive with purchase. I’m not saying a discount, but maybe a free gift with purchase, or samples of products with purchase. Something of that sort that would keep the price down or add more value. That, I think, is a huge missed opportunity for down-selling.

Ryan:
Even Target started doing this, we just went and bought our kids a bunch of Christmas presents, and you get gift cards rather than discounts. Like, “Oh, you spent $100 on toys, here’s your $10 target card, so you got to come back and buy, because you can’t use it on that transaction.”

Jon:
And you’re going to spend more than $10 next time you come back.

Ryan:
Yes.

Jon:
They know it.

Ryan:
We for sure will. But that’s … They didn’t give me a discount. It’s technically a discount, but it’s something I have to come back and spend more money and it’s generating a lot of goodwill cause my wife treats them as free money that’s like, “Oh I can just get this extra thing because I have a $10 gift card, so what the heck?”

Jon:
Right. And that extra thing is probably $15.

Ryan:
It’s never $10.

Jon:
Right. And so who wins on that? Likely Target. I think you called out a really good benefit there, which is, you can increase your average order value or even do it on the next purchase, and increase customer lifetime value. But I think there’s a ton of metrics that people should be thinking about, or just overall benefits of cross-selling and upselling, that … I think, really everyone looks at AOV as the one that is paramount here, and that’s true. Average order value matters, and that is generally what leads people here. But there’s a lot of other metrics that this influences. Just for instance, increasing revenue, overall revenue. The majority of customers are going to spend more on their orders and your overall revenue’s going to increase. There’s a stat that cross-selling accounts for 35% of Amazon’s revenue.

Ryan:
What?

Jon:
35%

Ryan:
No, that’s insane.

Jon:
And that-

Ryan:
You have to send me that link at some point, because I-

Jon:
Google it.

Ryan:
Amazon’s good, but …

Jon:
Yeah. Google it. Now here’s the thing about that, is they are so good at those recommended products. How many people are looking at a product detail page? Scroll down and half of a product detail page on Amazon is other products.

Ryan:
That’s true.

Jon:
And if you look at that, some of them are sponsored and purchased, but most of them are more expensive than the one you’re looking at. Generally that’s going to be the case, and Amazon knows how to play this game. So they’ve increased their revenue by doing these cross-sells.

Ryan:
That’s insane. I never would’ve guessed it’s that high, but that’s awesome.

Jon:
They’re so good with complimentary products, and it’s just their engine, it’s really well done. Now, I suggest that if you’re going to do this, you make it relevant. Because the thing that really turns people off on this is having cross-sells that aren’t relevant to the product that they’re buying. Then it just defeats the whole purpose. You can also … I talked about increasing customer lifetime value. That is a big one. And it is something that I think that most brands don’t think about, but the probability of selling products to existing customers, 60%, 70% higher than new customers. It’s always easier to sell to somebody who’s come back and ordered from you before. So complimentary products or add-ons, it’s just convenient and it will keep them coming back. So I highly recommend that.
You can increase your ROI. The higher your average order value, customer lifetime value, the better your return on investment will be against that acquisition cost. So you want to get more out of your ad spend? Get people to spend more, you’re going to get a higher return.
You can increase product awareness. This is one that people don’t think about very often, but cross-selling and upselling, they introduce consumers to other products that they maybe wouldn’t have seen because they weren’t looking for those. And now they’re aware that they exist. So that’s a good way to increase awareness of add-on products or higher tier products that maybe they wouldn’t have been interested in.
And last, I think, and this is key. I talked about this earlier, there’s some black hat ways to do this, and we’re talking about the right ways to do this, in my opinion, but you’re increasing the customer experience overall. And I think that’s really important, out of this. You don’t want to just … this is not being done for a money grab. If you do this with the right intent of offering products that are more helpful, then you can’t go wrong. But it’s very easy to tell when somebody’s just trying to force more products down your throat instead of saying, “Hey, these are actually related and things that have proven to be helpful.” And so personalizing that shopper experience can really add to credibility for you as well, and I highly recommend you take that point of view as you’re doing this.

Announcer:
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Ryan:
Those are all tremendously important pieces to every e-comm business, I think. If you’re not doing these things, I would argue your business is suffering. You’re leaving a lot on the table and your customers aren’t getting served very well. So there’s a lot of places in the process you can be cross-selling, upselling, but I’m sure you have to be careful, like right as you walk into my site, don’t pop up and offer me a discount when I have no idea what I’m doing yet. Let me find some stuff. So where do you suggest people or brands do cross-selling and upselling on the site or through the conversion process?

Jon:
Yeah. I think there’s two words that come to mind here, “tastefully” and “organically.” If you’re tasteful with it and it’s done in what feels like an organic manner, then you have a much better opportunity, I should say, to convert. So the last thing you really want to do is just paralyze shoppers with too much information. You give them too many choices or recommend these irrelevant items and that’s just going to turn them off. So you want to make sure it’s done tastefully, but also I like to think about three key places that you could use this, to more directly answer your question.
So pre-purchase, so on the product page before the customer’s added to their cart. The second place is during purchase, and pre-purchase and during purchase are both where Amazon succeeds at this beyond belief. During purchase is during the checkout process or when you just view your cart. Adding an upsell in cart, it’s easy to do with Shopify, there’s a clear plug-in for it, it’s not hard. The hard part is manually going in and adding what products should be related to other products, so that it’s not done in a distasteful manner.

Ryan:
Yes, I think that’s an important point. Most people that want to do this with apps. Yes, you want to let them do some things, but you have to be careful with that. Tastefully.

Jon:
Yes. The last thing is post-purchase. And again we talked about abandoned cart emails, et cetera, but this is after they’ve already made a purchase, you could send an email, SMS, or even next time they come back to your store, say, “Hey, we know you bought this item, here are other related items.” So a big one is carrying bags. At The Good, we bought one of these things called an Owl, a Meeting Owl. And it’s this device that has a speaker and a microphone and a 360-degree camera on top of it. And so you put it in the middle of a conference table and it can see the entire room. So it shows the Zoom participants at 360-degree view, and then it automatically zooms in on the individual who’s talking. And so it detects movement on individuals, and noise. So if you’re talking and moving, it will pan the camera addressed just to you and still show the 360 above you.

Ryan:
Wow, that’s pretty cool.

Jon:
It’s a really cool device for making it more immersive. And I got an email after we bought one, that said, “Hey, we see you bought this. A lot of people have issues moving it from location to location. Here is a custom-made pelican hard case. If you’re interested, here’s a discount code for just that case.” And that was a cool upsell, and I should have bought it because I literally just got back from Austin, Texas where we did a leadership team meeting and I put it in its box that it shipped in, and had to carry that box around. I was definitely afraid it was going to fall and break the camera. So I should have bought the hard case. It knew what was going to be helpful to me, and I saw that after I got back and I was like, “Yes, I should probably buy that and just ensure that I’m not going to screw up my camera.” So I think that that’s something that a lot of people forget about, is doing this after purchase.

Ryan:
Yeah. And my favorite one after purchase that you’ve brought up that I like is where you have a quality cross-sell that makes sense like that, and you say, “Hey, if you add this in, you’ll get the discount and we will also include that in your free shipping,” or “No additional charge for shipping,” which would speak to me, being like, “Oh, I hate shipping charges. So 100%, let’s put it in there,” because maybe individually, it falls under a shipping threshold, so you’d have to pay shipping if you don’t add it on now.

Jon:
Yeah. It’s a great plugin that will do that upsell after the person purchases. So after checkout on the confirmation page you could say, “Hey, you want to add this to your order?” This will air after Christmas, but I bought my wife a set of pans from HexClad, I believe it’s called HexClad, and it’s a new direct-to-consumer cooking brand that’s taking off. It’s supposed to be one of the best ones out there now. And so I bought her a set of them and at checkout, it said, “Hey, did you also want to get these other items and add them into your order and we’ll ship them for free?” And normally, it’s heavy items, so shipping’s not cheap. And I thought they did a really good job. So if anybody wants an example, that’s where I would go.

Ryan:
Hexchant? I’ll have to look at that.

Jon:
HexClad, I believe.

Ryan:
HexClad. Okay. I’ll have to look at this. But okay, well it leads us into this point, which I was excited about from the beginning when you said you had examples. I know you’re packed with examples of other ones where people can do specific things to help increase cross-sells and upsells.

Jon:
Okay. Where do we start? Bundles. We can say product bundles. So bundling, I think, is the easiest way to expose customers to new products. And this is a form of cross-sell. It can also be a form of upsell depending on what’s in the bundle. But the Owl camera could have said, “Here’s a bundle with the case.” And I didn’t see that on the site. I thought that was a missed opportunity. That would’ve been an upsell because it would’ve … Well, it was a cross-sell, because it would’ve been adding additional items. It wouldn’t have been selling me a better camera, necessarily. But really just grouping together these similar complimentary items, it gives shoppers a chance to try out other products, but they also are willing to pay more because they’re getting more. So it’s a great way to increase your AOV. A good example here is beauty products. Maybe you create a bundle for different skin types or anti-aging. Those are all things that would be more expensive than just buying one product on its own. So it’s a good opportunity.

Ryan:
Oh yeah, beauty’s great at that.

Jon:
Yeah. Beauty’s really good at this, that’s probably why that example came to mind. But okay, so another one. We already talked a little bit about this, so let’s get it out of the way, but post-purchase experience. It’s always forgotten about. As I’ve said several times, if you’re not offering something post-purchase, you won’t make any money post-purchase. It’s pretty simple. So why do people forget about this? You just make the money, right? But I think data has shown that if you do, roughly 20% of customers will buy. That’s a lot of money you’re leaving on the table. Imagine you could increase your AOV by 20% by doing this. So you’ll make more revenue, you’re going to have a better AOV, better return on ad spends, all your shoppers are going to be happy because nobody gets upset that they were offered these things after purchase. If they don’t care, they just close the window and move on. But if you’re going to make their lives better, then you have a good opportunity there.
And I do agree … Again, I think the most missed opportunity for this is follow-up emails. And again, the key here, make it personal. You just bought that really sensitive camera that you know Jon is running through the Austin airport in a box, it’s falling off his suitcase all the time, sell him that case. He’s going to buy it.
One we haven’t talked about is bulk ordering, so suggesting bulk orders. This is a great one because nobody loves to run out of their favorite product. So they’re already buying a product, you just suggest that they buy it in bulk. That’s a great way to increase your AOV and secure long-term loyalty. I just did this with body wash. There’s a particular brand that I like to use, and over holidays they were like, “Oh, we came up with this Axe spray.”

Ryan:
You’re the Axe guy. Five gallon tub of Axe.

Jon:
You might actually like it. It’s called Black Wolf, and it is amazing, direct-to-consumer brand. It smells amazing and I really like it. And they used to come out with these small containers and I used to run out of it all the time. I’m a big guy, it was just annoying. And now they came out with a pretty big one. So-

Ryan:
The key … More importantly though, does your wife like it?

Jon:
Yeah. Look, we’ve been married 10, 11 years. Doesn’t matter what I smell like at this point, right?

Ryan:
Oh man, my wife for sure cares.

Jon:
Let’s just say as long as it’s not when I’ve just come home from playing basketball. How’s that? Because then she cares.

Ryan:
That’s true. Okay, yes. Yes.

Jon:
Yeah. Yeah. So at any rate, I think according to, what is it, NRF I believe, 90% of online customers claim that free shipping motivates them to purchase, while 65% of buyers said they will typically look for a free shipping threshold on items they plan to buy before adding to cart. So you could easily say, “Buy in bulk and ship for free.” There’s things like that you could be thinking about and 65% of your buyers are already thinking about it. So you can make it more appealing by making it free to ship as well.

Ryan:
You would get me to upsell to a bulk 100% of the time.

Jon:
Okay. So here’s the one that we talked about earlier that Amazon got me on the other day, pitch a subscription. And Amazon’s just so good at this, it’s crazy. It’s one of the most effective ways to secure recurring revenue, is just, promote a subscription model. If you have a renewable product that gets consumed quite a bit, then why not automatically ship it to them? It happens quite a bit, but, I don’t know, we talk a lot about coffee. I wish that I could find a brand that would just ship me good coffee whenever I want it, just on demand. I used to have an espresso in the pods, and they did it. And they did it really, really well because they knew when I was going to run out based on my prior ordering habits. So they did a really good job with that. But if a consumer’s regularly buying the same product, then encourage them to just sign up for a subscription and give them a small discount. Again, Amazon’s great at this.
Lastly is pretty simple, but recommending a complimentary product. I think this one is something that again, Amazon’s great at, but this is just the simplest cross-sell strategy. It’s just recommend a complimentary product or suggest products that other similar shoppers have bought. Again, this has to be helpful. And when it’s done in a distasteful way or without the eye of trying to be helpful, it really actually turns people off because they’re like, “I’m buying boots, why are you recommending a tent to me? Yeah, maybe I could use them both on the same trip, but that’s unlikely what I’m here for.” So you really have to be thinking about this. You can do this on your product detail page, checkout page, or post-purchase. So you hit all three of them. But the thing about it is, again, you only have to recommend complimentary products. And I think that’s key, not just random items out of left field.

Ryan:
Got it. I do think on a lot of sites, the product pages … Again, and you do obviously CRO all day every day. It’s one of the most overlooked pages, because SEO doesn’t optimize product pages, and it’s just getting shopping traffic. And so there’s so much opportunity there because most people aren’t even going to buy that product. So if you look at your product page from the view of, the only reason people hit a product page is shopping, because product pages don’t rank well organically. So there’s intent, “I’m trying to buy something, that’s why I’m on this page.” And you know on average, they’re not buying that product. Okay, great. Either I have to find them a different size, a different color or a different product entirely. But test and measure those product pages and just make sure you’re not being stupid, and your conversion rate should increase.

Jon:
I fully agree with that. So if you haven’t already started testing, cross-selling, upselling, you are leaving money on the table, you’re behind.

Ryan:
Instead of AB, always be closing. Always be AB, up, US, always be upselling or … there’s got to be something there. I didn’t do it on the fly very well, but you better be [inaudible 00:29:47]

Jon:
We’ll go get Alec Baldwin, and maybe he’ll come up with something.

Ryan:
Yeah. That’s not going to be steak, guys.

Jon:
Yeah. No coffee for us.

Ryan:
No.

Jon:
Yeah. So just experiment with these tactics. And I think there’s a lot of things, but just remember, the biggest point I want to make today is that it has to resonate with your target shopper. If you try to use these in a black hat way, it’s too obvious, and you’re going to just turn people off. So I highly recommend that you keep all of this under that intention, and you’ll win. It will help you.

Ryan:
Jon, thank you for the enlightenment, especially this time of year. Well, most people get to hear this probably in January, but as we start making plans, cross-sell, upsell is where many of you listening to this are missing out and leaving money on the table. If 20% of your customers aren’t getting that email to buy something after the purchase, you’re welcome, Jon just added 20% revenue to your company.

Jon:
There you go.

Ryan:
Send him a bottle of wine.

Jon:
That’s what I like to hear. Yes, I like Pinot Noir.

Ryan:
Thanks, Jon. I appreciate the time.

Jon:
All right, bye.

Ryan:
Bye.

Jon:
We’ll talk soon.

Announcer:
Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.

The post Drive and Convert (Ep. 071): Leverage Cross-Selling And Upselling For Increased AOV appeared first on The Good.

• The difference between cross-selling and upselling, and how each increases AOV, CLV, and customer satisfaction
• 7 ways to successfully cross-sell and upsell throughout the shopping journey
• Tools and examples to help you create your own cross-sell vs. upsell strategy

What if you could elevate the customer experience and generate extra revenue at the same time?

Cross-selling and upselling offer an antidote to one-time buyers by serving relevant upgrades and complementary products that increase both average order value (AOV) and customer satisfaction.

What is the difference between cross-selling and upselling?

Cross-selling and upselling are two high-impact tactics merchants can use to generate more sales and improve the shopping experience. Here’s what they mean and, more importantly, how they differ from each other.

What is cross-selling?

Cross-selling is an ecommerce strategy that recommends complementary products to a shopper who has already made a purchase or has an item in their cart. For example, you might suggest a shopper add boot polish to their order if they’ve just bought a new pair of boots, or you might suggest batteries to go with a new camera.

Successful cross-selling campaigns include products that are highly relevant to the original purchase, and that will make a customer’s life easier. No one wants their new camera to arrive only to realize they don’t have the right batteries to use it.

Dollar Shave Club is a pro at cross-selling. When someone buys their first box, they’re invited to add complementary extras to their order, like shaving cream and cleanser.

What is upselling?

Upselling is a strategy used by retailers to encourage customers to upgrade their orders. Instead of recommending additional products, upselling invites shoppers to invest in a more expensive product or better version of the original item. For example, you might suggest a roller suitcase with added pockets and security or a kilo more coffee for $3 extra.

This cat food brand invites shoppers to upgrade their order to secure a discount. The customer gets a better product at a lower price, while the brand increases the value of the order.

Cross-sell vs upsell: The difference between upselling and cross-selling

It’s easy to confuse the two terms because they are very similar tactics. Both of them increase your profit but in slightly different ways. Upselling grows revenue by promoting higher-tier products, while cross-selling suggests more items a shopper could buy.

The key difference isn’t in how they work, though—it’s in their purpose. Cross-selling invites shoppers to purchase items they had no previous interest in buying. When they’re offered a complementary item or two (like batteries or boot polish), they might consider adding them to their order because it improves the experience of the product already in their cart. It will also likely make their life easier because they don’t have to go searching for the complimentary product they need.

Upselling, on the other hand, leverages the fact that a customer has already chosen a product and, therefore, must be very interested in buying it. You recommend the same product or service, but better. The customer has already shown a keen interest, so there is a chance they can be convinced to upgrade to better benefits and convert at a higher price.

Key differences between upselling and cross-selling:

• Cross-selling suggests additional products, whereas upselling suggests an upgraded version of the original product
• Cross-selling suggests products customers had no interest in buying before, whereas upselling suggests products that the customer has shown an interest in
• Cross-selling can be used post-purchase to encourage shoppers to come back, whereas upselling is all about upgrading the original order (no one needs to buy two iPhones in the space of two weeks!)

What’s the difference between upselling and downselling?

Downselling isn’t our main focus in this piece, but it’s worth giving it a quick mention so you can position it against the other methods. Unlike upselling, downselling suggests lesser-quality products that are cheaper to a customer who either can’t afford the original item or who has abandoned their cart.

Suppose a shopper has added a big tub of moisturizer to their cart but hasn’t yet checked out. You might get in touch a few days later offering a cheaper version, a smaller version, an incentive with purchase, or a complementary item that’s less expensive.

Downselling is common in subscription models. Customers can get a cheaper rate if they commit to a longer subscription, but those who don’t want to spend that much money can choose a smaller subscription level at less value.

The benefits of cross-selling and upselling in ecommerce

• Increase AOV: If a customer adds another item to their order or upgrades to a more expensive version, you automatically boost your AOV.
• Increase revenue: If the majority of customers spend more on their orders, your overall revenue will increase. Cross-selling accounts for 35% of Amazon’s revenue.
• Increase customer lifetime value (CLV): The probability of selling products to existing customers is 60-70% higher than selling to new customers. Serving complimentary products or add-ons is convenient for shoppers and will keep them coming back.
• Increase ROI: The higher your AOV and CLV, the better your ROI will be against your cost of acquisition.
• Increase product awareness: Cross-selling and upselling introduce customers to products they might otherwise not have come across.
• Improve customer experience: Suggesting related products personalizes the shopping experience and establishes a level of credibility.

How to upsell and cross-sell across the funnel and reach customers at every step

Cross-selling and upselling can lead to fruitful things for online retailers, but the key is to do it tastefully and organically. The last thing you want to do is paralyze new shoppers with too much choice or recommend irrelevant items that might turn them off.

“When you buy something and click on the buy button, you are at your most euphoric moment,” says Jordan Gal, CEO at Carthook, an upselling tool for Shopify stores. “That’s a good time to make an offer. If you can set up your offer in a way wherever it’s beneficial for both parties, then everybody wins.”

There are three key points in the sales funnel where you can effectively cross-sell and upsell:

1. Pre-purchase: Promote cross-sells and upsells on the product page before a customer has added to their cart
2. During purchase: Promote cross-sells and upsells during the checkout process or when a customer views their cart
3. Post-purchase: Promote cross-sells and upsells after a customer has made a purchase, either via email, SMS, or when they return to your online store.

Get cross-selling and upselling right, and you can enjoy increased revenue and happier customers in no time at all. Here are some tips for successful cross-selling and upselling.

1. Offer product bundles

Product bundling is one of the easiest ways to expose customers to new products. Grouping together similar, complementary products not only gives shoppers the chance to try out other products in your catalog, but they’ll be willing to pay more because they’re getting additional items.

For example, if you sell beauty products, you might create a bundle for oily skin or anti-aging that brings together some of your best products that are cheaper to buy together but more expensive than buying one product on its own.

Take a leaf out of 3 Wise Men’s book. The clothes brand encourages shoppers to mix and match items and create their own personalized bundles.

2. Build a great post-purchase experience

The customer journey doesn’t end when a customer has placed an order. Now is the perfect time to recommend relevant, complementary products and remind shoppers about other items in your inventory.

“If you don’t offer anything post-purchase, you won’t make any money post-purchase,” says Jordan. “But if you do, roughly 20% of those customers will buy. You’ll make more revenue, have a better average order value, a better return on ad spend, and a lot of your shoppers will be happy for it.”

Put together a five-email sequence that introduces shoppers to other products that might benefit their original purchase.

For example, you might suggest a toner to go with the cleanser they’ve just bought, or a matching hat to go with their new scarf.

The key is to make it personal: Use purchase data you have available to cherry-pick the most relevant products to serve to customers.

KiwiCo encourages shoppers to upgrade to get a free book with their next subscription box.

3. Suggest bulk orders

Nobody likes running out of their favorite face cream, coffee, or snacks. Suggesting shoppers buy in bulk is a good way to increase AOV and secure long-term brand loyalty while you’re at it. This can be particularly effective if you have a shipping threshold. According to NRF, 90% of online customers claim that free shipping motivates them to purchase more, while 65% of buyers said they typically look for free shipping thresholds on items they plan to buy before adding to their cart.

For example, if you have a free shipping threshold of $50, encourage shoppers to upgrade or add items to their order to reach that threshold.

Birchbox offers a juicy discount and free shipping when customers spend over $125.

4. Pitch a subscription

One of the most effective ways to secure recurring revenue is to promote a subscription model—who doesn’t want their favorite coffee or wine delivered to their door every month?! If a customer regularly buys the same product or has shown an interest in several items, encourage them to sign up for a subscription.

Not only will this guarantee regular revenue, but it will improve the customer experience by ensuring shoppers are never out of their favorite products with repeat purchases.

Native offers customers the chance to get money off if they subscribe instead of making a one-time purchase.

Offering a post-purchase subscription has been incredibly effective for Kettle and Fire. The brand wanted to expose shoppers to its range of flavors, so the team created post-purchase upsells and cross-sells.

“The first iteration, we had just one upsell and one down-sell… and that gave us a 41% higher revenue per visitor,” says Wilson Hung, the Director of Growth. For the checkout conversions, over the course of three iterations, we’ve seen an increase of over 140%.” The brand now has a 10% higher AOV.

5. Recommend a complementary product

The simplest way of cross-selling is to recommend a complementary product or suggest products that other, similar shoppers have bought. You can do this on the product page, the checkout page, or post-purchase.

Amazon has made a huge chunk of its revenue using this model—but make sure you’re only recommending complementary products and not random items that come out of left-field.

Aesop includes complementary products on each product page.

6. Leverage cross-sell and upsell tools

It would be a real drag if you had to manually dig into customer data to promote relevant products. Luckily, there’s a handful of powerful apps and tools that you can plug and play for successful cross-selling and upselling campaigns.

These are some of our favorites:

• OrderBump: Create hyper-targeted promotional offers for your customers both before and after they’ve made a purchase for a personalized shopping experience.
• Selleasy: Choose from different types of cross-selling and upsell offers, like the “frequently bought together” bundle, a cart page upsell funnel, and discounts with countdown timers.
• Vitals: Includes many cross-selling and upselling features, like volume discounts, product bundles, and buy-one-get-one-free options.
• Rebuy: Personalize the shopping experience based on previous purchases, customer location, and products in the shopping cart. You can also add recommendations and offers at different points throughout the funnel.
• Honeycomb: Create post-purchase thank you pages with upsells, generate relevant cross-sell offers, and offer shoppers free gifts with additional purchases.

7. Test, test, and test some more

Not every cross-sell or upsell tactic will work for every brand. As with anything, we recommend testing different offers at different points throughout the sales cycle to see what works best with your audience.

Run A/B tests of pre-purchase, post-purchase, and during-purchase cross-sells and upsells, try out subscription options, and play around with your shipping threshold to see where the sweet spot is. The aim of every great cross-sell and upsell campaign should be to benefit both the brand and the customer. It should be a win-win, providing a better experience for customers and increasing your revenue, AOV, and CLV at the same time.

Get started with cross-selling and upselling

If you haven’t already started testing cross-selling and upselling options in your store, you might be leaving money on the table.

Experiment with the different tactics we’ve laid out here, but remember: the most important thing is that you find a strategy that resonates with your target shoppers.

The post How To Leverage Cross-Selling And Upselling For Increased AOV  appeared first on The Good.

And it’s becoming a big problem. Approximately 30 percent of Americans say they’ve been hit by porch pirates at least once, according to a study done by Xfinity Home.

Cathy Robertson, a shipping and delivery expert with Logistics Trends & Insights in Atlanta, says:

It’s just common sense that along with all the tremendous upsides to ordering online, the downside is things can be stolen… You’ve got something worth 200 bucks being delivered to your home? You better be sitting on your front steps when it arrives.

So what’s the solution? How can the porch pirates be thwarted?

In response, many companies are fighting back by shipping items directly to stores and allowing the consumer to pick them up.

In this article, we’re going to cover:

• How exactly the ship-to-store option works
• Why many stores are using it
• How the rise of “porch pirates” presents a unique opportunity for you
• Why you should consider implementing a ship-to-store option

What Exactly Is the Ship-to-Store Option?

It’s not particularly complicated. If you have a brick-and-mortar store(s), you simply offer consumers the option of picking up their order at your store instead of receiving it at their home.

Numerous “click-and-mortar” retailers have implemented a store pickup option, including:

• Apple
• Walmart
• Macy’s
• Nordstrom
• Target
• Kohl’s
• Dozens of others

Amazon is going to unique lengths to offer a ship-to-store option. In many cities, they have “lockers”, which are a sort of storage unit where customers can pick up their packages.

Taking things a step further, Amazon recently announced what they’re calling “Key In Car” delivery. Using an app, customers can give couriers access to their cars, and the couriers will then place the packages in the cars, significantly reducing the chances of package theft

Writing in The Verge, Andrew Jenkins notes:

After purchasing an item and selecting in-car delivery, Amazon sends a series of notifications to let you know that the package is on its way. At any point, you can choose to change delivery locations or “block access” to the car in the Key app, if for some reason you need to run a quick errand or your car won’t be immediately accessible to the delivery person. Amazon will then default to your backup delivery location if access to the vehicle is blocked.

Clearly, Amazon recognizes the problem of packages being stolen and is going to great lengths to prevent it.

Perhaps it’s time you also considered implementing a customer-focused delivery option with your ecommerce business.

Why Offer Ship-to-Store Shipping?

You may be thinking that implementing ship-to-store shipping sounds complicated. Are there really that many advantages to it? It turns out there are.

First and foremost, it prevents package theft. This in and of itself is a big win, both for you and for your customers. The simple truth is that the threat of package theft is starting to influence the way customers shop online.

In Los Angeles alone, reported package thefts have increased by a staggering 581 percent since 2010. And with most thefts going unreported to the police, it’s a safe bet to say that the number is quite a bit higher.

In a recent study by Shipp, 53 percent of people have actively changed their plans so that they can be home when a package is delivered, and 41 percent of people have avoided purchasing certain items online due to theft concerns. The primary type of item that people have avoided buying? Not surprisingly, it’s electronics.

In the same study by Shipp, 61 percent of people said they felt that online retailers weren’t doing enough to prevent package theft, and a whopping 71 percent said that they would be open to having their packages delivered to an alternative location, such as a locker.

The moral of the story? People want to be sure that their packages won’t be stolen, and if you can offer an alternative delivery method, it’s likely to increase your overall conversion rate and customer satisfaction

But ship-to-store shipping has more advantages than simply offering peace of mind to consumers. It can also increase your in-store conversion rate.

It turns out that when customers come to a store to pick up their package, they tend to make other purchases while they’re there. Some of these purchases are impulse buys, while others are on items already needed.

Writing in Forbes, Bryan Pearson says:

These super-short trips [to pick up packages] can result in higher-proportioned revenue because shoppers who place pickup orders, encouraged by the prospect of a quick in-and-out visit, remain prone to split-second purchase decisions.

“As good as delivery is getting—one-day delivery, sometimes one-hour delivery—that still can’t compete with the one-second immediacy of being in store and picking up that avocado … because I thought about it in that moment,” explained Todd Dipaola, chief executive and founder of InMarket.

The statistics back this up. Every year, customers spend approximately $5,400 on impulse purchases, according to a survey by Slickdeals.net. Eighty-five percent of respondents to the survey said that their impulse purchases were in response to some sort of discount or deal. On top of this, 8 out of 10 impulse purchases are made in brick-and-mortar stores.

This presents a unique opportunity for you as a retailer. By offering in-store pickup, you significantly increase the chances that a customer will make additional purchases once they’re in the store. If you can combine in-store pickup with specific discounts, you may be able to significantly increase your conversion rate on those discounted items.

Riding the Ship-to-Store Bandwagon

48 percent of retailers in the United States are already offering their customers the ability to ship packages directly to the store including 62 percent of the top 50 ecommerce retailers.

Best Buy, Walmart, Target, and other retailers are using the ship-to-store option as a way to compete with Amazon.

And with package theft likely to continue rising, we should expect more retailers to offer their customers a ship-to-store option.

In addition, if you can get customers into your store, there’s a much higher likelihood of them making additional purchases, which will increase your overall conversion rate and revenue.

Yes, implementing a ship-to-store option complicates the shipping process slightly for you. But it’s quickly becoming a non-negotiable move for ecommerce retailers.

So, will you hop on the ship-to-store bandwagon, or will you continue allowing your customers to fall prey to the “porch pirates”?

The post How to Leverage Ship-to-Store for Better Experiences (and Conversions) appeared first on The Good.