There’s nothing more frustrating than an ailing average order value (AOV).
Growing your AOV is half the battle when it comes to increasing your total revenue, and there are tonnes of tactics you can use to encourage customers to spend more like running frequent promotions, offering free shipping, optimising product pages and making the shopping process easier for your customers.
While these are absolute essentials for a growing ecommerce store, if you don’t understand your customers, you’ll be making these changes in vain.
Understanding a few key principles of human psychology can take your marketing from good to amazing, which will in turn will help increase your AOV – so to help attract, convince and convert more customers, you’re going to need to take a quick lesson in psychology. Read on.
#1. Give a little: offer free shipping for the sweet, sweet AOV
According to author Dan Ariely in his book Predictably Irrational, people change their behavioural patterns when something free comes along. It’s not just about price – it’s about the emotional response, too.
For example, Ariely experimented with “free” by offering his test subjects a Lindt chocolates for 15 cents each vs. Hershey’s Kisses for 1 cent a pop.
But when Lindt was reduced to 14 cents and Hershey’s Kisses were offered for FREE, 69% of test subjects went for Hershey’s. When the word “free” entered the equation, test subjects were far more likely to snatch up a bargain… and the same works for your online store.
If you’re looking to increase your average order value, free shipping is a major customer converter. For one, you’re splashing the word “FREE” all over your website, including on your product and product category pages. Second, 84% of online customers have said they’re more likely to shop with brands that offer free shipping.
There are a few ways you can successfully offer free shipping without breaking the bank and use it to increase your average order value. Here are a few ideas to help get started:
- Free shipping on all orders.
- Customers get free shipping regardless of their order size and value. This method is recommended for ecommerce businesses who sell small or lightweight items (think makeup, small items of clothing like socks and ties, etc).
- Free shipping on some orders, products or product categories.
- This will ensure you don’t lose money on shipping for bulky or heavy items, plus the incentive of free shipping will encourage customers to purchase slow-selling items.
- Free shipping to specific locations.
- It costs far less to ship locally or nationally than overseas. Offer free shipping where you can afford to send – or, alternatively, use free shipping to market and expand to a new customer base.
- Free shipping for members.
- Customers who are members within your ecommerce business get free shipping as a reward. Studies have shown that offering something for free can drive repeat sales tenfold – you’ll encourage customers to shop again and again, plus drive more customers to become members and grow your email database.
- Free shipping for a promotion.
- If you’re looking to test the waters of free shipping before offering it full time, consider offering free shipping as a limited-time-only promotion. Spread the word via social media, email marketing, and more – you’re sure to see sales increase.
- Free shipping for re-engagement and email automation.
- You could use free shipping as an incentive for lost customers to come back and check out. The exclusive, one-time-only offer will help recapture abandoned carts or reengage old customers.
#2. Get on the bandwagon: use social proof and social media
When it comes to marketing, sometimes we’re less like people and more like sheep. It all comes down to cognitive bias – otherwise known as the bandwagon effect, groupthink, or herd behaviour.
The bandwagon effect refers to our natural human instinct to conform. Ever wanted a flash new keep cup or new car, just because Davo from the office has been flashing his around the workplace?
There’s the bandwagon – and we’re all prone to hopping on. The bandwagon effect refers to our natural instinct to say, do, or believe something if a large number of other people are doing it, too.
It’s common on social media – businesses offer influencers and celebrities products to test out and share on Instagram or Facebook, then people start talking, sharing and best of all, shopping. See the graph below.
Picture this: Chris Hemsworth shares a post on Instagram flogging a new workout and muscle-building program which can be purchased online. He’s a big dude and the son of Thor, so it doesn’t take much for awareness and enthusiasm to drum up around the program.
Soon, the workout program enters the mainstream and a huge influx of posts appear of male customers flexing their success using the workout program. Other potential customers (or weedy teenagers) see these posts and bam, we’ve got social proof the product works.
All hail the herd mindset.
Social media and social proof are now essential for marketing. Research shows trust in traditional marketing methods is on the decline and customers are placing their trust amongst the herd, rather than the shepherd.
If Davo reckons his keep cup is alright, I believe him.
- Build a social media audience worth marketing to.
- The power of cognitive bias comes from numbers. The more followers you have, the faster you can take advantage of the bandwagon effect and the faster you can drum up hype around your products. Work on building your follower-base in an organic way through frequent posting and sharing, complete with relevant hashtags.
- Get in touch with social influencers and offer free goodies in return for posts on Instagram, Facebook or TikTok.
- Influencers often have masses of followers – we’re talking hundreds of thousands, sometimes even millions. However, influencers with around 10,000 highly engaged followers in your niche are the ideal level to begin working together.
- Find an influencer related to your industry and reach out – for a price or even a gift-basket of goodies, they might be willing to share a post about your brand. Make sure to get your ‘goods for post’ arrangement in writing so everyone knows what to expect.
- Consider paid social media ads.
- Facebook, Instagram and TikTok offer paid advertising to help get your brand and your products in front of more eyeballs in a shorter timespan. Their algorithms are highly sophisticated to help you target your message to your ideal customer. If you want immediate results, talk to a professional marketer about running some paid ads on social media and how you can get the most bang for your buck.
- Add social proof to product pages.
- Testimonials are a powerful form of social proof. These are honest reviews of your products and services from real people, highlighting the ups and downs of shopping with you. If you can, ask customers to leave a review after purchasing – an automated follow-up email can do wonders! Here are six testimonial tools that make capturing user reviews even easier.
#3. Give ‘em a scare: take advantage of FOMO
We’ve left one of the sneakiest and most successful tactics for increasing your average order value to last… and it’s called FOMO (fear of missing out).
In behavioural economics and decision theory, FOMO can be simply explained as loss aversion. In their research, Scholars Amos Tversky and Daniel Kahneman have shown people have a strong need want to avoid loss – whether it’s a hot date, getting one last drink at the bar, or even getting a sweet deal online.
According to research, losses are twice as impactful as gains in the human mind. We hate missing out – fear it, even – and this can be used to increase the number of sales coming through your ecommerce website.
A couple of common FOMO methods include:
- Highlight the scarcity of the product.
- If you’ve got a top-selling product, you can activate FOMO by displaying the number of products left, e.g. “hurry – only 3 left in stock!”
- Set a limited-time only promotion.
- There’s nothing scarier to a shopper than the word “limited”. Splash “limited time only” all over your promotional material to urge customers to act now or miss out on the deal.
- Highlight the savings possible from purchasing multiple items in one transaction.
- Underneath the “add to cart” button, let customers know what kind of savings they can achieve if they had multiple items to the cart. Use impactful colours to catch their attention and highlight the urgency… red is always a winner in this case!
- Emotive/urgent language.
- Think “hurry”, “while stocks last”, “one week only”, “limited” and “before time runs out”. Be brief, be emotive, and make sure it’s urgent.
FOMO can be a powerful tool for encouraging customers to spend more and checkout more often. However, a word of caution to this tale… if you’re going to harness the power of FOMO, make sure not to lie to your customers.
If you’re splashing “3 items left in stock” all over your product pages but you’re caught with a whole warehouse full of products tucked away, you’re going to lose your customers’ business as well as their trust – and fast.
Use FOMO responsibly!
Get to know your customers and watch your average order value skyrocket
Humans are simple creatures.
Nine times out of ten, we all run on the same psychological wavelength.
Seeing the word “free” triggers excitement. Certain language like “HURRY” can trigger stress and the fear of missing out. Seeing an influencer, celeb, or even a friend with a cool new product just screams “I NEED IT!”
Understanding some key psychological principles can help drive your marketing and encourage customers to spend a little more, add a few more items to the cart, and check out online.
You’d be surprised what some emotive language can do to your average order value!
And of course, we would be remiss if we didn’t highlight the value of ensuring your customers are delivered their goodies in perfect condition, and on time.
Did you know that Transdirect Members can save up to 30% on our already super-low shipping rates? Learn how Transdirect can help your ecommerce business ship your wares at an even lower price, every time.