Learning from giants like Sephora can provide invaluable insights into overcoming challenges in the retail industry, help you win customers, and increase your average order value.

With a legacy of over five decades, Sephora has a story of continuous evolution, winning the hearts of consecutive generations. Sephora generated an impressive $10 billion in revenue in 2019, its fiftieth year.

But what’s the secret behind their worldwide success? How did they do it?

The short answer: by leveraging the power of personalization.

They understood their customers. Towards this, they began by collecting data from both digital and in-store sources.

We brought in-store and digital under one roof, along with customer service, said Mary Beth Laughton, then Executive Vice President in charge of Sephora’s omni-retail strategy. “It’s changed the way we think about sales metrics, engagements, and experiences across channels.

They created custom retail experiences for each customer, and their efforts paid off. Sephora launched a Help Me Choose” section on their website, where shoppers can answer a series of quizzes to engage with the right products. Thanks to this personalization in their online store, the average order value (AOV) increased.

Like Sephora, any eCommerce business can leverage their creativity to fuel their customers’ passion. In this article, let’s dive into how personalization and other strategies can overcome low AOV (average order value).

What are the challenges that come with low Average Order Value?

How much do customers spend on your website? Average Order Value refers to the average amount customers spend on a single transaction. If customers spend less per transaction, that’s a low AOV.

Some businesses can inherently have a low AOV but still be profitable. For instance, convenience stores, freemium apps, and sellers of digital downloads or handmade goods are all low-AOV businesses but are not necessarily low-revenue or low-profit businesses. In some cases, smaller orders or even low value may yield a higher profit per unit; however, the collective effect of several low-value transactions may still impact overall profitability.

Typically, low AOV is caused by customers purchasing a smaller number of items. That can mean that it’s difficult to generate upselling and cross-selling opportunities, reducing the chance to increase profits. As a result, the business needs to depend on a greater customer count. Any impact on customer count can significantly impact revenue and profitability.

This dependency on volume means that the business needs to spend much more on customer acquisition. It also results in a need for additional staff and infrastructure.

Boosting AOV: Ways to Enhance Transaction Revenue

So, how do you improve your average order value? We explore some effective strategies to encourage your customers to spend more per transaction, resulting in increased revenue without increased marketing and sales spend.

Special Product and Pricing Strategies

The most immediate way to increase average order value is by encouraging your customers to buy more! Present timely offers and promotions to encourage upselling and cross-selling opportunities. Here’s a few suggestions:

  • Keep it simple! Offer a marginal discount – that is, a discount on each additional product purchased. For example, if each unit costs $10, you may be able to offer them at $8 each if the customer buys more than 4 units.
  • Present customers with offers or coupons based on a minimum spend threshold. For example, they might receive a $10 coupon on a minimum purchase of $75.
  • Don’t be afraid of selling premium products at a premium price. This attracts customers who are willing to pay more for superior quality, and of course, automatically increases AOV.
  • Offer tiered pricing where you set different prices for different levels of services. So if you’re selling Software as a Service, you can offer basic features for lower prices, and charge more for premium features.
  • Implement dynamic pricing, where you adjust prices in real-time as per demand. For example, you can offer a coupon when a customer is at risk of abandoning their cart, or increase prices when there is high consumer activity.

Customer Experience Optimization

Provide your customers with personalized experiences on the website. You can leverage data for this purpose to understand the buyer and choose which products to display to each individual shopper. Here are a few ways to optimize customer experience using data:

  • Use the user’s recent purchase history and past data to recommend products. For example, if they’ve been purchasing men’s sneakers, they may not be very interested in women’s stilettos.
  • Suggest products based on their search history. If they’ve reached your site through searches for mobile purchase, target them on the site with multiple mobile phones – don’t present your mobile repair services upfront.
  • Target and retarget them with paid campaigns.
  • Write them personalized emails to pique their interest.
  • Tailor homepages for returning customers.

eCommerce Website Optimization

Maintain your website in a way that engages both first-time visitors and returning customers. This results in a comfort factor when using the website, which increases purchase rate and order value. By presenting additional options to purchase and making sales faster, average order values can be increased.

  • Highlight popular and newly added products on the home page.
  • Let them know if there are any ongoing offers that they could take advantage of.
  • Motivate visitors to purchase with the element of urgency. For example, timebound sales like a Black Friday sale, expiring coupons, or low-stock indicators can be used.
  • Optimize your product category pages with a description of the product category and the product itself. Show a comparison of various similar products on the product page. Display high-quality pictures, videos, or animation on every product page.
  • Provide sorting and filtering options to allow visitors to quickly find the right product.
  • Streamline your checkout process. Cart abandonment is often related to this process and the technical difficulties customers go through during checkout.

To successfully implement these strategies and more, and to increase your AOV, consider eCommerce Managed Services by Ziffity. Such services provide tailored solutions specific to your business, leading to the continuous evolution of your online store.

It’s crucial to understand and improve AOV to drive profitability. Use data, optimize your user experience and implement the right product and price strategy to get more out of each transaction.

Take the next step toward success with eCommerce managed services provided by Ziffity. We create tailored solutions as per your requirements and objectives, helping you unlock the full potential of your ecommerce business, leading you toward improved AOV and overall better turnover.

Invest in ongoing analysis to improve your AOV. Contact us today!