In the era of e-commerce, there are many online stores. This large number of stores made competition and success more difficult.
The success of any online store is represented by two basic and important factors, the first of which is increasing the number of the store’s customers, and the other is increasing the amount each customer spends on purchasing products from the store.
In today’s article, we will focus on how to increase your online store’s profits by increasing the amount customers spend on purchasing products, and in particular, we will focus on increasing the average order value.
But what does average order value mean? What is its relationship to increasing customer spending on purchasing products and increasing the profits of your online store? This is what we will learn about in today’s article.
What is Average Order Value?
The average order value is an important mathematical value through which you can know the amount spent on average during a specific period of time by customers in each sale made through your WooCommerce store. That is, it is the value of what a customer spends on a regular order in your store.
To calculate this value, you can follow the following law:
Average order value = total sales revenue in a given period of time ÷ number of orders in that period
For example, if the total revenue of your online store last month was $30,000 and the number of orders was 150; Then the average order value will be 150/30,000 = 200 US dollars. That is, the average amount your customers spend when making any purchase in your store is $200.
The importance of average order value in WooCommerce stores
Increasing the profits of your online store is undoubtedly your primary goal, and the ways to achieve this are many and varied. While the most popular of these methods lie through marketing campaigns aimed at bringing new customers to your store; However, this method is often expensive, especially for new stores.
Therefore, instead of focusing on bringing new customers to your store, you can pay attention to existing customers and encourage them to increase their spending on purchasing products from your store, which improves the average order value and leads to increasing the profits of your online store.
Not only that, but increasing the average order value will prevent the stored products from accumulating and possibly spoilage, because the sale will be faster and thus the process of packing and unpacking the stock of products will be quick and healthy.
We can say that the average order value is one of the practical performance measurements (KPI) that you must constantly monitor because of the importance of the data that these measurements give you in increasing the profits of your online store. Through the average order value, you can understand the purchasing habits of your customers, improve the conversion rate of your site, and see how your product pricing strategy is performing.
Calculating the average order value in a WooCommerce store
To calculate the average order value in a WooCommerce store, you must know the values of the mathematical equation we mentioned above. You can do this by going to the (WooCommerce) section of your site’s WordPress control panel menu, and then clicking on (Reports).
Then open the Orders tab, and then the Sales by date section. Now you must choose the time period in which you want to calculate the average order value; You can choose between the current year, the previous month, the current month, or the last 7 days, or you can select a specific date range and then press the Apply button.
Now, sales data will appear to you during the time period you chose, and what you are interested in is the value of both (net sales in this period) and (confirmed orders). By dividing the value (net sales in this period) by the value (confirmed orders), you will get the average order value for your store.
Unfortunately, the WooCommerce add-on data may sometimes not be completely accurate, so some advise linking your WooCommerce store with Google Analytics because of the accurate and diverse data it provides that is useful not only in knowing the average order value for your store, but also helps you develop and improve it significantly. .
Increase profit margin by improving average order value
As we explained previously, improving the average order value is one of the most important factors in increasing the profits of your WooCommerce online store. There are several strategies you can follow to achieve this.
The most important thing that distinguishes strategies for increasing the average order value is that you do not need to raise the prices of products in order to increase the profits of your online store. They seek to reach one or both of the following two goals: either pushing the customer to buy more products or pushing him to buy products with more expensive prices.
Here are the most important strategies that will help you increase the profits of your online store:
1. Use conditional free shipping
The principle of this strategy is simple and depends on offering free shipping of goods to the customer’s address in exchange for the purchase amount reaching or above a certain limit. Implementing this strategy will encourage users to spend more on purchasing products from your store in exchange for free shipping on those products.
Do not underestimate this strategy, as despite its simplicity, it greatly increases your online store’s profits by increasing customers’ spending on purchasing products and thus increasing your average order value.
According to statistics , free shipping is the number one factor that drives customers to buy products online. The high shipping cost causes 49% of customers to abandon completing the purchase process.
You can activate the free shipping option from your WooCommerce settings, but only for specific geographical areas. To do this, go to the ( WooCommerce ) section and then click on ( Settings ). Then click on the (Shipping) tab and choose the ( Shipping Areas ) section.
The shipping areas you prepared previously will appear in front of you. Choose one. Or you can add a charging area by clicking on the ( Add Shipping Area ) button. You will then be taken to the shipping zone settings page.
From the Shipping Methods section, click on the ( Add Shipping Method ) button.
From the next window, choose the shipping method ( free shipping ), and press the ( Add Shipping Method ) button.
Now that the free shipping method appears in the ( Shipping Methods ) section, we click on it again to adjust the free shipping settings.
Now we determine what the free shipping condition is by choosing (Free shipping requires.. minimum order value). We then determine an amount ( minimum order value ) that should logically be higher than your store’s average order value to push customers to spend more. Then we click on the “ Save Changes ” button.
Do not forget to alert customers who enter your store that there is free shipping when purchasing a certain value or higher. You can do this in several ways, one of which is by installing the Cart Notices add-on.
2. Selling the more expensive alternative and passing sales
The strategies of selling the most expensive alternative and cross-selling are considered successful strategies in order to increase the profits of your online store. Both strategies depend on providing the best and highest-priced alternative to the product chosen by the customer.
By offering products that offer what the user wants but with additional features or higher quality, the customer is tempted to buy a higher-priced product, which increases customer spending and increases the profits of your online store.
To implement these two strategies in your WooCommerce store, go to the ( Products ) section of your WordPress control panel, and then click on ( All Products ). Then choose one of the products and click on it.
From the next page, scroll down to find the ( Product Data ) section, and from there click on the ( Related Products ) tab, where you will find two sections ( Recommended Products ) and ( Marketing Products ). Add other products to them to link with this product.
Now when a customer decides to buy this product, the products associated with it will be displayed to motivate him to buy more or buy the better and more expensive options.
3. Package the products
Many online stores sell related products that complement each other to form a single product, such as clothing, for example. So instead of the customer choosing each product individually and adding it to the shopping cart, a package of related products can be formed together to be sold as one product.
But the trick is to offer this bundle of products at a cheaper price than the option of purchasing each product separately. This will push more customers to spend more on purchasing the full package at a cheaper price, which will subsequently increase the average order value and increase the profits of your online store.
This strategy can be useful in solving the problem of low-selling products in your store, as they are combined with a related product and form a single package to sell completely.
To apply this strategy in your WooCommerce store, go to the ( Products ) section of the WordPress control panel, click on ( All Products ), and then click on the ( Add New Product ) button.
By scrolling the screen down to reach the ( Product Data ) section, you can choose the product type ( assembled product ). Then go to the ( Related Products ) tab, and add related products from the group of products in the store through the ( Group Products ) field.
Thus, you have created one product that is a package consisting of several products that complement each other.
4. Conditional aggregate discounts
Who needs to buy several pieces of the same product? A customer rarely buys several pieces of the same product, but what if you offer him a discount on purchasing several pieces of the same product or several products from the same category? Then he will often turn to discounting to save money.
On the same famous principle, buy one, get one at a lower price, you can push customers to spend more money on buying more products, thus easily increasing your online store’s profits.
Of course, you must be careful to make the quantity value after discounts higher than the average order value in order to achieve the desired benefit from the strategy.
Implementing this strategy in your WooCommerce store requires installing either the paid Dynamic Pricing add-on, which costs $129 annually, or the Discount Rules for WooCommerce add-on .
5. Sell little extras
With some products, you can provide small additions that the customer can add to the product, or perhaps customize the product, or choose some simple modifications to it. It could be choosing a different color, a slight upgrade in features, or even adding some stickers. Whatever the addition, the customer will undoubtedly appreciate it.
Even if nothing can be added to the product, offering to gift wrap it can be a nice finishing touch, or perhaps offering to purchase a gift card shipped with it.
You will be surprised at how much your online store’s profits will increase because of all those kinds of little extras that you will offer to the user before completing the purchase for low prices.
To implement this strategy, you will need to install one of two paid add-ons in your store: Product Add-ons to display the add-ons on the product page itself, and WooCommerce Checkout Add-Ons to display the add-ons before completing the purchase process.
6. Create loyalty programs
One way to retain your customers and push them to buy more of your store’s products in order to increase your online store’s profits is through loyalty programs. Programs rely on the principle of offering points for every purchase, so that certain amounts of these points can later be exchanged for gifts or discounts.
Loyalty programs will push customers to buy more products in order to receive more points that will earn them gifts. Loyalty programs can also be used to sell products that are less popular in your store, as you can allocate a higher amount of points in exchange for purchasing those products. There are two add-ons that you can install in order to create a loyalty program in your store: the first is the paid WooCommerce Points and Rewards add-on , and the other is YITH WooCommerce Points and Rewards add-on, which offers some features for free.
7. Buy now, pay later
Some customers simply do not have the financial ability to purchase the more expensive products in your store. But you can still provide a way for this type of customer to buy expensive products, by following the buy now, pay later strategy.
This strategy depends on paying the price of expensive products in installments for the customer, and then making the payment later in several installments. Many electronic payment companies now support this feature, the most famous of which is PayPal .
The nice thing about this strategy is that for you, as a seller, you will get the price of the purchased product directly, and the process of dividing the amount and following up on receiving payments will be completely handled by the intermediary electronic payment company without any need for any effort on your part.
This strategy will push customers to spend more money to buy your store’s products even if they do not have enough money to buy at the time, and of course this will directly increase your online store’s profits.
It is worth noting that the buy now, pay later economic system has also begun to spread in the Arab world through several emerging companies seeking to provide this service in a way that suits the requirements of Arab electronic markets.
8. Offers are limited in quantity and time
Fear of missing outis known to be one of the most popular and successful quick selling strategies. It relies on the principle of creating a feeling of need to buy the product before the offer time expires or its quantity runs out.
You can create a limited-time offer on a product, or specify that only a specific quantity of the product is subject to the offer. This will make customers rush to buy to try to catch the offer before it ends. Thus, you will increase your sales, which will of course increase the average order value and thus increase the profits of your online store.
Thus, we have reached the end of our article in which we talked about the average order value, and its role in increasing the profits of your online store without even raising the prices of the products. Improving the average order value will increase the income from your WooCommerce store and will undoubtedly help you achieve great successes in the field of e-commerce.
