‘Tis the season! As the days get colder and we get further and further into Fall, online retailers are surely gearing up for the annual rush of holiday shoppers. While more and more customers are choosing to shop from the comfort of their own homes instead of facing the holiday crowds in-store, online retailers are asking themselves how they can better engage their customers online in order to drive higher average order value, all while lowering their promotional spend.
Average order value (AOV) has always been a chief key performance indicator for online retailers. It’s critical because low AOV creates pressure on order profitability and the fulfillment operation; high AOV provides greater leverage for the organization’s operations. Marketers are constantly striving for the ultimate goal: achieving the right balance between increasing a customer’s AOV while minimizing the impact of temporarily pulling sales forward and over-spending on promotion.
What tactics can retailers use to drive higher AOV?
- Minimum spend % or $ off promotions
- Minimum thresholds for free shipping
- Merchandising block and tackle (cross-sell, up-sell, price anchoring, check-out impulse items)
- Financing promotions for bigger ticket items
Common tactics like free shipping on minimum spend and financing promotions are ubiquitous, simple to communicate, and quite effective, but don’t offer much differentiation in the marketplace.
Among the various AOV drivers, it is the “Spend X Get Y Off” promotions that garner the greatest opportunity. Here’s why:
Using technology and real-time predictive analytic capabilities, marketers can deploy a highly targeted offer at the precise time along the purchase path to get customers to incrementally increase their basket size. It also nurtures the customer relationship by building more relevant interactions and treating them at the individual level, instead of as broad customer segments. Relevancy is the key. Advanced personalization and one to one customer engagement strategies deliver a more relevant experience to your customers. Ultimately, the marketers’ spend goes further, customers are more satisfied, and average order increases. That’s a win/win for sure.
What solutions exist today for retailers?
With so many players doing ‘slices of this’ or ‘slices of that,’ it’s hard to know which solution is actually making a positive improvement to your business. Self-serve models are good if you have the time, talent and budget. But you likely prefer a solution that can be deployed easily, keep you informed and, ultimately, help you deliver better program performance in a highly attributable, measurable way. After all, this holiday season, how are you going to outperform the marketer working for your competitor who is struggling with the same issues, without having an edge?
If you’d like to learn more about driving true incremental performance and state-of-the-art relevancy, check out the full article here.