As an ecommerce founder, a common question that pops up in your mind is "how do you increase your average order value?"
Every eCommerce business is faced with two major challenges: bringing down acquisition costs and increasing revenue per sale.
If you’re relying solely on acquiring new customers as a solution to these two problems, it’s not going to cut it.
Rather, focus on raising the buyer spend on each sale i.e. increase the AOV.
And the best way to do it? Upselling.
Research says eCommerce businesses selling to an existing customer see 60-70% probable conversions whereas selling to a new customer sees only a 5-20% success.
So let’s understand the What, Who, When, How, & Why of upselling and how you can use it to increase your AOV. We'll also cover some of the best examples of upselling you've ever seen in the ecommerce world.
Here's what we'll be covering in this blog post:
- 17 proven ways to boost average order value (+ examples)
- 6 Rules to keep in mind for your upselling strategy
- What should you be upselling?
- Who should you be upselling to?
- When should you be upselling?
- 3 major benefits of upselling
- Upsell & AOV 101
What is upselling?
To it simply, upselling is a sales technique wherein you offer your customers the chance to make purchase upgrades.
For eCommerce businesses, upsells means to introduce or recommend the shopper a product that offers better features, better specifications, or more volume to them. This of course comes at a marginally higher cost.
We all have come across upselling in some form or the other at some point in our lives.
Imagine ordering a cafe mocha at Starbucks and getting a recommendation to upgrade to a grande a just a little more cost — more chocolate, more coffee at just a minimal cost. Why not?
That’s how upselling works.
However, if Starbucks were too pushy about the upgrade, you would have declined the offer. This is where the upselling commandments come into play.
17 proven ways to boost average order value (+ examples)
According to a study, upselling drives an average of over 4% of sales for an eCommerce business. In fact, it’s one of Amazon’s core strategies to increase their AOVs as well.
But that happens when you upsell strategically in a way that the offers seem appealing to the online shoppers.
1. Offer a side-by-side comparison of similar products
One of the simplest ways to upsell is to offer a side-by-side comparison of similar products. It lets the shopper get a comprehensive view of the value they can get out of a product that might cost them a little more.
The ease of comparison of value and pricing removes the need to move back and forth between product pages to consider upsell offers. This increases the chances of being able to visualize the higher value being presented to the shopper and eventually better conversions.
2. Display the alternatives available on limited/ out of stock inventory
There may be times when a product is out of stock or running on limited inventory. In this case, you can implement an upsell strategy that displays alternative products to the shopper. These alternatives could be higher priced than the product they were viewing, but need to remain contextual to their search.
A simple “customers also viewed” section displaying these product recommendations can do the trick.
3. Give the shoppers an option to upgrade
Upgrades are to eCommerce what flowers are to women. Both persuade well.
While upgrades traditionally have been limited to gift cards, warranty, and the like, you can choose to do things differently.
Myprotein offers an upgrade to a higher quantity on its cart page. It offers upgrades by mentioning the number of servings and the savings per 30 servings.
In case you’re wondering how this works, say hello to reciprocity. Humans, by nature, are obligated to repay a favor when someone does it for them.
By offering customers to supersize to 30 servings and save $1.33 per 8 servings. It is persuading online customers to go for the purchase.
With a free 3-month Tidal subscription, it offers value for more, and ‘free’ works 90% of the time.
We've something for you: Reduce eCommerce Returns with Intelligent UX (+ Smart Handling ideas)
4. Offer a minimum dollar threshold for free shipping
Did you know that 9 out of 10 customers find free shipping as the greatest incentive for shopping online? Use this purchase behavior to upsell products on your store.
Provide a minimum dollar threshold where you encourage customers to add more products to the cart to avail free shipping. This way you sell more as well as save on shipping costs by fulfilling orders of more products together.
5. Show a discounted upsell after order completion on the thank you page
A lot of brands apply an upselling strategy only when the customer is browsing through products. But you have an opportunity to upsell even when the customer has completed a purchase.
You can do this by displaying upsell offers on your thank you page or nudging them to explore your discounts page for further upsell opportunities using an exit-intent popup. It’s like waiting for the customer to complete a purchase and then redirecting them back into the purchase journey.
6. Subtly recommend similar products
You step into a brick-and-mortar store to buy a t-shirt from their basic collection. But the salesperson talks you into checking out a similar t-shirt from their limited edition collection and immediately piques your interest. This is an upsell strategy that you can use in your store too.
If you have a large inventory with similar products, showcase similar products on the product page. You can also recommend new collections relevant to the product search the shopper has made.
Here’s how Net-a-Porter does it:
7. Show alternatives with better product ratings
88% of consumers trust product reviews and ratings as much as personal recommendations. Now you can’t physically be around an online shopper to encourage them into checking out other similar products. But you can subtly push your upsell offers in front of them by displaying alternatives with better product ratings.
This upsell strategy works because the higher ratings on an upsell let the shopper see how others like them find the product, and the value it has added to their lives.
8. Display and highlight a popular choice
Imagine walking into a store that displays three similar dresses in a row. But one of them has a label that says it has been picked as a must-have by a popular fashion magazine. You’re automatically swayed towards trying out this dress.
Use the same psychology to make upsells on your online store. When you’re displaying similar products or upsell offers on the product page, cart page, the search results page, or even the exit-intent popup, highlight one which is popular with a sticker or a banner.
9. Use popups for upselling
Popups are an effective strategy to capture the visitor’s attention. Instead of only using them to promote your discounts and deals, use the space to make your upsell offers. You can implement different upsell campaigns on different pages for more effectiveness.
For example, if a visitor is on the product page and is exiting the site, you can show an upsell offer, recommending a similar but better product at a 10% discount.
Similarly, if the visitor is exiting from the thank you page, you can encourage them to make an upsell purchase by showing the offer on an exit-intent popup.
10. Display upsell offers on your cart page
Typically, online stores display the products added to the cart on their cart page, along with details on quantity, pricing, etc. But you can actually use this space to promote your upsell offers too. This is pretty much what Amazon does as well.
When you add a product to your cart, it starts to display similar products that are ‘better’ than the one you picked right below it. This makes the shopper want to reconsider their purchase and buy a higher value product, especially if it’s accompanied by a better offer and ratings.
11. Implement quantity breaks or volume discounts
BOGO offers have often enticed customers, both offline and online. It nudges customers to purchase by offering an extra item at a discounted price.
Quantity breaks and volume discounts can help you upsell to increase your average order value(AOV).
While both are often used interchangeably, there is a slight difference that makes both distinct.
Quantity breaks refer to increasing discounts based on the number of products your customer buys.
Volume discounts, on the other hand, refers to price reduction offered to buyers who buy in bulk.
Terra Origin uses the BOGO offer quite well. If you notice, they’ve repackaged the BOGO offer as Add 1 more item to the cart to get 1 free!
That elicits more curiosity than otherwise.
By providing a progress bar and using an increased font size it is nudging shoppers to add one more item.
Why does it work?
It uses the principle of framing effect. According to this psychological principle, people react differently to choices depending on how it's presented.
Followed by adding a price break, the offer persuades buyers to add $40 to get 20% off. As per the Rule of 100 coined by Jonah Berger, a percentage discount for items priced below $100 works better while a dollar-off discount works well for items priced above $100.
This combined with this slashed rate of $19.50 to $10 compels the users to buy.
12. Provide high service tier trial products or mini quantities
If you’ve recently launched a high-value product, consider offering either a trial product or a mini-packaging of the same. This lets the consumer experience the product, understand the value it brings to them, and makes them more receptive to converting when you upsell the actual product to them.
Let’s take those perfume trials into account. The trial bottles let you experience what the perfume smells like before you actually have to buy it.
13. Start upselling during checkout
While it’s a good practice to keep your checkout as distraction-free as possible, running upsell campaigns there has proven to work effectively for many.
Just as the visitor is moving towards completing the purchase, make them an offer that cannot be refused — free shipping, for instance.
Let them know how far they are from availing free shipping and then display a few trending products in the same category below.
14. Upsell via your multiple communication channels
Whether it’s email, web push, Facebook Messenger, or even SMS, use your common communication channels to upsell products. Don’t just restrict them to notify shoppers of the ongoing deals and discounts.
For example, if a customer purchased a planner from you last month, use these channels to reach out to them and introduce your new range of weekly or monthly planners or productivity kits.
Here’s an example of an email for upselling:
15. Don't let your welcome emails go waste
Yes we just covered upselling through emails but we can help but take it step further. The most missed out opportunities are when sending welcome emails or transaction emails.
While the latter usually consist of a restricted messaging, sending a welcome email series to new customers is a very common practice and can be a great infrastructure for an upsell pitch.
Think about it, a customer just possibly bought a product, they trust your brand and in that moment you send a well crafted welcome email that subtly hints at buying a similar product. They're bound to consider it at least if not immediately pull out their card.
But be careful not to be pushy and overshadow the real message - giving them a warm welcome.
Check out this example below, they stay true to the message while presenting a soft sale pitch.
16. Set up retargeting and remarketing ads to promote upsell offers
Another effective channel to upsell products to your customers is your retargeting and remarketing ads. Based on what a customer purchases or browses on your website, you can display product upsells through these channels to introduce them to something better, and more ‘value for money’.
17. The Decoy pricing strategy
‘Decoy’ sounds like a term straight from a Hollywood spy flick.
But, in marketing, it has a different relevance.
Decoy Pricing refers to presenting a higher-priced product as a form of persuasion alongside a low-priced product by projecting it as inferior.
Built Athletics uses decoy pricing with panache. It recommends three products with 3 different pricing and flavor options.
While the middle product is the higher priced one, it has 6 options, while the second higher priced one has 2 options and the lowest priced product has 0 options.
Don’t you think you would be more inclined to buy the middle product?
‘But, all three products have different purposes?’
That’s where irrelevance plays an important role. Dan Ariely explains this in his TED talk about the study he conducted with 100 MIT students.
He showed the subscription offer from The Economist, where 16 students chose option A (Economist.com subscription), while 84 chose option C (Print & Web subscription).
No one chose option B because of no price difference between options B and C. He then removed option B and presented it to a different group of 100 students. The results were surprising where 68% chose option A and 32% chose option C.
Simply put, online customers don’t always know their preferences. Irrelevant options help them know what they don't want. It helps them in making decisions.
6 Rules to keep in mind for your upselling strategy
1. Ditch the upselling blueprint and get to know your customers first
All your customers are unique, and trying to fit them into the same box can be a grave mistake. What might seem lucrative for one might be a waste to another.
For example, if you're an antivirus software company selling a five devices plan, it's not a right fit for a person who has only two devices to use.
Understand what your customer needs. Take time to analyze their past purchases, their current needs, and how they fit into the upsell you’re offering.
2. Allow your customers to “experience” products first
One of the key factors of a successful upsell is how good or valuable the customer thinks your products are, based on their previous purchase and shopping experience. The best way to do so is to ask them for feedback post-delivery.
Here’s an example:
Now if the customer shares positive feedback, you know they liked your product. You can then nudge them to purchase a subscription of the product or buy a bigger quantity of the same.
This is similar to how you wouldn’t buy a tall grande right away from Starbucks without knowing your favorite coffee blend or its strength.
3. Highlight the value in your upsell offer clearly
If Starbucks didn’t suggest you get a bigger cup of coffee instead, would you have yourself? Not really.
This is because most often you choose to purchase something that you already want. Unless someone tells you that you could also have this along with that, you wouldn’t really go for it.
Another factor is that you’d need a strong reason to spend your hard-earned money on something extra.
Be it an increase in the quantity, a better feature, or simply the add-ons that come along with a particular product and/or service.
For example, if a visitor is browsing through basic, single-tone t-shirts, show them a pack of 3 with a message “let us cover all your weekday lounge needs” and a discount to save on buying the 3 together — it's a great way to nudge them to pay more than what they initially intended to.
“Tell me how I win. If I win, you win”, said sales guru Jeffery Gitomer when someone asked him how they could upsell him a credit card.
4. Be transparent about the pricing difference
Irrespective of the brand or the value your upsell offer brings, most online shoppers have set a budget for their purchase. While they’d like to know about the options available to them, it’s also important for them to know how much of a difference they’d have to pay.
When making an upsell offer, make sure you’re crystal clear about the pricing difference.
Don’t be ambiguous. Tell them how much they’re saving on the purchase despite the upgrade. It makes your upsell offer more compelling.
5. Segment your customers based on behavior for better personalization
We’ve said it before. We’ll say it again. Every online shopper is different.
But at the same time, some may display similar purchase behavior. Be it in terms of the products they like, the collections they’re interested in, what motivates them to make a purchase, and the upsell offers they tend to convert one. Use that data to categorize them into customer segments and detail them out like personas.
This will help you create personalized upsell offers for each of the segments, that they are more likely to convert on. 36% of your customers actually expect this personalization. This is a great way to improve your AOV for each buyer.
Want to know how top eCommerce brands use personalization to sell more? Read this.
6. Learn to accept a “no, thank you”
Sometimes, even if it’s a rightly timed upsell or great value addition, the customer might not feel the need to upgrade. Be respectful of their choice and accept their decision. If you’re too pushy about the upgrade, you might just end up losing the customer.
Now that you know the commandments of upselling, let’s get started with how to put this strategy to work.
What should you be upselling?
1. Most popular/ trending products
78% of consumers use the Internet to research and make sure they’re buying products of value. Buying a product/service has emotional factors connected to it. When people see that a product has been bought by many consumers, they feel more confident in buying it.
2. Behavior-based products
91% of consumers prefer to buy from brands that remember them. When you care to go through consumers’ past buying or product browsing behavior, you can provide relevant product options to them, which increases the likelihood of them buying it.
Use a customer journey-based approach to gathering information about customers’ past purchase history. Then, make the upsell relevant to the past purchases of the customer. If a customer bought a mobile handset three years back from your eCommerce store, it’s most likely that they might need to change or upgrade or look for a new handset in the coming few months.
3. Must-have/ need-based products
Let’s say you’re buying a ring for yourself. But as you move towards checkout, you see an upsell offer that displays another ring with the message “what would you like for your better half?”. This may immediately consider you to make a purchase as the brand creates a ‘need’ for you to buy a ring for your partner as well.
4. Upsell while making a cross-sell promotion
Upsell and cross-sell are two different things yet often confused for each other.
If Apple recommends its customers to buy the Macbook Pro instead of the Macbook Air, it’s upselling and if it asks them to buy USB-C to lightning cable or USB-C to USB Adapter, it's cross-selling.
A combination of both can effectively increase your AOV.
Gymshark combines cross-sell and upsell when selling its apparel. It sells a T-Shirt and socks effectively driving persuasion without causing choice paralysis.
Why is it effective?
An online buyer might be compelled to buy the shirt costing £25 instead of one in the cart or the sock. Either way, it is a win-win situation because it increases the AOV.
5. Product splinter or service slice
Upselling means you need to introduce your shoppers to something better, but related to what they’re viewing or are interested in buying. But not every online store has as many products in the same collection or category, nor do they have the ability to create new products right away.
This is where the product splinter strategy comes in. Here, you take a portion of your existing product and make its own new product. You can do the same with your services as well.
For example, you have an acne-reducing skincare product which is a mix of a mask and a hydrating lotion. You can actually invest in creating a mini-pack of your mask and lotion separately to let customers experience each before you introduce them to an all-in-one.
But who should you be upselling to?
Who should you be upselling to?
Upselling is not a strategy that you should restrict to only a set few customers. You can implement it for all the visitors to your store, no matter what stage of purchase journey they are at.
But here are some customers that you should definitely consider upselling to:
1. Your highest spenders
Take a look at customers who have spent a lot on your store. Create a separate segment of these customers and study their sales history to identify their motivation behind investing in higher-value purchases.
These are consumers that are willing to pay a premium to bag better products or avail of extra goodies. So make sure you’re offering them exactly that.
2. Your loyal customers
Do you see a segment of shoppers that tend to make purchases from you time and again? These are consumers that trust your brand and are hence more likely to make a bigger commitment.
Reach out to them with upsell offers that are similar to what they’ve purchased repeatedly. Make them feel valued by showing them you notice their preferences.
3. Your first-time buyers
First-time visitors to your store are more likely to leave without making a purchase. That makes upselling even more crucial to ensure they convert. Wondering how you can convince someone to make a higher-value purchase on their first visit?
Use social proof to back it up and show them upsell offers that display top-rated featured or best-selling products that are similar to what they are exploring on the site.
4. Your active browsers
Window shopping is real even online. There will be many visitors who land at your store looking for one product but end up exploring other collections as well. Since they’re already willing to see what options are available to them, ensure you dynamically show relevant upsell offers as they move along the site.
You never know what actually motivates them to make the purchase.
When should you be upselling?
The answer to this varies based on the upsell strategy you intend to use. But a few golden rules to follow to know the right time to make an upsell offer are:
- When you’ve given enough time to the visitor to find the product they’re looking for and understand the value it brings to them
- When you allow the customer to make a purchase to experience your products before making an upsell offer (eg. beauty and cosmetics)
- When you ensure your upsell offers are more intuitive than pushy and do not derail a visitor’s shopping journey
- When a trust moment occurs, i.e., a potential customer takes an action within your sales funnel that indicates their trust towards your brand is increasing
3 major benefits of upselling
The short answer is that a customer who is actively browsing through your products or has purchased from you before is more likely to buy a higher cart value product than a first-time visitor. It’s the easiest way to influence a consumer’s purchase decision in the most natural way possible.
But we’ll give you a few more reasons:
1. Increases average order value
When you upsell smartly, you can convince an online shopper to spend a ‘little’ more than what they initially had in mind. This helps you increase the average order value on your store easily.
2. Increases customer lifetime value and retention
When you personalize your upsell offers to focus on adding more value to your customers, their experience with your brand improves. The better the experience, the longer they tend to stay with you as a customer, and the higher is the probability of them making more purchases. This increases both customer lifetime value and retention.
3. Improves customer experience
Upselling essentially uses the theory of introducing shoppers to better products. This ensures that the online shopper makes a better purchase, one that is more likely to offer them a great post-purchase experience.
While upselling has endless benefits to increase your overall sales and revenue, it’s not always the strategy to go for. Sometimes, you need to downsell as well to nudge a purchase.
Upsell & AOV 101
1. Cross sell Vs Upsell - Is there a difference? Which is better?
When talking about upselling and its benefits, it's impossible to leave out the concept of cross selling.
But what does cross selling mean? - it refers to a popular tactic used to increase the average order value of a customer by suggesting related products or cost effective bundles.
Taking a simple example, say you visit amazon to shop for a pair of earphones.
While you're about to checkout or when you're just having a look at the product, you might see a bundle suggested by amazon which includes a pouch and a cleaning set for the product of your choice. This is how cross selling works - you entice the customer by suggesting products that closely relate to said earphones.
If you compare both strategies, you will realize that the end goal is obviously the same - drive more sales from a single customer visit. What's different in just the approach. While upselling involves selling upgrades or a better version of a product, cross selling is focused on selling more products to the customer.
Which is better, you ask? Well, it purely depends on your product portfolio. If you sell a variety of products that fall under one category, you can leverage the cross selling technique a lot more. But if you sell just a single type of product, you'd rather go for the many upselling methods we suggested earlier.
In an ideal scenario, you would want to run a mix of both in order to maximize the potential cart value from a customer.
However, if you are looking more possible options, there is a third method that's commonly used to drive the average cart value.
2. Downselling - a small sale is still a sale
Downselling is another sales technique used by eCommerce businesses to ensure every visitor turns into a shopper by offering them an alternative that is more budget-friendly. Sometimes, it simply includes offering more convenient buying options to customers after they reject or decline an upsell offer you made.
The image below will help you visualize the difference the between these three strategies.
3. Is upselling for you?
The short answer is, YES.
Upselling is for everyone. If you’ve started to notice that your store visitors tend to buy a lower range of products when you have better ones to offer, set up an upsell campaign so that they can see the value in your higher-priced products as well.
And as long as you’re adding value to the consumers, you’ll always succeed.
But as a parting note, remember that upselling isn’t a set and forget it strategy. Just like other marketing and sales campaigns, you need to continually monitor the response to your upsell offers and optimize them to suit your target audience better.
4. What is a good upsell percentage?
A ‘good’ upsell percentage is subjective of where you upsell. Generally, 16% of the eCommerce brands have 1-4% upsells on the cart page. On product pages, 15% of brands have 1-2% upsell rates and 5% have an upsell percentage of 3-4%.
To calculate the Upsell conversion rate, use the following formula:
Upsell Conversion Rate = No. of upsells/No. Of times offered * 100
5. How do you upsell without being pushy?
By not making it obvious. You offer an upsell but don’t have to keep pestering your customers.
Decathlon offers free shipping by giving a subtle message for customers to buy an item for an X amount to avail free shipping.
Want free shipping? You’re almost there
Add $15.01 more
Did that seem pushy? The copy is persuasive and drives the upsell. You don’t need to upsell on the checkout page if you have done it on the cart page.
6. What is average order value in eCommerce?
Average Order Value refers to the average revenue spent by a customer every time they buy from an online store.
Use this formula to calculate AOV.
AOV = Total Revenue/Total Orders * 100
Let’s say your eCommerce store earned $30,000 in a month and the total orders received were 5000.
AOV = 30,000/5000*100
AOV = $600
Your AOV is $600
7. Why is average order value important in eCommerce?
Average Order Value is a metric that helps you understand customer behavior which can help you determine how much your customers are spending on every order. It provides a strong reference for planning your pricing and digital marketing strategies.
Since acquiring new customers is becoming expensive each day, increasing the AOV of your existing customer audience can help you prosper.
8. What's a good average order value?
Ruthlessly honest, there is no “good” average order value. It is subjective as it depends on a lot of variables.
And just a heads up, the global average order value is $116.
Back to what’s a good average value, it depends on certain parameters such as
In a recent study, the AOV for fashion and apparel industry as of June 2022 stood at $122. The highest AOV was recorded for August and March ($134).
Things were good for the Consumer goods sector, where the highest AOV was recorded in Aug 2021 at $144 and the lowest at $71 in Dec 2021.
Surprisingly, the Beauty & Personal Care industry had a bleak year with the AOV not crossing $100.
This is why you should consider your industry AOV as a benchmark for your improvement.
Geography has a greater influence on business and eCommerce is no exception.
The Americas recorded the highest AOV of $131 in Aug 2021 and lowest at $97 in Dec 2021.
APAC reported the highest AOV of $143 in July 2021 and the lowest of $100 in Jan 2022.
This should be your second benchmark when it comes to improving your AOV.
The impact of the type of device customers use on your AOV can’t be discounted.
The AOV from desktop was at its highest in Aug 2021 at $150 and the lowest, $104 in Dec 2021.
Mobile devices were not far behind. The highest AOV was $117 while the lowest was $99 in Jan 2022.
9. Why does AOV decrease?
A declining AOV is bad news. It indicates an abysmally lower transaction revenue below the ideal. This signals a revamp of your upselling and cross-selling strategies to make your online customers buy more.
The AOV may seem unimportant but there are hidden costs associated with driving organic and paid traffic to acquire new customers, and finalizing checkout transactions.
And AOV helps pay for those costs.
A healthy AOV means you can increase your profits by selling to your customers.