by Paul Paradis, Chief Revenue Officer of Sezzle
Each and every one of us has experienced a good upsell. From combo-meals at fast food chains, to “must have” accessories for your new high end camera or smartphone, every business is trying to increase their average sale value; after all, the purpose of your store is to make as much money as possible with the resources available.
Focusing on increasing order value has a variety of benefits: you and your team work less, your revenue grows faster, and your margins increase. Some business owners, especially those with young companies, may be tempted to focus on simply increasing their number of customers, believing that increasing order size will require too large of an investment or is unattainable, but that couldn’t be farther from the truth.
The truth of the matter is that no matter what your company sells, it’s possible to double - or even triple - your order size. To get great results, you’ll need to address the three most common problems that hold customers back from buying more. By using a few psychological tricks, and adding a few “carrots” at the right time, you’ll see your average cart size growing steadily!
Set A Free Shipping Threshold
There are few things that today’s shoppers loathe more than paying for shipping. In fact, according to UPS, over 60% of shoppers will abandon their cart if they think the shipping costs are too high. That same data sheet indicates that 69% will add to their cart to qualify for free shipping - as long as it’s a reasonable amount.
What’s the best way to know what a “reasonable” free shipping threshold is? According to Shopify, it should be slightly higher than your average order value. Expect to need to adjust it in the first few months to find your business’s “Goldilox zone,” but keep in mind that the goal is to make the threshold slightly more than your customers are naturally spending, to encourage them to buy just a little more. Too little and you’ll lose money, too much and nobody will qualify for it.
Practice Psychological Pricing
As a retailer, it’s important to recognize that the majority of your customers are deciding on purchases at least somewhat impulsively. They may originally come to your e-commerce site because of a practical need, but their final purchase is almost always influenced by the experience and information your online presence delivers. Your web design and content will play a huge part in building their trust and excitement; your price points will help them decide which product to buy, and often, how much.
Offering a variety of options assists your customers in choosing which plan is best for them, and can often push them towards a higher value option that they’re interested in, but may have not otherwise selected. For those who are hesitant to buy, having a lower dollar value option will allow them to “try out” your products, instead of simply navigating away.
If you’re seeing a lot of abandoned carts, or your site has high traffic but little conversion, implement a tiered pricing model for your most popular items. Add a sample piece, and then include a larger package - this may mean more of the item, or the addition of a complementary product.
Offer Payment Plans
For many retail stores, the main thing holding back customers from buying is justifying the cost. This applies to virtually every price point, and increases for nonessential industries. The reason for this hesitancy can often be attributed to one phenomenon: younger shoppers have a harder time acquiring credit than generations before them. In fact, a Bankrate study found that only 33% of Millennials even own a credit card - which means that every time they buy from your store, they’re balancing their budget to include you.
Want to make that easier? Introduce a payment plan that allows them to stretch out their payment over time, without having to apply for - and be approved by - a credit card. For example, our solution, Sezzle, was created to do just this for purchases , as we simply take their original payment and stretch it out over six weeks (though we pay you, the merchant, in full at time of purchase).
If you’re struggling to increase your average sale value, it’s time to analyze what’s holding your customers back. Consider where the problem is arising in your sales funnel. Lastly, remember to let your audience know when you optimize your pricing, offer free shipping, or launch a payment plan via social media and email marketing! You’ll see your carts fill up - and check out - in no time.
Paul is Chief Revenue Officer of Sezzle Inc., a financial technology company that has created a next-generation payment platform for e-commerce. Learn more by visiting Sezzle.com!