When it comes to growing your online store, increasing your Average Order Value (AOV) should be a top priority. Without a significant AOV, your operational costs like shipping and marketing will eat up your profit margin. And if you can create a larger AOV, you'll increase both profit dollars and percentage for each order, which will give you more bandwidth to invest in customer acquisition or strategic initiatives.
But boosting AOV isn't always easy. If you do a straight price increase, you may see your conversion drop. A better option: drive higher AOV with upselling. Upselling means getting customers in the door with a smaller ticket sale, but in the shopping experience getting them to build a larger basket. Research indicates that upselling is capable of increasing revenue by 10-30% on average, making it a strategy you need to add to your playbook.
You might be thinking, yes, of course I'd love to upsell my customers. But what's the best way to go about it?
To start with, there are two kinds of upselling you should consider: one is basket-building and the other is upgrading. In a basket-building approach, the goal is to get customers to your website with a crazy value proposition and then encourage them to add more items to the cart. Conversely, you might get them to your website with a crazy value proposition and then convince them to upgrade to a more expensive item.
The best way to approach upselling is to think about how you can convey value to your customers and help them connect with your brand.
A great example is Walmart's television pricing. Walmart is willing to sell a tv to customers for razor thin margins, but during the purchase process, they ask if you want HDMI cords, a tv stand, a warranty, someone to come in and mount your tv for you, etc.
Apple is a retailer that emphasizes the upgrading approach, where their purchase funnel asks you to add more memory, more processing power, and other premium features.
In both of these instances, the retailer understands what the customer is thinking when they're buying the product. Customers are not buying a television from Walmart, they're creating a home theater experience. Customers at Apple are investing a device to power their digital lives and don't want to regret having too little storage or functionality in a few years.
Understand what your customers want, then offer them the full package.
When do you want to upsell your customers? Is there such a thing as too early or too late? There are a few major options for upselling, but implementing each one has its own nuances and it is best to let the customer journey dictate your strategy choices.
The main types are cross-merchandising, purchase funnel, and post-purchase.
For instance, if we go back to the Walmart televisions, there are options to include add-on services, but there's also a much more expensive option just below the buy-button.
If you scroll down a bit further, you can see a carousel of other popular TVs, as well as complimentary products. This is cross-merchandising.
If you add the item to your cart the purchase funnel will upsell service options, but you lose the option to swap the TV for a different product. If you purchase the TV, Walmart stops upselling services, since it would not make sense to buy a protection plan after the fact.
Finally, when you order the TV from Walmart, they will begin to send you emails asking if you have purchased your tv stand or soundbar yet. This falls under the post-purchase funnel. You have already made the initial purchase, now Walmart wants you to return and make a follow-up purchase that aligns with your first purchase.
Another way to make an offer post-purchase is with CartHook Post Purchase Offers. In this case, the customer completes their purchase in the checkout, then you show them an offer that compliments the product they just bought. Because they've already entered their payment info, they can accept that upsell with one click, then they see your standard thank you page.
As you identify your types of customers and what they are truly purchasing from you, it is best to let your data inform all decisions. What items best pair together, what items most interest different customers? You should build out extensive automated tagging processes for both your products and customers.
As a customer purchases an item, add any product tags from line items in their order to their customer profile. When you need to select an item to upsell to them via site merchandising, purchase funnel, or post-purchase you can rely on options with comparable attributes to their customer tags.
If a customer purchases men's underwear from you, they likely do not want to see upsells for women's underwear. Hone in on the product attributes that drive your purchases and recommend similarly attributed options. Implementing personalized workflows that tailor upselling strategies to each individual customer, increases your likelihood of a successful upsell.
Additionally, no story is fully told after only one sentence. Just as with the television upselling process, you will likely need a few interactions with your customers to fully communicate the value of your upselling option.
If a customer lands on a specific product page but does not buy it, you should recommend it to them in the purchase funnel, send them an email post-purchase, and offer them a discount on it via SMS after their first purchase arrives. Having a multi-faceted personalized approach is your best chance for securing the upsell.
Right about now you might be wondering, how will I find the time to implement this complicated process? The key is to automate each step.
Alloy Automation is a no-code automation platform for ecommerce stores that can make this happen.
You launch a workflow with a "trigger event" which might be a customer adding an item to their cart, creating an account, viewing a marketing email, or purchasing a product. From there Alloy lets you specify what you would like to happen.
Maybe you decide that once a customer receives their shipment, you send them a discount code 30 days later asking them if they want to order again. Or if a customer adds a product to their cart, you begin targeting them with emails, SMS, and purchase funnel upsells to create a bundle and save
However you want to implement your upselling campaign is up to you and the customer journey you are supporting. Here's to boosting your AOV with automated workflows!
Alloy Automation (YC W20) is an ecommerce automation tool used by brands like Italic and Doe Lashes to automate work across fulfillments, operations, & more. Alloy offers 80+ integrations and hundreds of prebuilt workflows - learn more about best-in-class automation strategies on their blog.
Sara Du is the founder and CEO of Alloy. Previously, she was an engineer at Snapchat and did her undergrad at Harvard. On the side she runs a Shopify store herself.