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Increase AOV With Personalised Product Recommendations

In eCommerce, driving revenue is often considered the culmination of strategic efforts to boost traffic. However, businesses can increase their profits by looking at their existing customer base.

The key is to increase their average order value (AOV). This metric is the average value of your online sales, which can be calculated by dividing the product revenue by the number of transactions. AOV is sometimes overlooked but there should be no doubts about it – it is one of the most important metrics your ecommerce store should be tracking.

Why is Average Order Value Important?

AOV is a key performance indicator (KPI), similar to conversion rate. By setting targets to improve AOV, your business can encourage people to spend more every time they purchase from your eCommerce store.

Although it does not directly influence profit margins, AOV is an important metric because it provides insights on trends and buying patterns. This drives decision-making on advertising practices, store design and pricing as marketers strive to better serve their customers. In turn, efforts to improve the customer experience will boost the ROI for each customer.

How to Increase AOV With Personalised Product Recommendations

Advertising is not the most powerful channel for new opportunity –– your website is. Research by Big Commerce indicates that an increased focus on your existing customer base has the potential to drive AOV by 50%.

Put simply, you must get to know your customers better. You must discover what they really want. Most importantly, you must figure out how to give it to them. Enter personalized product recommendations.

As far as eCommerce personalisation goes, product recommendations are one of the most powerful tools online marketers can use today as they can deliver more than five times the ROI on marketing spending.

Product recommendations offer a one-to-one shopping experience that is tailored to the customer’s interests, eliminating their frustrations at being inundated with irrelevant content and products. This approach boosts customer satisfaction, which builds loyalty. As a result, customers tend to spend more, which increases the average order value. To succeed with this method of ecommerce personalization, your business must utilize a strong foundation of data.

Data Insights Will Improve Your eCommerce Personalisation

Data is always reliable. Strictly speaking, clean data free of inaccuracies and corruption is always reliable. In any case, manually tracking, adjusting and tweaking the data you get on every customer would be a gargantuan mission at best, and a logistical nightmare at worst.

Fortunately, with a recommendation engine like Segmentify on your side, it is easy to use the data insights to see what engages people. By tracking engagement data, ecommerce stores can recognize and react to the online behaviors of their visitors.

Going deeper, companies must look at the affinities people display during site visits, and also consider the reasoning behind the actions. Knowing the “why” behind the actions gives marketers a lot of power in driving conversions, and increasing AOV in the process. To discover that, ecommerce sites should consider several key aspects in their stores, using the data insights to react with personalized product recommendations:

  • Search Queries – Offer personalized product recommendations based on the customer’s search terms.
  • Purchase History – Make product recommendations to the customer related to their past purchases.
  • Shopping Cart – Make product recommendations based on what items the customer currently has in their cart or their wish list.
  • Social Behavior – Consider the ratings, number of shares and likes that products receive on social media platforms.
  • Geographic Location – Consider the customer’s location or climate and make suitable recommendations.
  • Customer Segments – Use data on customers from similar demographics, considering what products they bought and then offering them to new customers.  

Don’t Confuse the Customer

One huge caveat of shopping in the digital age that everyone can relate to, is just how many options and alternatives we have to choose from. This causes a paradox of choice, causing people to feel overwhelmed and distracted, which ultimately turns them away.

An experiment on this theory set up free sample tables, offering customers 6 or 24 flavors of jam to sample. The table with six flavors was ten times as successful, with 30% of customers making a purchase compared to just 3% on the table with 24.

To successfully employ ecommerce personalization, it is crucial that you give your customers options, but make sure you don’t make it complicated.

Timing is Key for Successful Personalisation

Businesses should keep in mind that each type of campaign will work differently on different pages. For example, smart offers are most effective at driving average order value when they are used on the homepage. As 97 out of 100 visitors will leave if they are greeted by an unrelated product, it is crucial that you grab their interest from the very first visit.

By comparison, showing product recommendations just as the customer is going to checkout is a great way to upsell and increase your average order value. Segmentify offers a number of powerful algorithms geared for this purpose, such as the frequently bought together algorithm.

Successful ecommerce personalization boils down to making the right product recommendations to the right customers at the right time. By crafting a more personal shopping experience, you can encourage your customers to buy more on each visit.

Focus the Choice to Fill the Cart

As more than 70% of customers get frustrated with offers that don’t interest them, it is obvious that companies must do more to enhance the online shopping experience.

Putting greater focus on personalized product recommendations allows companies to truly wield the full potential of data insights and AI, segmenting their customers by behavior and interests and then offering them the value, solutions and messaging they want to receive.

Amazon have mastered this to great effect, attributing much of their success to ecommerce personalization. If you want to drive your profit margins up, perhaps you should focus less on advertising for new customers, and instead consider how you can truly serve the ones you already have.  

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