Ways to Win in a Lower Average Order World
Performics recently released its holiday 2010 forecast, predicting a 15% increase in sales from actively managed holiday paid search campaigns year over year (YoY) versus 2009. That’s good news and continues a year in which we have seen advertiser spend and consumer demand remain constant coming out of a deep economic downturn. Still, despite all the improving results of 2010, marketers have seen a persistent decline in average order value over the course of the year.
Through Q3, average order value is down almost nine percent year-to-date. Simply stated, customers are spending less per transaction. This means that, in order to increase total sales, marketers must work hard to up-sell related products to boost orders and substantively increase the number of orders they generate either by getting more orders from existing customers or bringing more new customers into the fold.
To up-sell customers as they shop, marketers can employ a wide range of tactics. A couple of the most effective include suggesting products related to other products the shopper has viewed or added to their cart and offering incentives to buy more.
Amazon.com has led the pack here in many ways. For years, Amazon has offered product suggestions to its customers, and in most instances, the site offers free shipping for qualifying orders totaling at least $25. This incentive alone is enough to get many customers to make another purchase or two to avoid paying shipping fees.
Even the most sophisticated strategies can leave average orders lower than marketers would like, so it’s imperative to simultaneously work to increase the total number of orders.
This starts with creating more demand at the beginning of the purchase funnel, but the extra spending required to do so must be done carefully and in an accountable fashion. This requires evaluating your marketing mix to ensure additional expenditures result in increased qualified impressions and traffic from all viable media sources that have a high propensity to convert once on site. Keeping in mind that each additional transaction generated may be of less value than that to which a marketer has become accustomed only reinforces the importance of qualifying all traffic from a performance basis.
Marketers can achieve this increased audience coverage by expanding search campaigns as well as buys across well-targeted display, mobile and social channels.
Beyond broader buys and diligent work to increase, marketers should embrace customer frugality and reward it. It will continue through the holidays and may very well be a permanent purchase dynamic in the future. Review your offer mix and presentation to highlight:
• Sharp price points
• Bundled offers
• Special deals
• Opportunities to compare and save
• Lowest to highest price on site search and merchandising
When appealing to customer frugality, make sure to reinforce a value message through every part of the user experience from ad copy to landing pages to customer service groups. Every price point and piece of copy counts, and marketers should know how their value stacks up versus the competition.
Michael Kahn ([email protected])is senior vice president, client services at Performics and a monthly contributor to Chief Marketer.
