How Can Offering Free Gifts With a Purchase Increase AOV?
Are you just getting started with your Shopify store and want to learn how to increase your Average Order Value (AOV)? You’ve come to the right place! There are many ways to increase your AOV, but for now, let’s focus on exactly how free gifts can do this.
What is AOV?
AOV stands for average order value. It's calculated by dividing the total sales revenue by the number of orders.
It's a great indicator of how much your business makes off of each individual customer. You should use AOV to make decisions about what products to continue selling, stop selling, or how much and when to raise your prices.
You want your AOV to increase because that means more revenue for your company!
Why Free Gifts?
We know you’re probably thinking…”How does offering something for free increase the order value”? Well it’s a complicated answer. It may or may not increase your AOV right away, but in the long run you will for sure see your AOV go up.
There are two ways offering free gifts could up your overall AOV.
Set a Minimum Order Price to Receive the Free Gift
This is the easiest strategy to increase your AOV right away. Let’s say you notice the current AOV for your website is $45/customer. From here, you could create a promotion that everyone who spends $50 or more receives a free gift. Psychologically, most people will think $50 isn’t that much of an increase from the $45 they are already planning on spending at your store.
Because it’s only a $5 increase, most customers will be enticed to spend the extra $5 on something else to qualify for the free gift. This a) gets them using whatever additional item they had to add to reach your minimum order total, and b) gets them using the free gift you gave them. If they like both of those products (and the products have a high repurchase rate), not only does your immediate AOV increase, but your future AOV will increase as well because they’ll be more likely to repurchase the two new items they received.
You could even offer tiers of gifts. For example, offer 3 free samples of X with a $50 order and 5 free samples of X with a $75 order. Make sure the gift/s costs less than the difference between the AOV and the minimum gift total. For example, don’t give away a $20 gift if you’re only upping the AOV by $5. The only scenario where this would be acceptable is if you give away something that has a very high repurchase rate.
Offering Free (Sample) Gifts Should Increase AOV in the Future
The other strategy to increase your AOV with free gifts is to offer a gift that you sell, and needs to be repurchased in the future. If the buyer loves the gift, they will likely repurchase whatever gift they received when it runs out. Good examples of this include makeup, food samples, paint, 1 free service, or a trial period if you sell software. Really, anything that you know your buyers will need to repurchase often makes for a good free gift.
This gets you in the door with an added product. On top of buying what they’ve already come to your store to buy, they will include the gift you gave them in future purchases. This will increase your AOV in the long run because it increases the total items in a customer's cart.
HypeCart is here and ready to help make increasing your AOV simple. HypeCart is an App that creates a better checkout experience for your customers and helps increase AOV. HypeCart specializes in adding upsells, one of which is free gifts, to your Shopify store’s checkout process.
Check out our free 7-day trial to see just what we can do for you!