You don't always need to find new customers to make more money. Getting new customers can be expensive and take a long time to pay off, so we suggest focusing on getting more out of your current customers.
Here’s what we mean:
Scenario 1: Getting New Customers
You're spending money to bring in new shoppers to your online clothing store. Each new customer costs you about $50 to attract, but they typically spend $100 on their first purchase.
So, if you get 100 new customers:
You spend $5000 ($50 x 100) to get them.
They bring in $10,000 ($100 x 100) in total revenue.
After deducting what you spent to get them, you're left with $5000 in profit.
Scenario 2: Boosting Sales from Existing Customers
Instead of chasing new shoppers, you decide to focus on encouraging your current customers to spend more when they shop with you. Right now, they're spending about $80 each time they buy from your store, but you want to bump that up to $100.
So, if you have 100 regular customers:
Initially, they're bringing in $8000 ($80 x 100) altogether.
And if you increase their spending to $100 each, they bring in $10,000 ($100 x 100).
Here, your profit is $10,000 because they’re not new customers.
Comparing the two scenarios:
In Scenario 1, you spent $5000 to get new customers, making a profit of $5000.
In Scenario 2, by getting your existing customers to spend more, you made $10,000 in revenue without spending anything extra.
As you can see, focusing on getting more out of your current customers can often be more profitable than constantly chasing after new ones.
So, with that being said, let’s jump onto the steps you can take to increase AOV.
Set a Minimum Purchase for Free Shipping
Do you know what is your typical AOV?
Let’s say your customers typically spend around $50 when they shop with you, but you want to encourage them to spend more, say 20% more. Offering free shipping on orders over $60 could help boost their average spending.
Most customers really dislike paying for shipping. In fact, 86% of customers abandon their cart because of shipping costs, whereas 93% of customers add more items reluctantly just to get free shipping. This suggests that customers prefer free shipping over fast shipping.
So, by offering free shipping on orders over a certain amount, like $60, it gives your customers a nice incentive to buy more from you. It's like a little gift to them, and it could mean they spend more with you.
Promote Bundles
Giving discounts or bundling products together can help persuade customers to spend more while also giving them a better deal.
To do this, just figure out which of your products go well together and offer them as a package deal. This is a win-win situation because customers feel like they're getting more for their money, and you get them to spend a bit extra.
If you run a coffee shop and notice that customers often buy a coffee and a pastry together. To encourage them to spend more, you could offer a bundled deal where they get a discount if they buy both items together.
For instance, instead of buying a coffee for $8 and a pastry for $5 separately ($13 total), you could offer them both for $9.99 as a bundle deal. This way, customers feel like they're getting a good deal, and you're increasing the average amount they spend in your shop.
Leverage Time Sensitive Offers
You can offer special deals that only last for a limited time to get customers to spend more. These time-limited offers make people feel like they need to act fast before they miss out on something good.
When deals are only available for a short time, it reminds customers that they need to make a decision quickly before they lose the chance to get what they want!
Cross-sell/Upsell
One simple way to make customers spend more is to suggest other things they might like to buy along with what they're already getting. This is called cross-selling.
Cross-selling means suggesting something related to what they're already buying. If your items don't really go together, you could try showing a list of things other customers bought to help boost how much each customer spends.
Upselling is when you try to get customers to buy something fancier or more expensive than what they were originally planning to get.
Reward Loyalty
Rewarding your loyal customers is a smart way to keep them coming back for more. It's a way of saying "thanks for choosing us" and it helps build strong relationships with them.
For example, you could have a loyalty program where customers earn points for every purchase. Once they collect enough points, they can redeem them for discounts or special perks. This way, customers feel valued, and they're more likely to stick around and shop with you again.
Final Words
To wrap things up, while getting new customers might seem like the best way to make more money, don't overlook the goldmine you already have: your current customers.
So, instead of always chasing after new business, take a good look at the people who are already supporting you. With a little effort and some smart strategies, you can turn them into your biggest spenders!
SO, WHERE DO YOU FIND THIS PARTNER?
Well, aren’t we glad you asked! We at DigiCom are obsessive data-driven marketers pulling from multi-disciplinary strategies to unlock scale. We buy media across all platforms and placements and provide creative solutions alongside content creation, and conversion rate optimizations. We pride ourselves on your successes and will stop at nothing to help you grow.
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