Retail Revenue—How to Increase Your Average Order Value by 55%

By August 2, 2016Digital Media Buying

Apps are where everyone is working right now.

Whether they’re used for shopping or communicating, apps provide a better user experience than websites. They’re built in, easier to use. You don’t have to go searching for a website; instead, apps are top-of-mind for users.

For a long time, apps were prohibitive because they were so expensive.

Everything was custom-built.

But today, there are no longer heavy up-front fees for companies who want to develop an app and mobile apps have been found to increase retail revenue. Further, consumers are no longer loyal only to the major retailers: they’re loyal to the brands they love, which can be SMBs or mid-markets.

We recently interviewed two guests from Shopgate: Casey Gannon (VP of Marketing) and Leah Chaney (VP of Customer Success), about mobile apps and how retail revenue has increased in many use cases. Since apps are no longer too expensive to have, the central question to our interview was this: how much of a priority should companies put on developing an app?

This post is based on their responses.

What Would I Do Differently With an App Than With a Mobile Site?

According to Casey and Leah, in 2015 there were 2,500 app downloads a second. That’s a hard statistic for marketers to ignore.

But is there anything really all that different about using an app as opposed to a mobile site?

Consider these three things:

1) You shouldn’t just consider a mobile app as a separate sales channel. It’s actually a marketing tool, specifically because of the ability to push notifications. Segmented push notifications tend to have a much higher engagement rate than any email.

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The good thing about push notifications, too, is that they open directly to the item. For example, if you push a notification offering 50% off an item, a user by clicking it will be directed to the item’s page, where the item is ready to be purchased. Now the user is a minimal amount of clicks away from purchase.

2) Just by having an app on a customer’s phone, your brand awareness increases. When someone is swiping through their phone, they’re reminded of your brand. It’s constantly in their face, and it’s cheaper marketing than paying for advertising or retargeting.

3) An app can work with iOS Spotlight indexing. Apple is trying to get consumers to search using Spotlight instead of going to the Web every time. So if someone were to search for Golden State Warriors jerseys, if they have a clothing app already installed, Spotlight is going to surface all of the jerseys that the app already has alongside some of the search results for the app on the Web.

Note: There are a lot of merchants who are trying to make their apps as complex as their eCommerce sites. The challenge, though, is that that’s not what people want in apps. Apps are supposed to be simple, without complications.

If you’re going to develop an app, keep it simple.

The Average Order Value on Shopgate Apps They’ve Said Is 55% Higher Than Mobile Web.

Yep, that’s what Casey and Leah found to be true. Why is AOV so much higher on apps?

There are several factors:

  1. The simplicity of apps makes buying easier.
  2. Native apps are faster.
  3. The checkout process is smoother.
  4. Realistically, if you’re on a mobile app, you’re probably familiar with the brand, whereas if you’re buying online, the item may have come up in a search.

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If I’m Doing $1 Million Online and I Build an App, Will I Do $850,000 on the Site and $150,000 Through the App? Or Do I Get Additive Sales on Top of What I’m Doing Online, Maintaining My Base of eCommerce?

Some of customer’s spending does naturally slide over to the app. Oftentimes, though, companies report higher spending and more frequent visits to the app, which creates additive sales.

Having an app is not only a way to increase revenue, but also a way to capture people you’ve never captured before. There’s a big demand for apps now, and most people expect it, which can actually influence a purchasing decision today: some will choose or deny your product based on whether or not you have an app.

Still, the focus on apps should be on retention rather than new acquisition.

What’s a Good Strategy for Push Notifications?

Think of it like a modern email campaign: it varies based on your offers and on what you sell. You may run a site where a daily deal makes a lot of sense and people are waiting on it every morning. Or maybe a once-a-week sale makes more sense.

The frequency really has to do with your industry and your buyer. Follow your email pattern. If your buyer is typically a weekend buyer, send it on Friday evening or Saturday morning.

In terms of messaging, the highest-engaging push notifications usually have an offer in them, similar to email. Coupons, some sort of discounts . . . some incentive to induce a click. It also helps to only incentivize on the app, too.

How Should I Drive the Adoption of Our App?

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Use everything. Make sure you have smart banners turned on, and that you’re promoting the app on your website and in any of your communication, including social media of course.

Incentivizing the adoption is the most important thing. Retailers are quick to spend a good amount of money to acquire a new customer, but then oftentimes will shy away from retaining them. That shouldn’t be the case.

Also, if your app is user-friendly, you can easily make changes and run A/B tests without changing code or making other tedious, technical changes.

Conclusion

There are a lot of case studies that show that mobile apps will increase your revenue, so why not start testing that reality? Check your analytics: if most of your customers come through mobile, and you’re not providing an experience that matches that, you can expect subpar results.

This episode is based on an interview with Casey Gannon and Leah Chaney from Shopgate. To hear this episode, and many more like it, you can subscribe to the Hawke Media Podcast.

If you don’t use iTunes, you can listen to every episode here.

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