How To Increase AOV & CLV Simultaneously

Incrementality vs. Attribution both make inferences about causality, but what’s the difference?

Attribution makes inferences about the causes of effects: we see CVR has increased, and we look backward for causes. With the number of factors and the interaction effect, it is hard to solve - it mostly ends up being a correlation attribution.

Incrementality measurement through A/B testing makes inferences about the effect of causes. This can prove true causation and measure the incremental effect of treatment.

This is why experimentation is the gold standard for data-driven decision-making once you have enough samples to do so.

Looking for winning ideas to test?

We share with you one of the biggest A/B testing wins from our friends Harry Molyneux from @dtcpages, which led to incremental revenue of $204k revenue/month.

Goal

Increase AOV (Average Order Value)

Hypothesis

An in-cart upsell could help increase AOV BUT distract customers during their purchase process.

Taking inspiration from store credit programs like Starbucks rewards, Harry’s team decided to test out a store credit offer: customers get a higher store credit back with higher order value.

If successful, this tactic not only increases customers’ AOV on the first purchase but also incentivizes them to come back and make repeat purchases.

Test Result

The result is surprising, in a good way.

Among the user cohort who clicked Add to Cart, this store credit offer led to a significant increase in AOV AND CVR.

Because of the store credit offer, customers are motivated to increase the cart value and convert right away.

This equals an incremental $204k revenue/month, $2.4M/yr.

This does not include the LTV incremental gain from repeat purchases when shoppers return for credit redemption.

How Can you implement this?

Some tips from Harry to implement and test this program for your store:

• This client used a custom solution. But you can use solutions like Fondu or Smile to make it work.
• Set a credit expiration date to increase the urgency for repeat purchases. Send email reminders when credits are about to expire.
• Set a minimum order amount to redeem the credit so you can recover the cost.