Ecommerce brands are constantly trying new strategies to attract and retain customers, and convert them into high-value buyers.
But increasing average order value (AOV) is easier said than done.
One strategy that is effective for increasing AOV is membership programs. When designed well and optimized strategically, membership programs can change the way customers make buying decisions.
Curious to know how membership programs lead to higher AOV for Shopify stores?
Read this blog.
TL; DR
- Membership programs are a proven strategy to increase AOV through strategic use of exclusivity, tiered structures, and psychological incentives.
- Key drivers that increase AOV are VIP pricing to increase bulk purchases, free shipping, and exclusive access creating urgency.
- Effective Shopify membership programs use tiered structures—bronze, silver, gold—offering clear value differentiation.
- Track critical metrics, including member vs. non-member AOV, retention rates, and lifetime value.
- Tracking tools that can be used are Shopify Analytics, Google Analytics, Appstle Membership App.
- Best practices include starting a small cohort program, integrating memberships across the Shopify store, personalizing benefits by tier, and continuously testing threshold psychology.
- When designed strategically, memberships can generate 40% of the revenue of Shopify Plus stores.
Why exclusivity matters in eCommerce
We humans are wired to feel good when we receive something exclusive. This psychological factor of exclusivity makes customers spend more. Exclusivity works in multiple ways. Here’s how:
Scarcity and FOMO
When there’s a scarcity of products, it triggers a feeling of FOMO. This behavioral phenomenon increases the perceived value of the product. And when customers think that they have access to something that others don’t, they are more willing to pay for it. Memberships work in a similar manner as they make members feel exclusive.
Status
Memberships also increase the status symbol of customers, especially, premium memberships. For instance, memberships of high-end fashion and beauty brands, members often associate higher tiers with wealth and status. Being associated with other members of the same category boosts their status symbol.
Identity
Certain memberships also boost the feeling of identity. Customers become a part of a special tribe or group that have similar interests and likes. For example, the Nike Run Club members. Being members of such exclusive groups creates an emotional connection to the brand.
How membership programs drive higher AOV
Membership models incorporate many strategies that lead to increased average order value (AOV). Here’s how it works:
1. VIP pricing and early access to sales
Memberships offer member-only discounted pricing to members. This helps increase AOV. When members receive discounts, they tend to purchase more items. Moreover, early access to sales also creates urgency, leading to more sales. This exclusive pricing for members works well for limited edition and seasonal products.
2. Bundling perks with memberships
By combining multiple perks with memberships, brands can create a stronger value proposition, leading to larger purchases by customers.
Some common perks bundled with memberships include free shipping on all orders, exclusive experiences, exclusive content, birthday or anniversary rewards, and member-only products.
This strategy of bundling multiple perks removes many barriers, and hence, leads to higher AOV.
3. Free shipping and rewards for higher order thresholds
Threshold setting can influence AOV. For instance, set up automated free shipping when the total order value crosses a specific mark. Among other perks, reward points can also be offered for higher threshold orders. This creates psychological nudges towards more spending. When automated using a smart memberships app, this strategy can increase AOV using multiple perks and rewards.
Let’s understand this with an example.
A Shopify Plus beauty brand launched a membership with an annual fee of $100, offering 15% discount on all purchases, free shipping, among other perks. Within a few months, the brand’s member AOV increased from $85 to $150, members started purchasing 3 times more than non-members, and the brand saw 40% of revenue coming from members.
Key takeaway: The combination of free shipping and 15% discount make larger purchases more economical for members, and hence members started buying more, thus, increasing AOV.
Designing membership programs that encourage bigger orders
Creating membership programs that actively increase AOV in a targeted manner requires strategic designing. Here are some strategies to apply:
1. Tiered memberships
Tiered membership plan models are based on the principle of members progressing levels. Members are encouraged to progress from lower tiers to higher tiers to avail the perks and benefits of the higher tiers.
Here are some factors to keep in mind:
- Ensure each tier offers a different set of perks. This leads to clear value differentiation, which makes members want to progress to higher tiers. If there’s minimal difference between tiers, members may not see much value in higher tiers.
- Make the lowest or base tier easily achievable so that it is easy for customers to join the membership program.
- Design tier-based incentives that encourage increase in AOV. For example, Bronze – 5% off on orders over $100, Silver – 10% off on orders above $150, and so on.
- Display the tier status at checkout and in members’ accounts. This makes customers identify themselves with the specific tier, and want to be part of higher tiers.
2. Incentives tied to basket size
Offer incentives based on members’ basket size. Here’s what you can do:
- Offer increasing discounts as the cart size increases. For example, 10% off $100, 15% off $150, 20% off $200.
- Add mystery rewards in the benefits mix by offering surprise gifts, bonus points, etc. when customers cross a certain order value. This creates excitement and drives customers to order more.
- Offer member-exclusive bundles at discounted prices. Add high-value products in the bundle to ensure a certain order value.
- Offer double or triple points on orders crossing a specific value. This makes larger purchases more rewarding.
3. Exclusive bundles & limited-edition products
Another strategy in membership programs that increase AOV for Shopify stores is to add the element of exclusivity at a greater level. Here are some ways to do it:
- Reserve some products only for your members. For instance, certain SKUs or limited edition products. This becomes a reason for members to continue memberships and purchase these exclusive products.
- Create curated bundles for members only and offer them at attractive prices.
- Collaborate with influences or other brands to offer member-exclusive products of premium value.
- Run pre-order campaigns for members only. Combine bundling offers. For example, pre-order 2 or more and get a discount.
How to track AOV and membership profitability
Tracking AOV and membership profitability involves measuring key metrics, using smart tools that help measure the impact of memberships on AOV, and following best industry practices. Here’s what you must do:
Measure key membership metrics
To track membership profitability and AOV, you have to set up a comprehensive analytics system in your Shopify store. Track these metrics:
1. AOV
Segment AOV metrics tracking based on various parameters. For example, active members vs. non-members, new vs. old members, segments of each membership tier, members during exclusive access period vs.regular shopping periods, etc.
2. Retention rates
Track your Shopify membership monthly retention rate and match it against the AOV trends. See if higher AOV members tend to have higher retention.
3. CLTV
Measure LTV for member cohorts vs. non-member cohorts and track how much revenue members bring over time as they make high-value purchases over time.
4. Membership ROI
Measure the full cost of your Shopify membership program, including discounts, free shipping costs, exclusive events, etc. against the revenue generated from the membership program.
5. AOV progression over time
Track how the AOV changes over time. For instance, the AOV might be lesser initially but increase as time goes by. This shows how well-planned and engaging your program is.
Tools to measure AOV impact on memberships
Once you identify the metrics you want to measure, use any of these tools or a few of them to measure the metrics:
1. Shopify Analytics
Shopify Analytics allows you to segment reporting based on customer tags, enables basic member vs. non-member AOV comparison, among others.
2. Appstle Membership App
Appstle Membership App is designed for Shopify and Shopify Plus stores. The tool provides detailed analytics reports that show AOV trends for members.
3. Google Analytics
With Google Analytics, you can track AOV throughout the customer journey, including acquisition channels.
4. Custom dashboards
You can build custom dashboards for your Shopify memberships and extract data from multiple sources to get comprehensive insights on membership performance.
Best practices and tips for Shopify Plus memberships
Increasing AOV from membership programs requires effort and strategic implementation. Follow these recommendations to increase AOV.
1. Launch with a small trial membership model to test pricing, benefits, how it will function, etc. and keep changing it before you roll out your actual membership program. Start this with a select cohort of customers.
2. Integrate membership across your Shopify store experience. Do not treat it as a separate add-on. For instance, make it a part of the product pages, checkout flow, email communication, customer service interactions, etc.
3. Personalize the membership experience by tracking and analyzing customer data. Automate personalized experiences for members based on their behavior data, and create exclusive shopping experiences.
4. Create clear upgrade paths by making it easy for customers to see the benefits of joining or upgrading to higher tiers. Create upgrade campaigns by using customer data and insights.
5. Optimize the membership program by continuously tracking and analyzing data to enhance customer experience, offer benefits, and increase AOV.
6. Leverage Shopify features by integrating other apps to automate marketing features, tier-based pricing, etc.
7. Test threshold psychology by running A/B tests on various perks, such as free shipping thresholds, discounts, exclusive access, reward points, etc.
8. Build a community for your members to interact, discuss, etc. Organize members-only events, provide exclusive content, set up member forums, cohorts, etc.
Wrapping up — increase AOV through exclusivity and memberships
Membership programs are one of the most effective strategies to offer exclusivity, increase loyalty, and drive more sales. Members tend to spend more over time, increasing the average order value.
However, setting up a successful membership program that provides the right kind of exclusive experience, generates high engagement, and consistently increases AOV requires a lot of effort.
To begin with, you require a smart membership app that provides comprehensive features and capabilities for exclusivity and automation.
Appstle Memberships App helps drive recurring orders, offer exclusive perks, set up automations that help scale membership programs, among other capabilities.
Install Appstle Memberships App in your Shopify store today!
