In over 10 years I have had the pleasure of working with thousands of hosting companies of all sizes with common goals, pain points, and fears:
"How do I grow my sales further?"
"My customer growth is flat, I need ways to retain customers."
"If I market or send customers an email, they might cancel the hosting plan they already have with us."
If this is your company, you probably focus on driving as much traffic to your site and in many cases paying for that traffic. This is only 1 of 3 multipliers that can help double your annual revenue. What are the other two? Customer retention and Average Order Value.
What is Average Order Value (AOV)
The average order value is the average amount spent per customer transaction each time a new or current customer completes a transaction through your cart. This is calculated by dividing your total revenue by the number of total orders.
Why does AOV matter?
This is one of the key multipliers to help your company double its revenue and knowing your company's AOV helps you find out if your marketing efforts and pricing strategies are working and/or needs improvement.
Many hosting companies focus too much energy and money on increasing traffic when it would be more advantageous and profitable to increase AOV.
A side benefit of increasing AOV is that your company will lower transaction costs associated with each order that will increase direct revenue and profits since the customer is already there to make a purchase
5 Ways for hosts to increase AOV
- Product Recommendations - suggest products that are complementary to what customers are buying or already have.
- Cross Selling/Upselling - Provide addons or suggest upgrades to purchases customers are making.
- Bundles/Discounts on bundles - Offer incentives and discounts for customers who upgrade to larger packages or bundles.
- Add and Announce New Products - Don't be afraid to communicate and keep them coming back with updates to existing products and announcing new products/services. They may not know you offer a service that they may be getting from another provider. Keep customers sticky by offering a bigger piece of the pie.
- Cancellation policy - Make customers aware that your products and services have a cancellation or refund policy. Give them the confidence to complete the purchase and to try new services.
Another key metric to keep in mind
Keep track of your conversion rate. This is calculated by the number of completed orders divided by the total number of visits. You will not want to increase AOV only to find your overall conversation is falling.
Focus on the customers that already buy
The most efficient and effective way to increase AOV is by concentrating on existing customers. They already made the decision to trust your brand and will familiarity with your service and support. Informing them on other or new services that they may have not known about is little effort to get them to spend more.
Revisiting the 3 key multipliers, average order value, customer retention, and new customer traffic. By focusing on all 3, your success rate can be much smaller in each category to drastically raise your revenue. Just a minimum of a 25% success rate in each multiplier can nearly double your yearly revenue.
Can your AOV increase by 25% in a year by cross-selling, upselling, and adding new products? This can be easy if you're not already doing this.
Can your customer retention increase and get the customer to buy 25% more frequently than the previous year? In most cases by just getting a hosting customer to come back 1 more time a year can drastically raise this.
Can you drive 25% more visitors to your site? This is the area where most hosts already focus and often times are paying for more traffic than required here.
By leveraging all three here is the expected result: 1.25 AOV x 1.25 Retention x 1.25 Traffic = 1.95 Revenue
How can WHMCS Help?
MarketConnect is a quick and low-cost way to introduce new products to your existing customers and maximize the opportunity with new customers. MarketConnect offers well-known brands and complementary services to help increase your company's Average Order Value. No commitments levels or fees to activate.
MarketConnect offers by default, recommendations based on services that your client may already have.
Similar to recommending products, upselling and cross-selling is also built in by default during the buy flow and add-ons are offered by default to all existing hosting packages during configuration. MarketConnect will also suggest to customers the benefits of upgrading their service when buying as a standalone.
For all current services, MarketConnect offers various grace periods on purchases therefore if a customer wishes to cancel within a period of time you can guarantee your customer a full refund.
Other MarketConnect benefits
- A simple and easy way to instantly launch complementary services
- No monthly minimum commitments or fees to start
- Competitive discounts/ pricing tiers and promotions
- Customizable and Ready-made landing pages -> no work required on your end
Let WHMCS MarketConnect help your company reach its goals to generate higher annual revenue and take the first step to increase your Average Order Value and retain more customers.
More info: https://marketplace.whmcs.com/connect
Ready to get started? https://marketplace.whmcs.com/help/connect/kb/overview/getting_started/activate_marketconnect
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