6 Underrated Benefits of a Lower AOV
I’ve been a big fan of running lower AOV offers/prices this year. It has really transformed our business. We didn’t create a dedicated lower AOV offer to test against a higher AOV offer, rather we just lowered our prices pretty substantially (20%) in an effort to unlock things. So, same thing.
Our situation was that we were stuck in the mud at $400K/month in Meta spend and ~$700-850K/month in revenue. We had that glass ceiling above us and just couldn’t figure out how to break through it. Every time we tried to scale beyond, CAC was just become way to high and we’d have to pull back.
So we came to the realization that we had priced out the next tranche of our TAM. If we wanted to acquire that next set of 100,000 (or whatever) customers, something big would have to change, and this time we felt it was price. Maybe for you it’s not price and it’s something else like a new product, new flavor, new customer persona, etc…
But for us, it most certainly was price. We came to this conclusion two ways:
Subjectively. We knew we were running way to high of margins than we should have been. Talking 93% plus - to us, this obviously created either a sense of unfairness in the customer mind or the feeling that our product is too expensive to try.
We make all of our money on LTV. We want customer volume so we can reap the rewards 3-6 months down the line, not massive first order profit margin. So we needed to get customers to think “it’s worth a try” and not “it’s expensive”.
Post purchase surveys, very simple question. we ask if there was anything that almost stopped you from ordering today. Important point, but many miss it, that this data is from people who have transacted with you already.
Our number one response was price, coming in at just over 70%. which was insane to us when we dug in!