Dispensary tips

8 ways to increase your dispensary's AOV during the holidays

By
Dutchie
November 14, 2022

Acquiring more customers isn’t the only way to bring in more revenue for your dispensary this holiday season. In fact, one of the best ways to drive more sales is to increase your average order value (AOV).

In this post, we’ll go over:

  • What is average order value (AOV) and why is it important?
  • How to calculate average order value
  • 8 ways to increase your average order value

What is average order value (AOV) and why is it important?

Average order value (AOV) refers to the average amount of money your customers spend when they order from your dispensary.

Your dispensary’s AOV is an important benchmark for understanding customer behavior. By understanding what your AOV is and which products are purchased most frequently, you can figure out how to increase it in a way that makes sense for your customer base. Some of the main benefits of increasing your AOV include:

  • Increasing your overall sales revenue
  • Driving increased revenue over a shorter period of time
  • Recovering the cost of customer acquisition more quickly
  • Increasing the lifetime value (LTV) of your customers

How to calculate average order value

As stated in Optimizely, the formula to calculate your average order value is as follows:

Average Order Value (AOV) = Total Sales Revenue / Number of Orders

You’ll need to know your total revenue and the number of orders to calculate your AOV accurately. Some cannabis ecommerce platforms will calculate these values for you so that you don’t have to crunch any numbers.

How to increase your dispensary's average order value

Note: Be sure product bundling, sales of marijuana accessories, product discounts, free item giveaways and digital payments are permitted in your state and in compliance with all local and state rules and regulations.

1. Implement cross-selling and upselling

Whenever possible, display or mention complementary products to your customers to make a bigger sale. This can be as easy as discussing which items pair well with one another in your product descriptions. Make it clear in your messaging and store layout that your items are better together.

In the world of cannabis retail, one of your best tools for all things sales-related will always be your budtenders. The relationships (or lack thereof) that they develop with shoppers will make or break your customers’ experiences.

You need to give your budtenders the skills and motivation to upsell and cross-sell to everyone who walks through your doors—so let’s review the difference between upselling and cross-selling.

Upselling is convincing a customer to upgrade the product they were originally planning on buying. For example: if a customer comes in to buy the cheapest oil cartridge in your dispensary, upselling would be convincing them that buying a more expensive (but better quality) cart is in their best interest.

Cross-selling is adding a separate (but usually related) product to a sale. An example of this would be if a customer goes into a store to buy a pre-roll and the budtender convinces them to also purchase a lighter and some hemp wick.

Both upselling and cross-selling utilize the same general skills from a budtender: the ability to understand what a customer wants and needs, and then educating them on your solutions. Ultimately, your budtenders’ goal shouldn’t be to make more money for the store, but rather to provide more value. This goal will give them the empathy to suggest the right products to your customers, which will likely keep them coming back for more.

2. Use visual merchandising to your advantage

How you organize your products in-store can have a significant effect on purchase value. It can even do some cross-selling for you—all it takes is displaying hard-to-resist impulse purchases near the register.

Driving impulse purchases typically involve 1-3 things: urgency, value, and/or excitement. This time-honored technique is used by most, although traditional retailers like Ulta and Sephora have this strategy mastered.

3. Provide bundle deals and bulk options

Group products that go well together or commonly sell together as “bundles”. (Think: lighters, rolling trays, and rolling papers; flower and grinders; pre-rolls and lighters, etc.) This will encourage customers that were only looking to purchase part of a set to buy a complete (and more expensive) set, therefore increasing your average order value.

You can also offer small discounts for purchasing more than one of the same item. Shoppers may see the savings that come with buying products in bulk and add more items to their cart.

4. Provide a more personalized experience

Use your POS analytics to create more personalized and targeted shopping experiences that will increase your AOV.

By looking at customers’ order history, you can create marketing campaigns with messaging and products that resonate with that specific audience. The more targeted and specific you can be with your marketing, the more likely customers are to spend larger amounts.

5. Offer limited time promotions

No one wants to miss out on a great deal. Urgency can spark the need to add more items to a customer’s shopping cart. Try offering short-term discount codes (with a 24-72 hour window) certain items to increase your average order value.

For a temporary increase in purchase values, you can always implement a few different tried-and-true promotions.

  • A certain percentage or amount off once the customer reaches a chosen threshold. Think “Spend $85 and get a pre-roll for $0.01”.
  • BOGOs. Buy one get one promos are intended to raise purchase values because in order to take advantage of the sale, the customer has to buy at least two things.
  • Offer bundle discounts. These can usually be offered all year round, as well. For items that a customer would be more likely to buy in bulk if it were cheaper, offer a discount for purchasing more at once. You can even stagger this discount: 10% off for 2, 15% off for 3, etc.

6. Gain consumers’ trust with social proof

Reviews and feedback from previous customers are examples of what’s known as “social proof,” and they can have a huge impact on purchasing decisions. According to Search Engine Watch, 72% of consumers will only purchase a product after reading positive reviews. If you have rave reviews for your dispensary, be sure to display them on your store’s webpages and marketing materials to entice (and reassure) customers.

7. Give a free gift with purchase

Everyone loves a free gift. Entice shoppers to click “order” by offering a free gift (such as branded stickers, hats, t-shirts, etc.) to their purchase.

8. Offer digital payments

Customers’ attitudes directly affect the size of their purchases. If you make shopping (and paying) for your products more convenient for them, you could potentially encourage them to spend more.

Providing your customers with a modern retail experience is a crucial competitive advantage in the cannabis industry. Digital payments allow your customers to escape the cash trap while also boosting your sales volume and reducing the risks associated with operating in all-cash.

Dispensaries that enable cashless transactions with Dutchie Pay see an average increase of 25% in order value, leading to increased sales volume and revenue. Upselling and cross-selling techniques are much easier to implement in a cashless environment: customers are far more likely to buy into upsells when they don’t have to physically remove cash from their wallets to do so! This drives ROI (return on investment) and ultimately increases the overall profitability of your dispensary.

Interested in accepting digital payments at your cannabis dispensary?

Dutchie Pay is a fully-integrated digital payment solution that both dispensaries and consumers can trust. Using a closed-loop automatic clearing house (ACH) solution, Dutchie Pay allows consumers to purchase their favorite cannabis products while automating compliance so that dispensaries can focus on growing their business.

Oh, and did we mention that over 70% of shoppers who use Dutchie Pay at a dispensary return to that dispensary within 90 days?

Let's grow together. Contact us for a demo today.

About the author
Dutchie
The Dutchie Squad