Increasing average order value (AOV) is one of the best ways for online retailers to increase profit margins. That’s because increasing AOV doesn’t push up marketing spend unlike efforts to increase site traffic. Nor does higher AOV imply higher transaction costs for the retailer. It’s no surprise to hear people claim that doubling AOV can have the same impact on revenues as doubling conversion rates.
But optimizing average order value isn’t easy. Cart abandonment, deal-hungry shoppers, and bad UX can stymie efforts to boost order value. In fact, AOV across all U.S. e-retail sales fell from $86 in Q4 of 2016 to $82 a year later, while overall revenues increased by over 14 percent over the same 12 months. This shows that while online spending increased, average order value didn’t.
That’s where the Jobs-to-Be-Done (JTBD) framework comes in. Jobs-to-Be-Done allows retailers to take a customer-centric, outcome-based approach to e-commerce, driving up AOV and creating loyal customers. Let’s find out how.
What Is the Jobs-to-Be-Done Framework?
Jobs-to-Be-Done is typically used by product teams as a framework to help them rethink and prioritize product features. The framework is based on the premise that consumers don’t simply buy products and services; in reality, people “hire” certain products to do certain “Jobs” for them. If the product does the Job well, they’ll hire it again sometime. As economist Theodore Levitt said, “People don’t want a quarter-inch drill, they want a quarter-inch hole.”
Clayton Christensen, the Harvard academic behind the JTBD framework, gives an example: Commuters driving to the office “hire” milkshakes not just as a quick breakfast but to stave off boredom during a long journey. The Job-to-Be-Done is to stay distracted. With that information, fast food companies could, for example, make shakes thicker or straws thinner to increase consumption time.
The JTBD framework parses consumer objectives into Main Jobs and Related Jobs. To create really valuable products, teams have to address both categories. Sticking with the milkshake example:
- Main Job: Stay distracted during a busy commute.
- Related Jobs: Stay clean, stain-free, and ready for work (a milkshake is less messy to consume when driving than, say, a muffin); sate hunger til lunchtime (options like bananas didn’t fill commuters up).
Main and Related Jobs can both be further broken down into Functional Job Aspects and Emotional Job Aspects—the objective and subjective requirements of the consumer. Emotional Job Aspects are again broken down into Personal and Social Dimensions—how the consumer feels about the solution you offer, and how they believe others perceive them when they use the solution.
Once teams have identified the Jobs consumers need to get done (more on how to do that later) and categorized them, they condense this information into a Job Statement in the format “When _____ , I want to _____ , so I can _____ .” For example:
Thinking about consumer objectives in this way helps product teams redefine competitors, view the market from a customer perspective, and protect their product from disruption. That’s all great, but how can it help with average order values?
Jobs-to-Be-Done and Average Order Value
When shopping online, consumers have a wide range of Jobs they want done, such as:
- Make choices that reflect lifestyle.
- Stay within a budget or pro-actively manage their finances.
- Find products that entertain or distract.
- Get the best deal or offer.
- Find products that promote professional or personal growth.
- Connect with family and friends.
Retail teams that identify and categorize these Jobs—including their emotional and functional drivers—will be better equipped to identify pricing opportunities, cross-sell or up-sell, and personalize the e-commerce experience. Those are all factors that feed into improving average order values.
Identify Premium Pricing Opportunities
Selling consumers premium-priced products is an established way to increase AOV. But what makes someone willing to buy a more expensive version? Understanding the emotional and social dimensions behind the Job the customer wants done can help uncover and optimize premium pricing opportunities.
Take the iPhone. Apple’s mobile devices retail at up to 50 percent more than the average market price for a smartphone in the U.S. And yet when Apple started charging over $1,000 for the iPhone X, the device consistently outsold every other Apple device available.
Apple has identified what makes consumers willing to pay premium prices—a cocktail of social and emotional dimensions revolving around user experience and status. A Job Statement for an iPhone user might look like this:
The Job consumers want done by the iPhone is not merely functional but social. Knowing that helped Apple achieve average handset price increases of 15 percent to 42 percent between 2016 and 2018.
Improve Cross-Selling and upselling
Cross-selling (promoting a complementary product) and upselling (promoting an upgrade or a more expensive version) are great ways to increase AOV. The classic example is McDonald’s “would you like fries with that?” upsell, which pushes the chain’s most popular complementary side dish.
Applying the JTBD framework can help e-commerce teams make better decisions when planning upsell and cross-sell bundles. For example, let’s imagine a customer is on our e-commerce site browsing picture hooks. Many sites would probably offer a bundle with hooks and tying cord to increase AOV.
There’s nothing wrong with that. But retailers using the JTBD framework would be able to think about a higher level Job: Maybe the Main Job is redecorating a new apartment. This perspective allows retailers to offer more sophisticated bundles to increase AOV—interior design books, kitchenware, or even candles.
Calibrate Financing and Payment Options with Contextual Jobs
As Jilt identifies, consumer Jobs change depending on context. For example, consumers shopping online during Black Friday and Cyber Monday all have one Related Job in common: Find deals and spend without busting their budget. Sales funnels that support consumers in that objective during the holiday shopping season will be more successful in boosting average order values.
Offering consumers 0 percent financing or alternative pay-over-time options will increase AOV while still allowing customers to get their target Job done. At Bread, we saw average order value increase by 30% when retailers offered alternative financing during 2018’s holiday shopping period.
How to Apply JTBD to e-Commerce Sites
Applying the Jobs-to-Be-Done framework requires a switch in how online retail teams operate. However, following some basic steps will help implement JTBD smoothly.
Step 1: Define the Target Market
Jobs-to-Be-Done pioneer Tony Ulwick describes a JTBD target market as “a group of people + the job they are trying to get done.” For example, parents (the group of people) who are trying to prepare nutritious meals for their kids on a daily basis (the Main Job to be done) would be a valid target market.
To define the target market, Ulwick recommends interviewing “job executors and assess[ing] their thoughts on the job they are trying to get done.” Focus groups, customer feedback surveys, and 1-1 interviews will all help define the target market’s over-arching Job. Product designer Greg Le Sueur outlines some JTBD interview tips here.
Step 2: Identify the Full Range of Jobs
Second, parse out the full range of Jobs parents need to get done when feeding their kids. These could include staying within a budget, not spending too long cooking, and providing nutritional variety.
Identify these Jobs through follow-up questionnaires with existing customers, customer complaints, and social media comments. Asking questions such as “When you find yourself in the situation that you are using my product, what Job are you ultimately trying to get done — what is the underlying objective?” will help identify the full range of consumer objectives for a product or service.
Step 3: Categorize Jobs
Define the Main Job the target market is trying to achieve. This isn’t as simple as it may seem: Limit the Job too much, and you’ll miss improvement opportunities; think too generally, and your solutions will be irrelevant. Innovation agency Strategyn recommends focusing on three aspects when defining the Main Job at hand—think from the customer’s perspective, think big, and focus on functional Jobs.
Then, break down the Related Jobs and the Emotional/Functional aspects of both Job categories. Our example of parents wanting to make healthy meals might look like this:
You can then write out Job Statements for all the functional Jobs (Main and Related) identified. Try to use real quotes from customer interviews or feedback. This will help you write AOV-boosting copy that speaks directly to consumer needs.
Step 4: Prioritize Opportunities to Grow AOV
You now have a range of Jobs for your target market. Next, you need to figure out which to prioritize. Innovation Consultant Sylvia Brown suggests using a quadrant analysis based on customer interviews and feedback. Sticking with our example, start out by asking parents to pick their five priorities when preparing meals for their kids. Next, ask them to rate these for importance using a 1-10 Likert scale, with 1 representing Not Important and 10 Most Important. Plotting the responses on a 2×2 matrix like the one below will allow retail teams to identify Jobs to prioritize based on customer objectives.
A quadrant analysis helps identify innovation opportunities. (Source)
Imagine that the majority of our surveyed group of parents identified “staying in budget” as one of their top five Jobs and weighted this with a score of 7 out of 10 on the Likert scale. Budgeting will therefore appear in the top right of the quadrant, and we know we should prioritize it as a customer need.
We now know that to help parents get that Job done (and increase average order value), we need to innovate around pricing and payment, like Bread customer Eragem does: