Term Index Page

Average Order Value (AOV) is a metric used in e-commerce that calculates the typical sum of all orders made with a particular merchant over a specified time.

Average order value is an important metric for online stores to be aware of, influencing important business choices like advertising spend, store design, and product pricing.

It is a key performance indicator that businesses target to discover the purchasing patterns of their clients.

How To Calculate Average Order Value

– Sum up the total revenue of a period
– Divide the revenue by the total order placed during that period

It is expressed as:
Average Order Value= Revenue / Number of orders placed

Advantages Of Average Order Value

• The higher the Average Order Value, the more revenue you earn.
• Improved cash flow
• Familiarity with how much consumers spend.
• It offers an understanding of the purchasing habits of your customers.
• Average Order Value and profitability are strongly correlated. However, if your store’s Average Order Value increases, your profits tend to rise too.

How To Use Average Order Value To Grow Your Store

1. Create an order minimum for free shipping or discount
2. Bundle product – Product bundling is a way to increase your AOV, by encouraging customers to buy more than what they anticipated.
3. Upsell and Cross-sell complementary products – Upselling and Cross-selling are all about attracting customers to buy a complementary or better version of the product they originally purchased.
5. Start a customer loyalty program – Establishing a customer loyalty program is a retention tactic that enables you to build relationships with your clients and raises client lifetime value.