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Average order value

Average order value

Average Order Value is a metric that is used to measure the average total of every order placed with a seller over a specific period of time.

AOV is a key metric that is used by online businesses to understand the purchasing habits of their customers.

Formula to calculate average order value

AOV= Revenue/Total number of orders

For example, let’s say in the month of January your website store’s sales were $20,000 and you had a total of 500 orders. So by using the formula, your average order value in the month of January was $40.

Importance of average order value

  • The average order value of a company helps you to evaluate your marketing strategies and measure the long-term value of your customers.
  • It is more profitable to increase the average order value because it does not cost you anything. It’s all about the right strategies and offers that you can provide to the customers.
  • It is a way to increase your profits and drive direct revenue

Strategies for increasing Average order value

  • Upselling(“would you like this T-shirt for only $15 more than the pair in your cart?”)
  • Cross-selling(“How about a T-shirt to go with the jeans you just ordered?”)
  • Free shipping (“shop for $5 to get free shipping”)
  • Volume discounts(“This soap costs $8, but you’ll save 20% if you buy 2 or more”)
  • Coupons on minimum order(“spend $40 and get $10 off on your next order”)
  • Donations(“to be given to non-profit organizations on minimum purchase”)
  • Return policy(“you can send them back if you are not satisfied”)
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