What is Average Order Value (AOV)?
Average Order Value (AOV) is a measure used by online stores to see how much money customers spend on average each time they place an order. It’s a key metric for understanding customer spending habits and making important business decisions.
Why It Matters
AOV helps businesses understand whether customers tend to make small or large purchases. By tracking this, companies can make better choices about pricing and marketing strategies. Monitoring AOV regularly (daily or weekly) is important in the competitive world of e-commerce.
How to Calculate It
To find the AOV, divide the total revenue by the number of orders over a specific period. This gives you the average amount spent per order.
Ways to Increase AOV
Price Increases: Raising the prices of products can boost AOV, but it’s important to balance this so customers aren’t discouraged from buying.
Upselling: Encourage customers to buy more expensive items or add extra features to their purchases.
Cross-Selling: Suggest related products that complement what the customer is already buying.
Discounts: Offer discounts for orders above a certain amount, like 15% off orders over $50.
Free Shipping: Provide free shipping on orders that exceed a specific amount, such as $50, to encourage larger purchases.