What is Average Order Value?
Average Order Value (AOV) is a metric that measures the average amount of money customers spend per order on a business’s website or store. It’s calculated by dividing total revenue by the number of orders placed within a specific time period.
AOV helps businesses understand customer purchasing behaviour and assess the effectiveness of pricing strategies, upselling, and cross-selling efforts. It can also help in understanding of many areas such as the effectiveness of marketing promotions.
Why is AOV Important?
AOV is one of the most crucial ecommerce key performance indicators (KPIs) to monitor sales performance and identifying opportunities to increase revenue without necessarily increasing traffic.
By improving AOV, businesses can boost revenue more efficiently, as they don’t need to acquire new customers to achieve higher sales as both new and existing customers are spending more.
Strategies to increase AOV may include bundling products, offering volume discounts, or promoting premium products.
How to Calculate AOV
The formula to calculate AOV is:
𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑂𝑟𝑑𝑒𝑟 𝐶𝑜𝑢𝑛𝑡RevenueOrder Count
For example, if a business generates £50,000 in revenue from 1,000 orders, the AOV would be:
50,0001,000= 5050,0001,000= 50
This means that, on average, customers are spending £50 per order.
How The Data Refinery Makes AOV Easy
The Data Refinery seamlessly integrates with most ecommerce platforms including Shopify, Amazon, WooCommerce and many more. Once hooked up, the system generates KPI reports across many areas of the business including AOV to keep you on track of your businesses performance and choose from a huge library of ecommerce metrics.
