Average Order Value

To increase earnings and sales, data-driven companies must closely monitor the average order value (AOV), an e-commerce metric (KPI).

Knowing the average dollar amount spent per order across your business channels is helpful. It gives you a benchmark for understanding customer behavior and can help you build a marketing and pricing strategy to boost that value. As a result, you can make your business decisions quickly. With a higher AOV, businesses can increase their revenue growth, get new customers, and make a solid customer base.

Here’s everything you need to know about average order value (AOV) and how to calculate your AOV.

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Templates using this KPI
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Integrations using this KPI

What is Average Order Value?

If you've wondered how much money your existing customers spend on every order you place with e-commerce businesses, you've come to the right place. Customers' average order value (AOV) is one of the most important metrics for online retailers, as it influences everything from advertising budgets store layouts, and product pricing. As a result, online retailers use this metric as a yardstick to better understand their customers' buying habits.

Up-selling (providing expensive items that are an aversion to the same product), Cross-selling (providing complementary products), free delivery with a minimum purchase, volume discounts, and coupons are all ways to increase AOV for your business.

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How to calculate Average Order Value?

Divide your company's total revenue by the number of orders to obtain your average order value. To calculate AOV, sales per order are used rather than per customer. Even if a customer makes more than one purchase, the average amount of their orders is calculated separately for each purchase. Although it doesn't directly relate to gross profit or profit margins, the average order value shows how those numbers are calculated.

Average Order Value Formula

The Revenue ÷ the total number of orders = Average Order Value.

There were a total of 1,000 orders in a month for your online store's sales of $31,000. A monthly AOV of $31 was calculated by dividing $31,000 by 1,000.

What is a Good Average Order Value?

Regarding online shopping, various online businesses and products offer customers a wide range of options. An eCommerce store like Amazon has a higher average order value. The beauty industry has an AOV of $70, the health and fitness industry of $76, the fashion industry of $97, the general eCommerce of $97, and the home and garden of $353. So anything more than $76 is a good average value. But as always, it depends on shipping costs, transaction volume, and profit margin.

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What is a bad Average Order Value?

To increase your average order value, you should offer coupons, personalize customer experiences, improve digital marketing efforts or social media marketing, make your shopping cart functional, incorporate add-ons, feature product pages, and develop a mobile app. As a result, you'll be able to retain more customers.

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Average value orders KPI examples & templates

You can add your AOV in some of our templates!

See this KPI in action here!

See this KPI in action here!

Ecommerce report template

A report with all the most critical metrics for your eCommerce site, like shopping cart abandonment, click-through rate, and revenue. Gather data from Shopify, Google Analytics, and different advertising platforms.

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Executive report template

This dashboard template is filled with metrics your C-suite will want to see. Please show them your revenue, new customers, churn rate, and more. You can also add some customer satisfaction KPIs, gross margin, or customer data for a better overview.

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Google Analytics report template

Get essential analytics metrics in real-time. Check the number of customers, traffic, customer journey through your website, and more with this easy-to-use GA template.

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Average Order Value Best practices (How to increase aov)?

Here are some best practices you should keep in mind to achieve your target AOV.

Upselling or cross-selling complementary products

Customers are more likely to buy if they see or hear about complementary products. You're on the right track if you mention which additional products go well in your product descriptions or if you offer bundles. Similarly, upselling is a great way to increase your average order value by promoting more expensive products that are an extended version of your existing products.

Providing Coupons

You need a long-term strategy to get the most out of discounting your products. That way, you can get a better conversion rate. Customers who leave reviews, sign up for an email list, or refer friends should be given discounts. You will likely see an increase in Average Order Values (AOV) when you offer discounts or even a free shipping threshold. More customers are attracted to your products when you provide such incentives for a specific period of time.

Enhancing the e-commerce experience by making it more personalized

Increase your AOV by optimization, personalization, and targeting your customers' shopping experiences with data. Targeting specific customers by studying their purchase history and creating marketing campaigns that resonate with them is possible. If you can target and personalize your marketing, clients are more likely to spend huge sums of money. For customer retention, you can also create a customer loyalty program. That will help increase the customer's lifetime value and create better relationships.

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