Average Order Value (AOV)


Average Order Value (AOV) is a metric that calculates the average amount of money spent per order by a customer. AOV is calculated by dividing the total revenue by the number of orders. For example, if a business has $10,000 in monthly revenue with 100 orders, their AOV would be $100. This means that on average, each customer spends $100 when they make a purchase. This can be calculated on a per-channel basis (e.g. on the website or a mobile app), or omnichannel, encompassing the average a customer spends regardless of where the order originates.

Why is Average Order Value important to your business?

AOV has several essential implications for your business. Firstly, increasing AOV allows businesses to increase revenue without increasing the number of customers. That means a company can increase its profitability without having to acquire more customers. Additionally, having a higher AOV improves your return on investment (ROI) for marketing efforts. When you know a customer’s AOV, you can tailor campaigns that encourage customers to spend more by adding additional products to their cart.

How to increase your Average Order Value?

To increase AOV, businesses need to concentrate on improving the overall customer experience. One way to do this is through Product Bundling. Product Bundling offers customers a discount or incentive for purchasing multiple products in a single order. Businesses can also use up-selling and cross-selling techniques to encourage customers to purchase additional items with the product they have already selected. Additionally, implementing a loyalty program that offers discounts or rewards to customers that spend over a certain amount can additionally boost AOV.

Another strategy for increasing AOV is through personalized discounts and promotions. Discounts that are offered to customers based on previous purchases or product views can improve the likelihood of a purchase and encourage customers to spend more. Personalized promotions like ‘Spend $100 and get a free gift’ can incentivize customers to spend more to reach the free gift threshold.

In conclusion, Average Order Value is a crucial metric that businesses should focus on to increase profits and improve overall revenue. By encouraging customers to spend more each time they make a purchase, businesses can generate more revenue without spending on costly acquisition campaigns. Implementing tactics such as product bundling, personalized discounts, and loyalty programs are just some of the ways to increase AOV.


Book: House of the Customer (2023) by Greg Kihlstrom

Blog: Optimizely: Average Order Value