What Is Average Order Value?

Average order value is the average amount of money a customer spends each time they place on order on your site. You can find out the average order value of your company by dividing your total revenue by the number of orders.

For example if your store had $10,000 in revenue and 42 orders then your average order value would be $238 (10,000 orders / 42 orders). This is an important KPI to understand your customers buying habits. It’s also important to track this metric over time to see if your average order value increases or decreases. It allows you to understand the value of each customer. It also allows you to evaluate how much you should spend on advertising.

How To Improve Your Average Order Value (AOV)

There are several strategies that can improve your AOV. One of the most popular ones is a volume discount where if you buy more you save more. An example of this is a “buy 2 get one free” deal. You can also include upselling where you suggest an additional item when a user is about to checkout along with cross-selling where you recommend related products such as shoe insoles to go with your new shoes.

Other strategies include offering free shipping on order over a certain purchase amount for higher minimum purchases, coupons on a user's next visit, and even having a return policy so customers know they can return a product if they don’t like it.

You can also implement several of these strategies by segmenting your customers' shopping habits and presenting them with different offers. An example would be loyalty programs for frequent shoppers.

Using A/B Testing To Increase Your Average Order Value

A/B testing can help you create experiences that lead to conversions on your website. An example of this could be A/B testing which item to cross-sell with the shoes we mentioned earlier. You could suggest an insole or a pair of socks to see which offer people respond to the most. You could also A/B test your messaging for upselling to see if the message “recommended for you” vs. “people also purchased” leads to more engagement.

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