What is Average Order Value (AOV)

Calculating Average Order Value

Average order value (AOV) is a means of tracking the average dollar amount spent each time a customer places an order on your website or mobile app. To calculate your company’s average order value, simply divide total revenue by the number of orders.

So simply put AOV = Revenue / Number of Orders

For example, if in the last month you had total web sales of $40,000 and you had a total of 4,000 orders. This would evaluate to $40,000 / 4,000 = $10. Your AOV for the month was $10.

Why is Average Order Value Important?

It allows you to measure your marketing and website performance and also your pricing strategy.It gives you the information required to measure long-term value of individual customers.

This is where conversion rate optimisation comes in, looking to maximise the revenue from your existing traffic. To get more traffic you need to spend more money, lifting AOV drives direct revenue growth.

How to lift your average order value

A lot of businesses concentrate solely on getting more traffic to the site, neglecting other key areas such as AOV and customer retention. Identifying and testing key friction points can lead to bi rewards, bottom line is a lift in profits.

Here are some areas to concentrate on: