E-Commerce Average Order Value (AOV) is an important metric in determining the success of your marketing and sales strategies. With these strategies you will be able to increase your store’s AOV and hopefully become more profitable.

What is AOV?

AOV is the average amount spent by customers on a single order. This can be a key indicator of the effectiveness of your current strategy. It can give insights into site layout, advertising spend, pricing, etc.

A high AOV shows that customers are making larger purchases and your strategy is working. While a low AOV, or lower compared to your own performance, is a sign that your purchases are smaller and you will be making less of a profit off each transaction. In these instances, you may wish to employ average order strategies for e-commerce to help raise your AOV.

How to measure AOV

AOV can be calculated with the following formula:

Total revenue / number of orders = average order value

Once you have calculated your AOV, you must choose a few metrics to help measure improvements. While a good AOV depends on many factors (including your industry), the best evaluation usually comes in comparing it to your own store’s historical AOV.

Evaluating your AOV can be done weekly, monthly, or yearly. Although, it is important to note that seasonal shopping habits (like Black Friday) can affect your AOV. You can take these seasonal needs into consideration by comparing AOV over a longer period of time.

Calculating the mean, median, and mode of AOV

Using the mean, median, and mode of your Average Order Value data will make it easier to draw comparisons and understand what your customers are spending with your business.

Mean AOV

The mean is a calculation also known as the average. It can be calculated with the following formula:

Sum of data / count of data = mean

Mean AOV is essentially the same thing as AOV. You are finding the average of all the order values for your e-commerce business.

It is important to recognize this by both terms so you are able to find the information that you are looking for when researching.

Median AOV

The median can be considered the middle data point. Instead of being calculated with a formula, this is found by placing the data in numerical order. Once the data is ordered, find the middle number. That is the medium. If you have an odd number of data sets (i.e. two numbers in the middle), use the average of the two.

Here are some examples of calculating a median:

9 11 20 28 31 = median of 20

19 22 24 27 = median of 23

When it comes to AOV, the median will help you find the middle of your customers’ order values. This can help you determine what your customers are currently comfortable spending.

Mode AOV

Mode is the most common number in a data set. You do not need a calculation to find the mode. Instead, look for the number that is repeated the most.

Here is an example of calculating the mode:

1 2 5 6 2 9 2 13 = mode of 2

Mode is important in terms of AOV because statistically, you will be more likely to see these purchase amounts than the mean or median amounts.

Now that you know how to find the mean, median, and mode of your AOV data, you will be able to use them to analyze your business strategy and choose the right methods to improve it.

Strategies to improve AOV

Once you have analyzed your data, it is time to work on improving your AOV strategies. Here are some methods that you may be interested in implementing.

Upselling

Upselling is recommending a more expensive product to your customer than what they were originally going to buy. To achieve this on your website you will need to have strategic copy and product images to entice users to buy the more expensive item. When done successfully, upselling will occur with a majority of your customers and raise your Average Order Value.

Shipping minimums

Creating a minimum spend for customers to achieve free shipping can entice them to buy more products. The trick to this strategy is finding a price higher than your AOV, but not too high to deter customers from purchasing altogether.

Promotions

Customers don’t want to miss out, so offering promotions with time restrictions can encourage them to make purchases by a certain date. Additionally, they may buy more at once then they usually would to take advantage of the savings.

You can offer promotions like bundles, buy-one-get-one, or percentage discounts. Keep in mind that this strategy does not help build your business over time, but will help you see a bump in AOV during a certain promotion period.

Recommended products

A recommended products section on your website will help you get more items in front of your customer that they may be interested in.

You can add this section to the homepage, product information pages, or even the cart. The products can be based on the items in the user’s cart, or on previously viewed items. The goal of this website section is to encourage customers to add more to their cart and drive up the AOV.

Return policy

Creating an accommodating return policy can help boost your AOV. Customers will be more likely to purchase higher-priced items from an e-commerce business if they know they will be able to return it easily. Additionally, customers who have positive return experiences are more likely to become repeat shoppers. Consider implementing a more efficient and convenient return policy that your customers can use when needed.

There are many strategies to implement to raise your Average Order Value. The key to finding what works best for your e-commerce store is to test, test, and test again! Try out strategies and then compare your AOV to historical data to determine the most effective methods.

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