What Is Average Order Value (AOV) and How Can You Increase It?

Every business wants to improve its bottom line. When this is the case for your company, you might start to wonder, “How do I increase my average order value?” 

The average order value (AOV) is quite simple to understand. Divide your revenue by the number of orders. This calculation will give you the average spent on each order. Simple!

If you want to take your business to the next level, take a look at our guide to improving your AOV!

What Is Average Order Value in eCommerce?

AOV is one of the most important metrics measured in eCommerce.

Measuring order revenue from website and app traffic not only gives an AOV but also tracks the number of visitors placing orders. You can see whether you have high volumes of site traffic compared to orders to determine whether your site is maximizing its ability to generate sales. 

If your site traffic is much higher than your AOV, you may have a problem. Let’s make it a little more concrete. Say you had $100,000 in revenue spread across 65 orders. That’s over $1,500 per order, which, depending on your business, could be incredible. 

But let’s say you had 5,000,000 site visitors. If this is the case, you need to ask, “Why are so few visitors becoming customers?”

Why Average Order Value Matters

Every company’s goal is to increase its profits. Knowing your AOV can show you where you might be losing money. 

Let’s say you’re selling guitars. People come to your website or app to order a guitar because yours are high quality and the website/app is easy to use. Great! But don’t rest on your laurels just yet. You can offer other things that every guitarist needs, such as a case, strings, picks, cables, polishing cloths, string winders, repair kits…you get the picture. 

Having “suggested items” is like putting candy by the cash register in a brick-and-mortar store. Impulse items or other extras increase your revenue. That guitar player was going to buy strings, picks, cables, and a case anyway, why not make a purchase through you?

If you know your average order value, you can find holes in your profits and patch them effectively.

Average Order Value Formula

To make it visual: AOV = Revenue / Orders. That’s it! 

For example, if you have $10,000 from your transactions in a day and you have 500 transactions, your average order value would be $20. 

This metric assumes, of course, that you’re tracking these things! Analytic data like this is essential for your business, so keep good records.

As for the period, you can measure any amount of time you like. Measure your AOV by day, week, month, or year if you want. Use the measurement that’s more relevant to your business.

Other eCommerce Key Metrics in Mind

When you’re trying to figure out why your site traffic isn’t translating into sales, conversion rate (CR) and revenue per visit (RPV) come into play. Increasing your CR and your AOV increases your RPV. Improving all of them should be your goal!

Conversion Rate

Conversion rate (CR) measures how many visitors turn into paying customers.

If you have 100,000 visitors and 1,000 of them purchase products from your site, you have a conversion rate of 1%. Believe it or not, 1-2% is average, while anything over 2% is spectacular.

Revenue per Visitor

Revenue per visitor (RPV) puts a specific value on each visitor to your website or app. Divide your total revenue by the number of visitors to your website, and you have your RPV. 

If you had $1,000,000 in sales and 500,000 site visitors, you’d have an RPV of $20. 

5 Methods to Improve Average Order Value

Here’s where the rubber meets the road. Getting that average order value higher and higher means putting in a little elbow grease to get customers spending more on your site. What is AOV but a way to figure out where to improve? 

Here are some methods to do just that:

1. Personalize the Experience

Everyone loves personalized language. It’s why ads use the word “you” so much. Having your site mention the customer’s name on forms and having automated “thank you” messages with their name draws them in. 

You can also have automated help features that give that a little bit of extra customer service, such as a window that pops up on the bottom with a “Can I help you?” message.

2. Minimum Orders 

This method ensures people aren’t ordering a single pack of gum or some other small item, whether you structure it as minimum quantities to buy or minimum values for free shipping. 

This strategy also reduces the number of boxes and shipments that need to be made, which is better for the environment (and yes, this should be used as a selling point!).

3. Optimize Your Site

If your site is frustrating to use, change it! Make sure your site retains functionality and looks pleasing on a variety of devices and operating systems.

If the site looks great on a desktop computer but is useless on a phone, it’s time to optimize! 

Reducing the number of clicks one has to make also gets people to the checkout page quicker. They’re likely to buy more if the shopping experience is pleasant.

4. Loyalty Programs

Reward your customers for being customers! This may involve offering discounts, free items, giveaways, or points that let the customer get useful things like gas at their local stations. Analyze your customer base to see what would have the most impact.

5. Bundle Deals

If several items are commonly purchased together, such as a camera, a tripod, and a memory card, offer a discount for buying them all at once. 

Your AOV Could Be Higher — Print Bind Ship Can Help

Increasing your AOV also means providing excellent service to previous customers. Customers are much more likely to order a second time if their orders arrive well packaged and on time. Choosing a solid third-party logistics (3PL) partner means that your products will be packed properly, accurately inventoried, safely stored, and shipped around the globe — all without you having to worry about the details.

Having Print Bind Ship on your side is the next best thing to teleporting your products directly into customers’ homes. Contact us today for a free quote to see how we can transform your business.