Average Order Value (AOV)

Average Order Value (AOV) represents the average total value of orders placed by individual customers within a specific timeframe. It is computed by dividing the total revenue generated from customer orders by the total number of orders.

For instance, consider an eCommerce platform offering products priced at $15, $17, $19, $20, and $23. If the platform records monthly sales of $120,000 from 6000 orders in October, the AOV for that month would be $20 ($120,000 divided by 6000).

Enhancing AOV directly contributes to improving Customer Lifetime Value (CLTV). To optimize AOV, focus on increasing the average cart value per order. This can be achieved by addressing three key components in tandem:

1. Cart Conversions: Every completed cart transaction elevates the AOV. Employ strategies such as creating a sense of urgency to expedite cart closures and offering incentives for meeting minimum cart thresholds to encourage higher AOV.

2. Product Quantity: There are two approaches to consider regarding this metric. Encourage customers to purchase complementary products alongside their primary selection through cross-selling techniques. Alternatively, prompt them to increase the quantity of their primary product through volume discounts.

3. Product Pricing: Encourage customers to opt for higher-priced variants of the products they are interested in and effectively upsell when feasible to elevate AOV.