What is Average Order Value (AOV)?
AOV is a measure of the average dollar amount customers spend per purchase in a given retail or e-commerce setting.
It is calculated by dividing the total revenue generated by the number of orders placed during a specific period of time, usually a month or quarter.
A low AOV may indicate that customers are making multiple small purchases instead of larger ones, or that customers lack sufficient disposable income to spend more on each purchase.
On the other hand, a high AOV indicates that customers are purchasing more items each time they shop.
What are some common causes of low AOV?
- Poor awareness of product benefits and features preventing customers from seeing the value in purchasing larger orders
- Customers may be hesitant to buy expensive items, so they opt for multiple cheaper items instead
- Not offering discounts or promotions that incentivize customers to spend more per order
- Too many competing prices making it difficult for customers to make a choice
- The store doesn’t offer enough products that would entice customers to place larger orders
What’s the difference between Average Order Value (AOV) and Average Transaction Value (ATV)?
Though both AOV and ATV are used to measure customer base spending, they are fundamentally different in the sense that an order can consist of multiple transactions.
For this reason, AOV is a metric that is often used to measure long-term customer loyalty, whereas ATV measures immediate consumer spending habits. Additionally, AOV takes into account discounts and promotions which can influence customers to spend more, whereas ATV does not take these into account.
How can e-commerce brands increase AOV?
There are a few ways to increase average order value in e-commerce:
- Offer discounts and promotions that incentivize customers to spend more.
- Create bundles of related products to help customers purchase items they may want or need at the same time.
- Increase awareness of product benefits and features so customers can better understand the value of placing larger orders.
- Provide personalized recommendations to customers so the products they are most likely to be interested in buying are brought to their attention.
- Offer free shipping or other incentives for customers that place larger orders.
Average order value with Emarsys
Emarsys works with leading brands like PUMA, Pizza Hut, and Nike to increase their acquisition, purchase frequency, average order value, and retention by unifying their customer, sales, and product data and enabling personalized cross-channel execution.