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What is AOV?

Average order value (AOV) is one of the most significant metrics for companies that helps them to measure and establish objectives. While increasing an eCommerce store's AOV helps to boost profits significantly. Additionally, many AOV marketing methods are quite simple to implement.

Define AOV

AOV is the abbreviation of Average Order Value. Besides, it is an eCommerce metric that illustrates how much a customer spends on average throughout each transaction.

When the value of AOV is increasing in your online store that means the customers are buying more expensive items. Also, it means that customers are adding more items to their shopping cart before continuing to the checkout.

Brands across all industries should seek to improve their AOV. This is because it may boost income quickly. Organizations may use average order value data to make informed decisions in areas like marketing, product pricing, and client acquisition expenditure.

How to Calculate Average Order Value (AOV)?

Well, there are no hassles when you calculate AOV for an eCommerce store. It is a very easy process. In this process, you just need to divide the total revenue earned by the total number of orders that you received within a defined period of time.

AOV (Average Order Value) = Total Revenue / Total Orders

Hence, it is so simple to calculate. And, brands can also track their average order value across all sales channels. Therefore, it is best to calculate it at least once a week so that patterns may be identified quickly. This also makes determining the reasons for dips and surges easier.

How is AOV Essential for Your Brands and Organizations?

As we state above understanding and setting the targets for AOV is the most important for the brands to make key decisions. 

Well, here we summarized a list of a few reasons why AOV is essential for brands. So, let’s have a look at them! 

  • An average order value plays a vital role to make you understand the behavior of the customers.

  • AOV impacts the profits of your brand.

  • It is strongly connected to profitability. When it raises that means more money without any spending on customer services, delivery, and conversion.

  • The metrics of the average order value are relatable.

How Can You Improve Average Order Value (AOV)?

There is a range of AOV marketing tactics that can help you to boost your profits. Additionally, many of these will also help you boost conversion rates and customer lifetime value.

Well, here we are going to mention some of them. So, let’s have a look at them!

1. By cross-selling the complementary products.

2. Motivating customers to buy extra items or expensive products.

3. Simply raise the price of the products.

4. Doing experiments with thresholds.

5. By creating a loyalty program.

6. Providing other perks.

7. By investing in better customer service.

8. Take knowledge from the customer behavior on external sales channels.

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