Average Order Value tracks the average amount spent each time a customer places an order on your website. The basic calculation used is total revenue generated by your website divided by the total number of orders within a speicifc time period.
For example: £300,000 Revenue / 1,500 orders = an average order value of £200.
AOV is a great metric to track as this can be used as a benchmark statistic to monitor your online sales and performance.
It is a great insight into your customers purchasing behaviour and styles, which can then enable you to plan Marketing campaigns and budgets more accurately.
Absolutely, below are just a few examples of eCommerce tactics to utilise, as with everything you should AB test these to see what is most effective for your products/customers/website.
This means customers will have to spend over a certain amount (for example £40) in order to reach free delivery, so this can help increase your AOV.
You may reduce the pricing of your products, but customers may then buy more in one purchase from you which could see your AOV stay the same, or you may see your customers buying the same quantity as they normally do but an increased number of customers could be purchasing from you due to the lower price.
This can mean customers purchase a slightly more expensive product than they originally intended which will increase AOV, or you could try recommending products aligned to what is in the customers basket as ‘extras’.
You could try increasing AOV by offering customers a ‘bundle’. For example when selling a laptop, offering a ‘free’ mouse and keyboard for a slightly higher total price.
Allowing customers to buy more of a product for a better discount can help increase their spend with you. For example offering ‘Buy one, get one half price’ is a common tactic on retail sites.
Another thing to be aware of which can affect average order value is seasonality. For example customers may buy more during Holiday periods, or wait for seasonal sales. These customers may also not be your typical loyal customers so behaviours will be different during these times.
Other external factors such as latest trends or Marketing activity which is out of your control can also impact customers views and buying habits and therefore affect your AOV.
Devices and Marketing channels should also be observed. For example, do your customers buy different products on a Mobile device than on Desktop? Do customers spend more on a Desktop than on a Mobile? If customers received a personalised email is this more a powerful tool for your business at getting customers to buy online than, say, display advertising?
All scenarios and examples above are critical to understand how they impact your average order value and therefore allow you to change your Marketing spend and pricing tactics accordingly.
All of the examples above should be tested and understood in order for you to continue to grow sales and increase your AOV, something Webtrends Optimize can help you do strategically.
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