Average order value (AOV) is a useful metric to monitor as you grow your business. Traditionally, it’s one of the first numbers business owners try to improve to increase revenue or optimize return on ad spend. It sounds simple enough: If you can get people to spend more money per order, you’ll make more money, right?
What is average order value?
Average order value (AOV) refers to the average amount spent by customers per transaction. It’s calculated by dividing total revenue by total number of orders.
For example, If your store has a total revenue of $2,000 split between 100 orders, your average order value is $20. This means that, on average, a customer spends $20 each time they make a purchase from your store.
Traditionally, online businesses that know their AOV focus on getting customers to spend past that threshold—for instance, if their AOV is $20, by offering free shipping on orders over $25.
By personalizing your marketing efforts with creative upsell strategies, Context can help you increase your AOV, leading to higher revenue.