Average Order Value (AOV) is a key e-commerce metric that measures the average dollar amount spent per transaction. It's one of the three fundamental levers for growing revenue (alongside traffic and conversion rate).
Formula: AOV = Total Revenue ÷ Number of Orders
Why AOV matters:
Increasing AOV is often the most efficient path to revenue growth because it doesn't require acquiring new customers or improving conversion — it maximizes the value of traffic you already have. A 10% increase in AOV directly translates to a 10% increase in revenue.
Strategies to increase AOV:
- 1Product bundling: Offer curated bundles at a slight discount vs. buying items separately
- 2Cross-selling: Use Market Basket Analysis to recommend complementary products
- 3Free shipping thresholds: Set the threshold just above your current AOV
- 4Volume discounts: "Buy 2, get 10% off"
- 5Upselling: Present premium alternatives
AOV segmentation:
Overall AOV is useful but can be misleading. Breaking AOV down by customer segment (using RFM analysis), acquisition channel, or product category reveals much more actionable insights. For example, your Google Ads customers might have a $45 AOV while organic customers average $72 — information that directly impacts your marketing strategy.
