Digital marketing term
AOV (Average Order Value)
AOV is an e-commerce metric found by dividing the total revenue from orders in a given period by the number of orders, showing how much customers spend on average per cart.
Detailed explanation
This value is calculated by dividing total revenue by the total number of orders, and it's frequently used to evaluate how effective pricing, cross-sell, and upsell strategies are.
To increase this value, tactics like setting a free-shipping threshold, offering bundled deals, and showing related product recommendations on the cart page are common; these tactics are usually intertwined with cross-sell and upsell strategies.
This metric isn't sufficient on its own; when read alongside profit margin and LTV, it becomes clear whether a rising order value is actually increasing profitability.
Frequently asked questions
- How is AOV increased?
- A free-shipping threshold, bundled offers, and related product recommendations on the cart page all raise average order value.
- Is a higher AOV always better?
- If profit margin is low, even a high AOV doesn't reflect healthy profitability, so it should be assessed alongside margin.
Related terms
Internal links for the topic cluster — read these concepts together.
- Cross-sellCross-sell is a sales technique where a complementary product is recommended to a customer while or after they purchase a main item, aiming to increase total order value and customer satisfaction.
- UpsellUpsell is a sales strategy that aims to increase order value by directing a customer toward a higher-priced, more comprehensive, or higher-quality version of the product they were considering.
- LTV (Customer Lifetime Value)LTV is the estimated total revenue a customer will generate for a company over the course of their relationship with the brand; it's a core metric for evaluating long-term marketing return.
- Profit MarginProfit Margin is a core financial performance indicator that shows the percentage of a business's total revenue that becomes actual profit, revealing how much of sales converts into real earnings.
- Cart Abandonment RateCart Abandonment Rate measures the share of users who add items to their cart on an e-commerce site but leave without completing checkout, out of all users who created a cart.