What is Average Order Value?
Average Order Value (AOV) measures the average revenue generated per transaction. It is calculated by dividing total revenue by the number of orders over a specific period.
For example, if your online store receives 100 orders totaling $5,000 in a week, your AOV is $50. Understanding this metric helps you evaluate how much each customer spends per purchase and identify opportunities to increase revenue.
Why use Average Order Value?
- Identify revenue opportunities by analyzing product mixes and pricing strategies to increase the average spend per order.
- Optimize marketing spend by targeting campaigns toward customers most likely to increase AOV, ensuring paid media drives higher profit per sale.
- Evaluate promotions and personalization by testing upsells, bundles, and cross-sells to see which strategies effectively increase order size and improve campaign ROI.
AOV vs. CLV vs. Conversion Rate
| Metric | Focus | Calculation | Frequency | Example Use |
| AOV | Order size per transaction | AOV= Total revenue ÷ number of orders | Transactional | Assess average cart spend |
| CLTV | Value over customer lifespan | CLV = (Average Order Value) × (Purchase Frequency) × (Retention Period) | Customer lifetime | Predict future revenue |
| Conversion Rate | Purchase likelihood | Conversion rate =Number of purchases ÷ number of sessions | Session/campaign | Optimize onsite funnels |
FAQs
AOV can be increased by implementing strategies such as product bundles, volume discounts, free shipping thresholds, and personalized product recommendations. Track performance in your analytics dashboard to measure their impact. Explore Insider’s guide to e-commerce personalization for techniques that drive higher order values.
No, AOV measures revenue per order, while CLTV measures total expected revenue from a customer over their entire relationship. Both are critical metrics for optimizing marketing, but they operate at different scales. To understand CLTV better, read the customer lifetime value glossary.
A “good” AOV varies by industry and product mix. Use industry benchmarks to compare performance and monitor trends over time to uncover opportunities for upselling, pricing adjustments, or product recommendations. For more examples and strategies, see Insider’s guide to use cases to increase average order value.
