AOV

Average order value

If there is an indicator that can provide an instant view of the performance of your business, it is AOV or the average order value.

But what is it and why is it so crucial? We will explain it in this post.

What is AOV?

AOV (Average order value) is a metric that represents the average value of each order placed by all customers for a period of time

To calculate it, you will simply have to divide the total income during this period by the total number of orders.

AOV = Total income / total number of orders

Some reasons for not ignoring this metric are:

Profitability: A higher aAOV usually means more revenue, which can translate into profitability.
Marketing Strategies: If you know your AOV, you can adjust your marketing strategies to increase this value, either through Upselling, Cross-Selling or fostering loyalty.
Acquisition Cost: If you know the AOV, you can calculate how much you are willing to spend to acquire a new customer and remain profitable.

Upselling: Offer More expensive products.
Cross-Selling: Offer Similar products when you know what your customer is looking for.
Offerings and Discounts: In requests at a minimum price that slightly exceeds the current AOV.

If we are talking about improving AOV, we can’t ignore the effectiveness of a good marketing campaign.

SMS campaigns, for example, can be an effective way to inform customers about new deals, discounts, or complementary products that can increase AOV.

Understanding and optimizing AOV can make a difference in the profitability of your business.

Accompanied by effective marketing strategies, such as email marketing and SMS campaigns, you can do wonders to increase this indicator.