Maximizing your Average Order Value is one of the best ways to improve your sales and marketing strategy. By definition, Average Order Value (AOV) is exactly how it sounds; it’s the average amount spent per order. This gives your business the ability to better understand your pricing and revenue strategies. While the metric seems simple on the surface, it offers valuable insights into areas of future growth and improvement. We'll take you through how to calculate this metric, how to understand it in the context of your industry, and how to apply it to the platforms you're using now.
How to Calculate Average Order Value
You can calculate AOV by dividing total revenue by total number of orders. AOV can be assessed for various time-periods (i.e. day, week, month, year) and, if your sales are tied to certain products or platforms, you can assign a specific AOV for each.
If you’re confused about how to define total revenue and total number of orders, we’ve included some nifty definitions and examples below:
Total revenue is how much you make from selling your products. A simple way to calculate revenue is sales price times number of units sold. It also usually includes discounts and deductions for customer returns.
Total number of orders is, well, the sum of all instances where someone purchased from your store.
When choosing what to include in your calculations, remember: consistency is key! That means, if you decide to include XYZ in your AOV for the month, you should include it in the next month’s AOV as well. Having consistent metrics will allow you to better identify the causes of good or bad performance. For instance, if, over the past few months, you’ve started cross-selling related products at check-out and your AOV increased, then you’ll know that action was productive in expanding order size!
Connecting Average Order Value to Your Business
Again, as you begin (consistently) monitoring AOV, you’ll be able to find insights specific to your strategy. Of course, it’s also important to understand your AOV in relation to your broader industry. To help you know what to expect, we’ve included a list of average AOV per industry (shoutout to Little Data for the stats):
Industry/Business Field - Average AOV
All Shopify websites - $70
Beauty - $70
Health & fitness - $76
Fashion - $97
General eCommerce (US) - $97
Home & garden - $353
Further, while you can find revenue and order numbers from many channels, we’ve identified popular platforms that are particularly relevant to AOV. These may be good places to begin if you’re getting started with this metric:
Stripe: If this platform handles your company’s billing and subscription information, you’ll have easy access to AOV data. Simply visit Reports > Balance change from activity. Your total balance change would be your revenue (as generated on Stripe) and the number of charges (Charges > Count) is your total number of orders.
Google Analytics: Lastly, if you have eCommerce tracking enabled on Analytics, then you can track your AOV via your eCommerce Overview Report. It will show up under the Transactions section.
Tracking Average Order Value with Lido
While AOV is easy to calculate, it’s important to keep in mind that AOV is one of many valuable metrics to track your performance. If you don’t want to spend hours at the end of the month juggling numbers from your Shopify, Stripe, and Google Analytics accounts, consider trying Lido. Lido can help you build a dashboard to monitor your data and give a look into how your key metrics (such as AOV) change over time. With that, we invite you to check out our integrations for the following platforms below:
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