Average order value is the average amount of money a customer spends on one order in your store. It is also called average basket size.
The formula for AOV is simple:
AOV = Total revenue / Number of orders
It can be calculated globally for the store or by marketing channel, campaign and other factors.
AOV is an important metric for revenue projections, campaign budgeting, calculating discounts and promotions, setting up loyalty programs and so on.
Naturally, the higher AOV is, the better. If you increase it, revenue automatically goes up without the need for more traffic or more conversions. The same marketing investment, the same effort, but better marketing ROI. It’s cheaper and easier to get bigger orders than to drive more traffic or increase conversions.
Some tactics to increase AOV are: