Frequently Asked Questions
How do you forecast AOV?
Forecasting average order value can get a bit tricky, but perhaps the most basic way to form a prediction is to look at your claimed ecommerce value and the known AOV. You can divide your revenue by your AOV to get an estimate of total orders, and then start to predict what you’ll sell over the next month, in the upcoming quarter, and so on.
Why is AOV important?
Knowing your average order value helps you analyze your marketing efforts and pricing strategies by giving you the metrics needed to measure the lifetime value of specific customers. That’s because AOV is really a benchmark for consumer behavior and customer retention, and can assist you in creating systems to evaluate how well things are going.
Ecommerce stores often focus their energy on increasing traffic to their site, when in reality, it would be much more profitable to increase AOV. Turning your attention toward upselling, cross-selling, or add-ons with product recommendations can be a big boost to your profits — and it doesn’t cost a dime since that customer is already adding items to their shopping cart.
Is high AOV good?
Simply put, a higher AOV is much better for your online business than the alternative. A high AOV tells you that you’re really leveraging every dollar you’ve put toward new customer acquisition. While AOV will differ greatly from company to company, steadily increasing this metric should be the goal for every business regardless of industry.