What is AOV in marketing?

Question

Justin Parker · Accepted Answer

AOV in marketing stands for Average Order Value, and this is a metric used in the marketing field to gauge and measure the average amount of money consumers spend on each order or transaction. AOV is determined by dividing the total amount of revenue generated by the total number of orders.

AOV is a very important tool in e-commerce because it can help organizations measure the effectiveness of their:

Overall marketing campaigns
Pricing strategies
Product or service offerings

Increasing AOV can often result in higher revenue generation and overall profitability for businesses. It can also lead to a stronger customer base. Tracking AOV enables companies to gain key insights into customer behavior, needs, and interests. They can then use this data to adjust their marketing strategies accordingly.

Organizations seek to increase AOV through a variety of marketing techniques. Here are some common marketing techniques that increase AOV:

Cross-selling and Upselling

This strategy sees organizations offering complementary products or services to consumers. This encourages customers to spend more on each order.

Bundling

The bundling of products or services together at a discounted price point can often result in consumers perceiving more value in each order. This might cause customers to spend more or shop more often to receive bundle offerings.

Free shipping thresholds

Many companies use the tactic of offering free shipping for orders that exceed a certain threshold. This method encourages shoppers to spend more to receive the benefit of having their order shipped for free.

Loyalty programs

Loyalty programs are used to reward recurring and loyal customers. Repeat purchases and higher amounts of spending are rewarded with certain incentives or promotions, thus encouraging loyal customers to engage in more shopping and continue buying from a specific brand.