Average Order Value

The Average Order Value (AOV) measures the average amount each customer spends every time they place an order. Tracking AOV is important because it tells you how much revenue you generate per transaction—and by optimizing it, you unlock more revenue and profitability from every visitor who becomes a buyer.

When you know your AOV, you can also evaluate the effectiveness of promotions and upsells. If a particular bundling or free-shipping threshold raises AOV, you’ll see it reflected immediately in that metric. Rising AOV also means you’re getting more revenue out of each purchase; sweetening the return on ad spend and acquisition costs without needing more customers. So let's learn more about your AOV and the factors that influence it: average item price and items per basket.

New versus Repeat Customers

Analyze your AOV over time by new versus repeat buyers to uncover distinct spending patterns. New customers often start with smaller baskets, while repeat customers tend to spend more per order. For subscription businesses, where shoppers typically make a one-time purchase before switching to a discounted subscription, the opposite trend may emerge. Because new and repeat customers behave so differently, strategies to boost AOV can have varying impacts on each group. That's why RetentionX breaks down AOV for all, new, and repeat customers separately. Learn more here.

Average Order Value

The AOV is the average amount spent per order, reflecting typical purchase size–before product returns.

AOV = ∑ Sum of Gross Revenue / Number of Orders

AOV of New Customers: The average value of first orders only to understand how much new customers spend initially.

AOV of Repeat Customers: The average value of all second and later orders to understand returning customer spend.

Items per Basket and Item Price

To understand what’s driving changes in AOV, analyze in addition its two key influencing factors: Items per Basket and Item Price. They reveal whether customers are buying more products, spending more on each item, or both:

The number of items per basket shows how many products a customer typically buys in a single order—before accounting for product returns.

Items per Basket = ∑ Sum of Items Sold / Number of Orders

Items per Basket of New Customers: Average number of items in first orders only.

Items per Basket of Repeat Customers: Average number of items in all second and later orders.

The average item price represents the typical amount paid per item, revealing whether customers tend toward lower-priced or premium options.

Average Item Price = ∑ Sum of Gross Revenue / Items Sold

Item Price of New Customers: Average item price in first orders only to understand entry-level pricing.

Item Price of Repeat Customers: Average item price in all second and later orders.

Trends

All three KPIs are shown as a color-coded bar column chart followed by absolute figures. Trends get even more clear by the growth rate by comparing each data point with the previous period.

Also, with the activation of RX Forecast™ you will additionally receive three forecast scenarios for the coming months. To enable predictions, simply book the add-on Forecast Plus.

Use Cases

One of the biggest benefits of optimizing the AOV is that you’re focusing on customers who already intend to buy. They’ve arrived on your site with purpose—often with items in their cart—and all you need to do is help them discover complementary products or upgrade to higher-value options.

By engaging shoppers who are already converting, you encounter fewer barriers than when chasing new prospects. Instead of running on the customer-acquisition treadmill, your goal becomes creating a richer exchange of value, where customers who spend more receive more in return. Here are a few strategies to make that happen:

• Cross-Selling: Selling of a different product or bundling of complementary products to provide an additional benefit to the customer and an increase in revenue for you.
• Upselling: Encouraging your customers to purchase a more expensive but related product before checking out. 
• Packs: Creating packs of items instead of selling multiple products separately; e.g. promoting a 3-in-1 pack of coffee beans that highlights 20% savings when compared to the price of one single package.
• Volume Discounts: Offering products at a reduced price per item when purchasing more. For example, 50% off the purchase price of a second coffee.
• Free Shipping: Introducing a policy of free shipping above a minimum purchase quantity to encourage your customers to fill their shopping basket to the extent that they receive the benefit. 
• Return Policy: Rolling out a forgiving return policy, at least for the priciest items to reassure customers and boost sales.
• VIP Program: Setting up a customer loyalty program for your Top Customers to give your top customers special treatment and thereby encourage them to buy more.
• Live Chat: Offering live chat support for quick questions to eliminate any potential purchase barriers.

Also, analyzing AOV performance is a good indicator of Lifetime Value for those businesses that are starting and do not have enough data to perform an LTV calculation.

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