What Exactly Is Average Order Value?

Home » News » What Exactly Is Average Order Value?

Average order value – what is it and how to take advantage of it. 

If you need help with your email marketing, go to https://www.oasisoptimization.com

——————–

Okay, so what exactly is average order value, I’m going to go over that as well as some other ways that might be known. Or you might have heard that. And this is a very short video. First of all, I’m Adam Moody. And if you’d like help with increasing your average order value, you can head over and find out more at Oasisoptimization.com

Alright, first of all, your average order value refers to what the averages of all of the orders at either your store your sales funnel, whatever that may be. So basically, you can just say, Okay, take the revenue and divide it by the number of orders. All right, a lot of times we look at this in terms of a specific product or a funnel, and we’ll just say, okay, you know, do the same thing, what’s the revenue divided by the number of purchases? And we’ll look at that and say, okay, we come up with a certain number for this. 

Let’s just say it’s $50. And we look at that and we say, well, it’s costing us $40 to get that customer. That’s great. That means we’re profitable. But then a lot of times we say, Well, how could we increase that’s very important to do, because maybe your ad costs are going to go up, your fulfillment costs are increasing, or in general, you would like to make more profit. 

So you could scale the business. So it becomes very important to understand what your average order value is. And then to look into ways that you can increase average order value, which I have some additional videos on the channel available if you’re interested in that. 

So another way that average order value might be known, or you might have heard of it is average cart value. All right, so basically talking about when somebody checks out kind of the e-commerce term of a cart or basket, and just saying, Okay, well, you know, how much was in there on average, when they check out and again, that’s just taking the revenue and dividing by the number of purchases. 

Now, this is different from lifetime value. Sometimes this gets confused. lifetime value literally refers to a lifetime. So it could be that initial purchase, somebody buys a product, maybe they there’s an upsell, and they take that and so in our example where we were talking about 50 dollars maybe that person spent $75. But then we send them an email and a month later they come back and buy something on a special for $100. 

So now they’ve, you know, spent many times more than what that initial average order value was. So lifetime value is totally different. It’s literally the lifetime how much that person has purchased with you. So don’t get those confused, and you’ll be alright. And like I said, if you would like help with increasing your average order value, sales funnels, email marketing, you can reach out to me and get in contact at Oasisoptimization.com. 

Posted on