AOV

AOV is always considered when evaluating marketing effectiveness. Businesses focused on development and scaling are constantly working to increase this metric. Let's discuss AOV in more detail: what it is in advertising and marketing, how to calculate the average check, how it affects the company's profit, and how to increase it.

AOV or Average Check: Definition in Marketing

The AOV abbreviation stands for average order value, which also means "average check".

This metric is widely used in online retail, advertising, and marketing. Depending on what they are analyzing, marketers calculate both the average check of an order and the average check of a customer if they regularly buy something from the company.

This indicator should also be considered when evaluating ROI, ROMI (return on investment in business and marketing), CPO (cost per order), and LTV (lifetime value of a customer).

Average Check: Formula and Calculation Examples

Calculating the average check is quite simple, as you only need to know two indicators:

• the total amount of purchases for a specific time without taking into account the type of goods purchased;
• the number of purchases during the same period.

AOV formula:

Businesses with a wide range of products and a large assortment should do the same. Divide goods or services into groups and calculate the AOV for each group. In addition, you can segment your target audience and calculate the average check for different types of customers.

Customer base segmentation is also helpful for personalized campaigns, including upselling and cross-selling. With Yespo, businesses can collect customer data, create segments, and send messages based on personal customer needs and interests.

We'll provide some specific examples to help you understand how to calculate the average purchase check.

Let's assume that an online toy store sold 30 products in one day with a total value of $240. In our case, the average check for a particular day is $8. Similarly, you can calculate the average check per year, quarter, month, or week – it all depends on how often you want to analyze this parameter and why you need it.

Now, let's look at calculating AOV for stores with different product categories.

Let's say that in a week, a particular outlet sold 5 products of one category for $1000, 10 products of another category for $500, and 30 products of a third category for $615. Now, let's find out what the average check will be in this case:

AOV = ($1000 + $500 + $615) / (5 + 10 + 30) = $2115 / 45 = $47.

How to Analyze the Average Check and Why to Do It

You should analyze the AOV metric to understand the following:

• how satisfied customers are with your service, product range, and quality, as well as the convenience of purchasing;
• whether the pricing policy was developed correctly and whether the prices are competitive in the market;
• how effective the marketing strategy is (if the average check is growing, then you are doing everything right);
• which segment of customers is attracted to your product (this information will be useful for creating a customer portrait);
• the degree of consumer loyalty to your brand and products, whether they are ready to give preference to your company over competitors;
• what financial situation is the company in: is it currently growing, stabilizing, or falling in revenue (average check and revenue are interconnected, so high profits are possible only with a good AOV or large sales volumes).

Remember to keep statistics for a week, month, quarter, and year when analyzing the average check. Comparing previous periods will help you track the dynamics of AOV changes depending on the season, demand, and niche trends. Also, evaluate the average check amount by different traffic channels to understand which brings you the most solvent customers.

Remember to calculate the online promotion profitability for each of the lead sources because even a large AOV does not always offset the high cost of advertising. If advertising does not pay off, you should either abandon this channel or optimize your advertising campaign to increase its effectiveness and financial return.

How to Increase the Average Check

Increasing the average check is one of the main tasks for any business. Without this, breaking through the financial ceiling and reaching a new level of company development is impossible. To ensure that AOV delights you with stable growth, follow these tips:

1. Focus on upselling and cross-selling: working with existing customers is always easier and cheaper than attracting new ones. You can do this with product recommendations customized on your website, in direct channels, and with special upselling workflows for sales managers.

Be sure to launch an additional campaign with recommendations to a group of buyers with a high AOV. These people have money, so they can buy something else from you, just offer it.

2. Competently build communication with customers to increase the value of goods in the average customer check. The implementation of the upsell strategy is also possible in triggered campaigns.

3. Run sales and promotions whenever you see the average check dropping or sales decrease. Customers love discounts as much as marketers do. Just remember: you can't fool your customers in this matter. If you make a significant markup on a product or service in advance and then offer it at a lower cost, some customers may remember the recent price and realize you are lying to them. Refrain from undermining customer trust, or your AOV will decrease.

4. Organize promotional upsells when it is beneficial for the customer to buy more. Promotions such as "1+1=3", "-50% for the second item in the check", and "Buy one item and get the second one as a gift" stimulate sales growth and significantly increase the average check.

This marketing tool works well during Black Friday, Cyber Monday, and on the eve of various holidays. For example, according to a study conducted by Survey, Cyber Monday and Black Friday are the most profitable periods for retailers. This is a great reason to expand the customer base and increase the average check.

5. Implement an "exchange with excess" strategy and give customers more than expected. This increases loyalty to the company and makes it easier to upsell in the future. If you mention the product bonus first, you can influence the customer's decision to place an order. In addition, the bonus system helps to increase the number of products in one check, which is reflected in the AOV.

6. Develop a loyalty program for regular customers to encourage them to stay with you for as long as possible. This will extend the customer lifecycle, increase the LTV, and increase the average check.

7. Offer different payment options for the product so customers can choose the most convenient and profitable one. The ability to pay with a bank card, buy a product or service in installments, or use credit is sometimes a key factor when ordering.

All of these methods should help you increase your average check. We wish you successful marketing experiments and high sales!