Z U B I . A I

When it comes to running an e-commerce business, there are so many critical components that make up the customer analytics side of an online store. The best part about an e-commerce business, in comparison to a brick and mortar store, means that you have access to large amounts of data. These metrics can tell you a lot about your business and deliver critical key pieces of information that could indicate where your business can further improve. Because we all know that for a business to succeed, the performance must be able to be measured.

Average order value – AOV

A particular area of importance within your metrics is in relation to ‘AOV’. You may have seen the term ‘AOV’ within your customer analytics, referring to ‘average order value’. What this little metric does is divide your overall revenue from sales with the amount of orders you have processed. Once this is calculated, you are then provided with the figure of the ‘average order value’, or in other words the typical cost per order you receive within your e-commerce store.

So why is this such a critical component for your business? Understanding this fundamental metric can provide valuable insight into how your business is honestly performing and, as such, how sustainable the company is. From this information, you are able to strategise ways that could improve your business and increase the overall value per order.

After all, in simple terms one of the basic key performance indicators of a business is how much revenue the company is bringing in. Then balancing this in relation to the costs and expenses of the business, ensuring the profitability of your e-commerce store.

Return of Investment – ROI

Another factor to consider is ensuring return on investment (ROI) of your marketing spend. The ‘average order value’ can provide valuable insight into approximate budgets around digital spend. The higher the value of your average order, the more money you can justify spending to obtain each new customer. You might decide that it is worthwhile spending $10 per lead if they are likely going to spend $400 at your store. This is just one of the many ways that the AOV metric can provide incredibly useful information to improve your business.

An additional key benefit in understanding your AOV is to use it as a metric of performance. If you wish to increase the overall profitability of your business, setting goals to increase the average order value is a fantastic place to start. This tangible and concrete customer analytic will allow you to keep track of your performance and set goals to improve profitability.

We believe that the ’average order value’ metric is a fundamental to customer analytics, and with Engage you are able to access this information that is highly necessary for any thriving business.  

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