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How can I use Average Order Value over time to determine if I am improving my store sales profitability?

Average Order Value (AOV) is a metric that calculates the average amount of money spent by customers in a single transaction.

Monitoring AOV over time can provide valuable insights into your store’s sales profitability. Here are 6 ways you can utilise AOV to determine if you are improving your store sales profitability:

  1. Identify trends: Track your AOV over regular intervals, such as monthly or quarterly, using Google Analytics or your ecommerce platform such as Shopify or BigCommerce to view the data in a graph. Compare periods and look for trends over time. If your AOV is consistently increasing or showing an upward trend, it indicates that customers are spending more per transaction, which can be a positive sign for profitability.
  2. Analyse pricing strategies: Changes in AOV can be influenced by pricing strategies. Evaluate any pricing adjustments or promotions implemented during the period you are analysing. For example, if you introduced upselling or cross-selling techniques, bundled products, or implemented dynamic pricing, monitor how these strategies impact your AOV.
  3. Assess customer behavior: AOV can also reflect changes in customer behavior. If you observe an increase in AOV, it suggests that customers are purchasing more expensive or higher-margin products or are adding complementary items to their carts. Analyse customer segments, demographics, or purchase patterns to identify the factors driving the increase in AOV.
  4. Evaluate marketing initiatives: AOV can be influenced by your marketing efforts. Assess the impact of marketing campaigns, discounts, or loyalty programs on AOV. For instance, if you offered volume discounts or free shipping for orders above a certain value, check if these incentives led to higher AOV.
  5. Consider operational efficiency: AOV can also be influenced by operational factors within your store. Evaluate the ease of navigation, product presentation, and checkout process to ensure a smooth customer experience. If AOV is consistently low or declining, it could indicate issues such as complicated checkout processes or limited product availability.
  6. Compare AOV with profitability metrics: While AOV provides insights into sales revenue per transaction, it’s crucial to correlate it with profitability metrics. Analyse metrics such as gross profit margin, net profit margin, or customer lifetime value to assess the impact of AOV on overall store profitability. A higher AOV may not necessarily translate into higher profits if costs or margins are not adequately managed.

By consistently monitoring AOV over time and analyzing the factors that influence it, you can gain a better understanding of how changes in your store’s sales profitability are evolving. It allows you to make informed decisions and implement strategies to improve profitability, whether through pricing adjustments, marketing campaigns, or optimizing operational processes.

Learn why turnover is not always a good indicator for profitability. 

Did You Know …

You can list your local products for free on Google!

Your in-store products can appear in free listings across Google properties, including Google Search, Google Images, the Shopping tab, Google Maps, and Google Lens.

We’re working with retailers who have local brick-and-mortar stores in service areas like Sunbury.

What do you need?
An automatic feed to Google via their Merchant Centre.

Brave can help you get this set-up via any ecommerce store.

Call Mike on 0419 810 727 to get the ball rolling.

Need help with analysing your sales numbers?

How can you improve your online store? Let us know your email & we'll send you some ideas!