Average Order Value
The average dollar amount spent per transaction — total revenue divided by number of orders — a critical e-commerce and SaaS metric.
Average Order Value (AOV) is one of three levers in the revenue equation: Revenue = Traffic × Conversion Rate × AOV. Most teams focus exclusively on traffic and conversion rate, ignoring the often-easier lift available through AOV optimization.
Why AOV Matters More Than Conversion Rate
Increasing AOV by 10% has the same revenue impact as increasing conversion rate by 10% — but it's often easier and cheaper. AOV optimization works on users who have already decided to buy. You're not convincing skeptics; you're expanding committed customers' baskets.
Proven AOV Tactics
Cross-sells and upsells are the obvious plays, but the behavioral science behind them matters. The decoy effect (adding a clearly inferior option to make the target option look better), anchoring (showing the premium option first), and free shipping thresholds (set at 20-30% above current AOV) are the most reliably effective tactics.
Testing AOV Changes
AOV tests require different statistical approaches than conversion rate tests. AOV data is typically not normally distributed — it's skewed by large orders. Use revenue per session as your primary metric instead, and consider using percentile analysis alongside means.
Practical Application
Know your current AOV by segment (new vs. returning, by traffic source, by device). Set your free shipping threshold at 20-30% above the median order value. Test bundle pricing using the decoy effect. And always measure the impact on both AOV and conversion rate — sometimes AOV increases come at the cost of reduced purchase frequency.