The average order value is defined as the ratio of total conversion value (Revenue through paid marketing) and the total number of conversions generated within the time period in consideration.
The average order value found in the above-defined way depicts what is the average value of each conversion. This value can vary depending on the following factors –
- Change in product catalog – Expansion or reduction in the number of products, change in product prices etc.
- Seasonality – Depending on the product type different time periods in the year can shift focus to different product segments which as a result can increase or decrease the AOV.
- Sales and Discounts – Sales and discount in addition to changing the product pricing can also increase conversion within a product segment or for the entire catalog which results in a change in AOVs
- Change in targeted audiences – Different audiences react to different price segments which can be used to increase AOVs if the audience personas are used judiciously.