How to Find Average Order Value on Shopify

Table of Contents

1. Introduction
2. What is Average Order Value (AOV)?
3. Why AOV Matters for Your Shopify Store
4. How to Find AOV in Shopify
5. Strategies to Increase Average Order Value
6. Conclusion
7. FAQ

Introduction

Imagine you're running an online Shopify store. You generate a good amount of site traffic, but your sales figures aren't as high as you'd expect. This situation can be perplexing and frustrating. What if the answer to boosting your revenue lies in a metric you haven't closely monitored: the Average Order Value (AOV)?

Average Order Value is a critical metric in eCommerce. Essentially, it tells you the average amount of money your customers spend per transaction. By understanding and optimizing your AOV, you can make informed decisions that enhance your pricing strategies, marketing efforts, and ultimately, your bottom line.

In this blog post, we'll delve deep into the concept of AOV, explain how to find it on Shopify, and provide actionable strategies to increase it. By the end of this guide, you'll be equipped with the knowledge to improve your store's financial performance significantly.

What is Average Order Value (AOV)?

Average Order Value (AOV) is the average amount a customer spends each time they place an order from your store. This metric is essential because it provides insights into customer spending behaviors and helps you gauge the effectiveness of your pricing and marketing strategies.

Formula to Calculate AOV: [ \text{Average Order Value (AOV)} = \frac{\text{Total Revenue}}{\text{Total Number of Orders}} ]

For example, if your store generates $5,000 from 200 orders in a month, your AOV for that period is $25.

Why AOV Matters for Your Shopify Store

Understanding and optimizing AOV brings several benefits:

1. Revenue Insights: Provides a clear picture of revenue per transaction, helping in setting realistic sales targets.
2. Customer Behavior Analysis: Offers glimpses into purchasing patterns, helping tailor marketing strategies.
3. Marketing Efficiency: Helps evaluate the success of campaigns and promotions in driving higher spend per order.
4. Profit Maximization: Increases overall revenue without necessarily increasing customer acquisition costs.

Higher AOV often correlates with a healthier profit margin as it indicates customers are spending more per visit, making each sale more valuable to your business.

How to Find AOV in Shopify

Shopify simplifies the process of finding your AOV with a built-in analytics dashboard. Here’s how you can find your AOV:

1. Accessing Shopify Analytics:

   • Log in to your Shopify Admin.
   • Go to Analytics > Dashboard.
   • In the dashboard, scroll down to find the Average Order Value section.

2. Manual Calculation:

   • Export sales data: Go to Analytics > Reports > Sales over time, adjust the date range, and export the report.
   • Use the formula: Divide your total revenue by the total number of orders within the selected date range.

Understanding how these insights plug into your broader business strategy is crucial. By consistently monitoring your AOV, you can identify trends and make adjustments as needed to optimize your store's performance.

Strategies to Increase Average Order Value

Once you've identified your current AOV, it's time to implement strategies to boost this metric. Here are several approaches:

Upselling and Cross-Selling

Upselling is encouraging customers to purchase a higher-end product than the one they’re considering. Cross-selling is suggesting complementary products. These techniques can be used together to effectively increase AOV.

How to Implement:

• Highlight related products during the checkout process.
• Use Shopify apps like Bold Upsell or Cross-Sell to automate and optimize these offers.

Product Bundling and Volume Discounts

Packaging related products into a bundle or offering discounts on bulk purchases incentivizes customers to buy more.

Example:

• A skincare store might bundle a cleanser, toner, and moisturizer at a discounted price, motivating customers to buy the set rather than individual items.

Tools:

• Use apps like Ultimate Special Offers or Bundle Builder on Shopify to create and manage product bundles and volume discounts.

Setting Free Shipping Thresholds

Free shipping is a powerful motivator. Setting a minimum order value that customers must reach to qualify for free shipping can encourage them to add more items to their cart.

Implementation:

• Analyze your modal order value (the most common order amount) and set the free shipping threshold slightly above it to encourage additional purchases.

Personalized Product Recommendations

Leverage data from customer profiles and purchase history to make personalized product recommendations.

Tools:

• Shopify's built-in recommendation engine or apps like Personalized Recommendations.

Implementing a Loyalty Program

A loyalty program rewards repeat customers, encouraging them to make additional purchases to earn more points or rewards.

How to Implement:

• Set up a loyalty program using apps like Smile.io or Loyalty Lion, offering points for every purchase that can be redeemed for discounts or exclusive products.

Incentives Through Limited-Time Offers

Create a sense of urgency with limited-time deals on specific products. Flash sales and exclusive discounts can drive quicker and more voluminous purchases.

Examples:

• Offer a 10% discount on orders over $50 for a limited time.
• Promote last-minute bundles as limited-time offers.

Enhanced Customer Service: Live Chat

Providing live chat support can help customers make quicker decisions, answer last-minute questions, and reduce cart abandonment.

Tools:

• Apps like Tidio or Live Chat can integrate live chat functionalities into your Shopify store.

Conclusion

Understanding how to find and optimize your Average Order Value on Shopify is pivotal to your store's success. By implementing the strategies outlined in this post, you can encourage customers to spend more per transaction, thus increasing your revenue without significantly boosting marketing expenses.

Remember, the key is not just to push for higher sales but to enhance the shopping experience, offering value at every point. Regularly monitor your AOV, experiment with different strategies, and adjust based on what works best for your audience.

FAQ

Why is Average Order Value important?

AOV provides insights into customer spending behavior, helping businesses optimize pricing, marketing strategies, and improve overall revenue.

How do you measure AOV?

AOV is calculated by dividing the total revenue by the total number of orders over a specific period.

What affects Average Order Value?

AOV can be influenced by product pricing, upselling and cross-selling strategies, discounts, and the effectiveness of marketing campaigns.

Can AOV help in reducing customer acquisition costs?

Yes, by increasing the amount each customer spends, you can boost revenue without increasing the cost associated with acquiring new customers, thereby improving profit margins.