Understanding Average Order Value


Whether you are new to the world of marketing, or a seasoned veteran, there are a number of calculations that one comes across on a regular basis.  Calculations from Average Order Value (AOV), Purchase Frequency, Lifetime Value, Costs of Goods Sold, etc. Developing a keen understanding of these calculations and how they fit into your marketing analysis will be critical for the growth and performance of your organization.  In this blog article, we will explore the Average Order Value, how this simple calculation works, why you need it, and finally how it can fit into other larger calculations


In order to calculate your Average Order Value, one simply takes the Total Revenue for a period and divides it by the total number of orders for that period.  Total Revenue / Total # of Orders = Average Order Value.

What To Do Next:

At Smart eStrategy we like to think about your online store as having a number of different levers that can be pulled as one considers how to increase performance and drive revenue.  There are four main areas to consider: Total Traffic, Website Conversion Rate, Purchase Frequency, and finally Average Order Value. By tackling any one of these factors, a marketer can greatly increase the total revenue an organization generates.

Fortunately, within e-commerce, there are a variety of simple out-of-the-box plugins as well as techniques that one can implement into their store to help increase the average value of a customer order.  Here is our list of items that we believe you may want to consider.

  1. Offering Shipping Incentives - whether free shipping or flat rate shipping can help incentivize your customers to spend more as they will feel they are getting a deal on the shipping.

  2. Product Recommendations - a fantastic way to help increase the AOV is by providing customers with recommendations of other products they may appreciate.  This can help encourage customers to continue shopping as well as create a sensation that the shopping experience is being catered to their needs.

  3. Up-Sell & Cross-Sell Tools -  are great applications to install into your e-commerce store.  They can help provide suggestions of other products that may be different, yet complementary to what a customer has already added to their shopping cart.  For example, if shopping for bicycle helmets, a cross-sell app may recommend bicycle lights.

  4. Bundling & Discounts - this is a well-practiced technique that you have no doubt experienced yourself.  For example, Buy 3 Get 1 Free. This classic technique helps encourage customers to purchase in bulk and provides them with an incentive to do so.


As one begins to explore new and different opportunities to increase revenue, at Smart eStrategy, we always recommend beginning with measuring. What gets measured, gets managed. By taking the time to calculate your Average Order Value you will quickly become aware of the opportunities that exist to make sure it is first and foremost consistent, and then finally to increase it over time.

- Henry Palmer

Channel Architecture & Marketing Diversification


At Smart eStrategy, one of the critical items that we discuss with all accounts, no matter the size of the organization, the makeup of the brand, or the type of product, is what the channel architecture should look like. Forty years ago, if you wanted to reach your audience, you could advertise on a single platform (aka print or television) with a few providers and reach the majority of your target audience. The population, conveniently, all tuned into largely the same sources. Fast-forward to today and if you wanted to accomplish the same feat you would need to advertise across hundreds of platforms in order to come close to developing the same sort of reach.

So what does this teach us as marketers? In our opinion, one must seek to first develop an understanding of their ideal customer - we refer to this as a customer avatar. From there, you must appreciate that these potential customers may engage with your brand across a variety of different platforms. As we discussed in the article Facebook Turns Fifteen, Facebook is and has been a massively influential platform, but it’s not the only way to reach your customers. At Smart eStrategy, we like to examine the architecture of a marketing initiative and build out a multi-channel marketing plan incorporating social media, email, search, messenger bot, as well as alternative sales platforms like Amazon.

In many ways, the best approach to your organization’s marketing strategy is similar to that of an investment strategy - diversification pays off. Your target audience interacts with brands across a diverse set of platforms in a variety of different manners. Creating an integrated marketing approach that connects with your audiences across these different channels is the best way to assure that your brand is reaching your target customer. At Smart eStrategy we believe in analyzing the unique needs of each brand and building out a multi-channel architecture that helps our clients connect and interact with their potential customers while providing strategic diversification.

- Henry Palmer

Facebook Turns Fifteen


This February the social media world celebrates a unique event - no not the annual onslaught of Valentine’s Day well wishes- but rather the 15 year anniversary of Facebook. In February 2004, Facebook, or as it was known in those days, The Facebook, was launched. Back then the budding social media platform was available to a select number of universities and their students. A “.edu” email address was the ticket onto the new platform.

In its early days, most skeptics didn’t appreciate the awesome potential of this new platform and how it would quickly become embedded in the very fabric of our culture. In fact, as many of us tend to forget, Facebook wasn’t actually the first social media platform, there had been quite a few others before it - does anyone recall MySpace or Friendster? Yet, despite not having the early advantage Facebook succeeded where others had failed and it quickly grew from strength to strength. As the platform grew in global popularity it became clear that Facebook would present a revolutionary platform for advertising. By 2007, Facebook opened up the platform to advertisers allowing businesses to strategically target potential customers based on a variety of interests and demographics. For us marketers - the landscape evolved overnight. With Facebook’s enormous community of users - users who openly shared information about themselves and their interests, marketers had the ability to reach customers in a focused way that they had never had before. The entire industry seemingly changed overnight.

Fast-forward to 2019 and Facebook is still a major force and over the last decade has become an essential marketing channel for businesses. After all, it's hard to deny approximately 1.5 billion daily users. For any business involved in e-commerce and aiming to connect with new customers, Facebook is a no-brainer. As a marketing agency, we have seen tremendous results for many of our clients on the platform, helping skyrocket growth in an incredibly short period of time.  As brands look to make significant marketing improvements, Facebook often offers very low-hanging fruit that should be examined.

What are our key takeaways though at this anniversary? Well, simply stated, Facebook over the past 15 years has helped transform digital marketing efforts and does not appear to be going anywhere anytime soon. Even despite the major political and ethical speed bumps the company has hit in the last year, the company is still seen as a top 10 globally ranked brand. For e-commerce companies that are not currently advertising on the platform, you may be missing significant sales opportunities. For all of those that are currently advertising on Facebook, we would recommend viewing Facebook as one of many tools in your toolbox. Just as one may diversify their financial portfolio, marketers must also diversify their marketing channels. An omni-channel marketing approach that leverages Facebook as one of the many platforms will help deliver strong and sustainable performances for your organization while helping you better reach your potential customers.  

- Henry Palmer