Advanced AOV Strategies Using Triple Whale

May 7, 2024

Average Order Value (AOV) is one of the most critical metrics for brands hoping to increase overall revenue, but too often, companies aren’t getting a complete picture of their AOV. 

Triple Whale provides businesses with the analytics to understand the nuances of their AOV and make data-driven decisions to enhance customer satisfaction and loyalty while optimizing revenue streams. 

Here’s how Triple Whale’s unique breakdown of AOV offers crucial tools for ecommerce success. 

Why Understanding Average Order Value is Critical to Ecommerce Success

AOV measures the average amount spent each time a customer places an order within a specific period. 

This metric is crucial for businesses aiming to grow revenue, particularly with paid media and advertising. Typically, businesses only collect the mean AOV, or the total revenue divided by the number of orders. However, Triple Whale offers a more nuanced perspective by analyzing the data to provide the mode and median as well.

Let’s consider a fictional company, Luxe Apparel. Over a month, Luxe Apparel recorded the following order values:

  • 10 orders of $50
  • 15 orders of $100
  • 5 orders of $200
  • 2 orders of $500

From this data, we calculate:

  • Mean AOV: The total revenue ($4000) divided by the total number of orders (32), which equals approximately $125.
  • Median AOV: The middle value when all order amounts are lined up from smallest to largest, which is $100.
  • Mode AOV: The most frequently occurring order value: $100.

Here’s why understanding and analyzing AOV, especially through the lenses of mean, median, and mode AOV, is indispensable for ecommerce success:

  • Strategic Pricing and Promotion: AOV offers insights into how techniques like pricing strategies, promotions, and product bundles affect customer purchasing behavior, enabling brands to tailor their offerings to encourage customers to purchase more per transaction. For instance, promoting high-margin products or creating bundles can effectively raise the AOV.
  • Economic Health Indicator: The distribution of mean, median, and mode AOVs signal the economic health of a brand. A healthy distribution suggests a brand has the economic strength to make paid media work effectively, while skewed distributions might indicate underlying issues that could hinder success in paid media channels.
  • Efficiency in Paid Media Spending: Mode offers valuable insights into what a brand might expect from new customer acquisitions. A low mode AOV suggests that the business might struggle to recoup an investment in paid media, while a high one indicates that paid media may be an effective strategy.
  • Customer Insight and Segmentation: AOV analysis enables brands to segment customers based on their spending patterns, allowing for targeted marketing efforts, personalized promotions, and improved customer engagement. 

How Triple Whale Supports AOV Optimization

The Triple Whale platform offers deep insights into customer behavior with a rich set of data analytics tools that enable brands to thoroughly understand AOV and how to increase it. Here are some of the platform’s key capabilities related to AOV analysis and optimization:

Mean, Median, and Mode AOV Calculation

Triple Whale offers three perspectives on AOV, each offering useful data for ecommerce brands looking to increase their AOV:

  • Mean AOV offers a broad overview of the average order value, but it can be skewed by very high or low order values.
  • Median AOV provides insight into the middle value of your order values, offering a view that is not affected by outliers.
  • Mode AOV reveals the most common order value, giving you an idea of the most frequent spending amount by customers.

Many other AOV analytic tools rely solely on the mean, which can be skewed by outliers. Triple Whale offers a more accurate representation of typical customer behavior by offering all three metrics.

AOV as a Litmus Test

Triple Whale’s data collection and organization offer long-term strategic insights, not just short-term tactical data. Triple Whale emphasizes the importance of AOV not as a daily metric to be monitored but as a quarterly or account-auditing tool.

By examining AOV over time, businesses can use it as a litmus test to make adjustments to their marketing and sales strategies.

Mode to Mean Ratio (MMR)

The Mode to Mean Ratio (MMR) provides a percentage representation of the most frequent purchase value (Mode AOV) over the average purchase value (Mean AOV). This metric offers an additional layer of insight to assess whether the mean or mode AOV is a more accurate representation of customer tendencies in a particular instance. 

Example with Luxe Apparel

For Luxe Apparel, we previously calculated:

  • Mean AOV: $125
  • Mode AOV: $100

To find the Mode to Mean Ratio (MMR) for Luxe Apparel, we use the formula:

  • MMR = (Mode AOV/ Mean AOV) X 100%

With the data plugged in, we get:

  • 80% = (100/125) X 100%

This indicates that although $100 orders are most frequent, a significant portion of revenue comes from higher-value orders which raise the average.

Product Journeys and LTV Analysis

By leveraging Triple Whale’s capabilities in analyzing product journeys and customer lifetime value (LTV) you can pinpoint which products drive the best AOV and build intelligent paid media strategies focusing on high-performing products.

How to Analyze AOV with Triple Whale

Triple Whale’s customer insights feature can help businesses drill down into specific customer segments and behaviors. 

Analyzing product journeys within these segments can reveal which products are commonly bought together or lead to repeat purchases, which are opportunities for product bundling, cross-selling, marketing, and other tactics to increase the AOV. Here’s how to use Triple Whale to learn more about your AOV: 

Comparing Median, Mode, and Mean

Manually comparing the median, mode, and mean reveals all kinds of interesting opportunities. Here are a few examples: If the median AOV is significantly lower than the mean AOV, it could indicate that a few very high-value orders are skewing the average upwards, offering the potential to identify why high-value orders are being made and increase their frequency.

A mode AOV that is considerably lower than both the mean and median might suggest that a majority of customers are making small purchases while a few make larger ones, which is an opportunity to segment customers into separate marketing efforts aimed at these separate buying behaviors. 

Mode to Mean Ratio (MMR)

The MMR provides a quick snapshot of how representative the mode AOV is compared to the mean AOV. A low MMR could indicate that the majority of orders are much lower than the average order value. 

Tailoring marketing campaigns or promotions to bridge this gap, either by encouraging purchases of higher-value items or by bundling products, can increase the mode AOV and overall earnings.

Product Performance Analysis

Utilizing Triple Whale’s analytics to understand which products have the highest contribution to the AOV can reveal opportunities for highlighting these products through targeted marketing efforts. 

For instance, say certain high-ticket items significantly contribute to a higher AOV. You can focus on promoting these products to prospective customers through personalized recommendations or featured product placements on the website.

Long-term Planning with AOV Trends

Triple Whale’s platform allows you to monitor AOV trends over time. This could mean adjusting long-term strategies based on seasonal variations in AOV or identifying slow but steady shifts in customer purchasing behavior that could impact future revenue.

Strategies to Enhance AOV with Triple Whale

By combining Triple Whale’s robust analytics with strategic ecommerce practices, you can significantly enhance a business’ AOV. An intelligent approach founded on data not only improves revenue but also improves customer engagement by offering a more personalized experience and greater perceived value in the products. 

Here’s how to use Triple Whale’s analytics and insights in actionable ecommerce strategies to elevate your AOV:

Bundle Products Effectively

Use Triple Whale’s insights to identify which products are frequently purchased together and pair them into a bundle. For instance, a beauty supply company might pair a face wash with a toner and moisturizer to offer a complete skincare routine at a discounted price. Customers perceive that the bundle offers greater value than the products alone and are willing to pay more for the entire bundle. 

Use badges like “Most Popular” to guide customers towards high-value choices and be sure to emphasize how much they’ll save by buying the bundle compared to purchasing the components individually. 

Personalized Recommendations

Offer personalized product recommendations based on browsing behavior and past purchases. Showcase these recommendations prominently during the browsing and checkout process. 

For example, a simplified 2×2 grid displaying ‘Recommended For You’ products is an easy way to tempt customers into making additional purchases and increasing their cart size. 

Make Exclusive Offers

Analyze customer segments that consistently have higher AOVs and offer them special offers or membership programs like early access to sales, exclusive product lines, or loyalty rewards instead of discounts, which might undermine the perceived value of the products among these already engaged segments. 

Tailored membership programs emphasize value and exclusivity, making these customers feel valued and that they’re being given a VIP experience. 

Encourage Larger Orders

Set your free shipping offer just above your current AOV and use Triple Whale to analyze your AOV trends and adjust your threshold to continuously encourage higher spending. 

Offer discounts for bulk purchases or higher spending. Triple Whale can help identify which products are often bought in larger quantities, allowing you to make volume discount offers likely to convert sales.

Identify Intelligent Product Promotion

Analyze which products and bundles are driving AOV and use this data to refine your upselling, cross-selling, and bundling strategies.

Use Triple Whale to understand which products are frequently bought together and use it to identify complementary products that can be upsold post-purchase. This will allow you to design post-purchase upsell funnels that can be easily integrated into the shopping flow. 

Monitoring and Adjusting: Leveraging Triple Whale for Data-Driven Optimization

Triple Whale offers a powerful suite of analytics tools designed to give businesses real-time insights into their sales performance, enabling them to fine-tune their strategies for maximum effectiveness. Here’s how you can use Triple Whale to monitor your AOV strategies and make informed adjustments:

  • Track AOV Trends: Utilize Triple Whale’s dashboard to continuously monitor AOV trends over time so you can see how changes in your strategy impact AOV and identify what works and what doesn’t. It can also help you identify seasonal trends.
  • Segmentation Analysis: Analyze AOV by customer segments to understand which groups are most responsive to your strategies. Triple Whale’s detailed analytics can break down AOV by demographics, purchasing behavior, and more so you can understand exactly which customer groups are responding to which of your initiatives with higher orders. 
  • Product Performance: Keep an eye on how product bundling, upsells, and cross-sells affect individual product performance and overall AOV. Triple Whale can highlight which products are key contributors to your AOV, offering opportunities to replicate successful strategies across your catalog. On the other hand, if certain bundles or upsells aren’t performing as expected, consider tweaking the combination of products or the incentives offered.
  • Optimize Pricing Strategies: Analyze the impact of pricing strategies on AOV. Triple Whale’s data can reveal how customers respond to different pricing tiers, discounts, and shipping thresholds. 
  • Personalization: Refine personalized recommendation algorithms based on customer response data from Triple Whale. Adjusting recommendations to better match customer interests can significantly increase the effectiveness of cross-selling and upselling efforts.
  • Create Feedback Loops: Integrate customer feedback mechanisms to gather insights directly from your audience. Use Triple Whale to correlate customer feedback with AOV performance, identifying areas for improvement or potential new strategies to test.
  • Test and Learn: Adopt a test-and-learn approach to continuously experiment with new strategies. Triple Whale’s analytics can serve as a benchmark to measure the impact of each test on AOV, allowing you to quickly pivot or scale successful experiments.
  • Real-Time Adjustments: Triple Whale provides real-time data, enabling you to make quick adjustments in response to emerging trends or sudden shifts in consumer behavior, critical for responding to market changes and maintaining a competitive edge.

Use Triple Whale to Elevate your AOV Strategies

Understanding and optimizing Average Order Value (AOV) is a linchpin for ecommerce success. It’s a reflection of the effectiveness of pricing strategies, promotions, and product offerings and is key to unlocking increased revenue from existing customers.

By offering deep insights into customer behavior and a rich set of data analytics tools, Triple Whale empowers businesses to dissect their AOV into mean, median, and mode—each providing unique insights into customer spending patterns so you not only understand your current AOV landscape but can identify opportunities for improvement.

From guiding strategic pricing and bundling to tailoring marketing efforts for different customer segments, Triple Whale’s analytics capabilities are instrumental in driving AOV optimization.

About the Author: As the Strategy Lead for Paid Social at adQuadrant, Daniel Shepherd brings ad buying experience across the multitude of social and search platforms with millions of ad dollars managed annually. He loves being a great teammate and learning new skills often. Outside of work, you’ll find Daniel doing the following: swimming, drinking Philz Coffee, lifting weights, reading the Bible with friends or neighbors, dancing, perfecting his fantasy football team, and most of all spending time with his wife and kiddos.

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