5 Ways to Increase the Average Order Value of Your Customers

Average order value (AOV) is total revenue divided by the number of orders in a period, and it is one of the fastest levers to grow a store's sales without buying more traffic. Five approaches raise it reliably, namely first-time incentives by category, shared experiences, loyalty programs, cross-selling and up-selling. Each works best when it is designed around the customer's profile and the product margin.

It is the budget review at a retailer that sells online and through stores. Marketing asks for more money to acquire customers, and the CFO answers with a number that quiets the room: the company pays more to win a new buyer than that buyer spends on the first order. The business is growing in orders and shrinking in margin. In the corridor afterward, the e-commerce director says what many retail leaders eventually discover. The problem is not the number of customers. It is what each customer puts in the basket, and what the company does to make the second and third basket larger than the first.

There are several ways to measure and increase the sales levels of a store, whether online or physical, and raising the average amount each customer spends is one of the most powerful. Every store that sells products lives in a constant search for ways to lift its sales, and this article examines five that act on average order value. Before reviewing them, it helps to understand why the metric deserves a seat in the executive agenda and how it connects to loyalty, because the best results come from combining both.

What is the average order value of a store and why does it matter?

The average order value, also called the average invoice or average bill, is calculated by dividing the revenue generated by the store by the number of orders received during a period. Expressed as a formula, AOV equals revenue divided by the number of orders. If a store generates $2,000 in income from 200 purchases, its AOV is $20 per purchase.

The figure is extremely valuable because it frames what is realistic when planning future strategy and helps distinguish good, bad, risky and safe options. Suppose that winning one more customer requires spending $25 in advertising and promotion. With an AOV of $20, that extra customer is not profitable on the first purchase. The decision then becomes one of lifetime value: either the company has reason to expect repeat orders that justify the investment, or it should find a cheaper way to reach the customer, or it should raise the value of each order. This arithmetic is why finance and commercial leaders should look at AOV together with acquisition cost, margin per order and repeat rate, never in isolation. ICX Consulting develops the longer view in its article on how to maximize customer lifetime value in sales and marketing.

Why are loyal customers the best route to a higher AOV?

It is almost always more economical to grow revenue through customers who identify with the brand than through people who do not consider themselves customers or who have not made a first purchase. Harvard Business Review reports, in Amy Gallo's article The Value of Keeping the Right Customers, that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one, depending on the study and the industry, and cites Bain & Company's Frederick Reichheld on the finding that increasing retention rates by 5 percent can raise profits by 25 to 95 percent. The range is wide and the ratio varies by sector, but the direction is consistent with what retailers see in their own data.

The behavior behind the numbers is easy to picture. When a customer enters a store, physical or digital, there are two possible outcomes: they find what they were looking for or they do not. A first-time visitor who does not find it usually leaves. A loyal customer who does not find it still keeps looking, because the relationship gives the company the benefit of the doubt, and may well find something else that catches their attention. The loyal shopper is therefore the one most likely to add a second or third item to the basket, which is exactly what raises the average bill. The practices below should be read in that light: each one either builds loyalty or takes advantage of it.

Strategy one: how do first-time incentives raise the basket?

The first approach is to offer a specific discount or percentage as an incentive the first time a customer consumes a particular product, whether within a category or within the whole store. By understanding consumption patterns and the categories a customer has already bought, the company can offer an incentive for trying a product they have not yet purchased. This widens the customer's relationship with the catalog and raises the value of the order.

The design choice that matters most is scope. A first-time incentive can apply to strategic categories chosen to increase the invoice, or to the store as a whole. The disadvantage of applying it globally is that the company loses control over the type of product with which the incentive is redeemed, and with it the ability to choose promotions according to margin and profitability. A grocery chain, for example, may use a first-purchase incentive in its fresh-prepared category, where margins are higher and the habit of repeat purchase is strong, instead of discounting the entire basket. A pharmacy chain might apply it to wellness products that customers do not yet associate with the brand. In both cases the principle is that the incentive should be a guided invitation to explore, not a generic markdown.

Strategy two: how do experiences and interactions build spending?

The second approach acknowledges that the economy now runs on experiences. A company decides whether to build connection through good experiences or to wait for an eventual bad experience to push customers away. Loyalty is not obtained through lower prices. It is obtained by understanding the buyer persona and considering not only what customers buy but also what the company can do to create pleasant experiences around the purchase.

One practical proposal is to create challenges on social networks in which participants can win a product the store sells. Customers who take part continue to feel part of the brand, and they tend to recruit new customers who want to join. The mechanism is simple, and it is useful because it ties community, product and incentive in the same activity. A sporting goods retailer can organize a monthly training challenge that rewards participants with equipment, and a specialty food brand can invite customers to share recipes using its products. The experience, not the discount, is what draws people in and keeps them returning. ICX Consulting offers a deeper look at designing these touchpoints in key eCommerce practices to improve customer satisfaction and retention.

Strategy three: how does a loyalty program increase order value?

The third approach is to build a loyalty program, which is one of the most effective and least expensive ways to raise the average order value. Offering rewards for completing certain actions, such as spending a certain amount, encourages people to spend a little more to reach the reward. It is particularly important to design the program around the company's buyer personas, because what motivates a price-sensitive student differs from what motivates a household head who shops weekly.

For products that people need to buy again, a loyalty program is also an effective retention strategy. It can increase the customer's willingness to spend, and therefore the value of each order and the value of the customer over time. The caution is that a poorly designed program becomes a permanent discount that erodes margin and trains customers to wait for rewards. Thresholds should be set slightly above the current average basket, rewards should be tied to categories with healthy margins, and the program should recognize behavior beyond purchase value, such as referrals or reviews. ICX Consulting reviews the main models in types of loyalty programs.

Strategy four and five: what are cross-selling and up-selling?

The fourth and fifth approaches belong together. Both techniques use the product the customer is viewing as the starting point and present another product or service that may interest them. In cross-selling, the customer is on the page of a product that interests them, and the store generates options for similar or complementary products that fit naturally with what they were following. In up-selling, the nature of the product allows some extra payment to be offered on top of what the customer already has in the cart, whether through an exclusive version or an upgraded option.

The commerce platforms treat these as distinct merchandising tools. Adobe's documentation on related products, up-sells and cross-sells explains that related products are add-on items bought alongside the product being viewed, that up-sells are alternatives the shopper might prefer, such as higher quality or better profit margin, and that cross-sells are impulse-style additions shown on the shopping cart page, similar to small items placed near a store's checkout counter. Each has a natural place in the journey, and the combination matters. A consumer electronics store may offer a protective case as a related product on a phone page, a higher-capacity model as an up-sell, and a charging cable as a cross-sell at the cart. A travel company might offer a room upgrade as an up-sell and airport transfer as a cross-sell.

Relevance is what makes these techniques work. Offers that do not fit the customer's interest irritate and add friction, while those that make the purchase more complete feel like service. The offers should also be measured, by tracking acceptance rates and the incremental revenue per order, so that the team can discard what does not contribute.

What does this mean for the C-level?

For the CEO, raising AOV is a way to grow without raising acquisition spending, which improves unit economics and shortens the payback on marketing. For the CFO, the relevant discipline is to evaluate every tactic on contribution margin and not only on revenue. An up-sell that adds revenue but sells low-margin items, or a loyalty reward that gives away more than the extra spending produces, can lower profit even while the average ticket rises. The CFO should therefore ask for AOV reported alongside margin per order, repeat rate and promotion cost.

For the CMO and the commercial director, the opportunity lies in coordinating attraction, conversion and loyalty. The same buyer persona work that informs acquisition should guide the loyalty program, the experience initiatives and the product recommendations. For the head of customer experience, a higher AOV is often a by-product of a better journey, since customers who find relevant products easily buy more. For the technology leader, the requirement is data: the store needs reliable customer, product and order records to personalize offers, trigger rewards and measure results.

How to start on Monday morning

A seasoned consultant would begin by calculating AOV for the last twelve months by channel, customer segment and product category. The first discovery is usually that the average hides large differences: new customers and repeat customers, mobile and desktop, one category and another. Those differences show where the opportunity sits. Next, identify the five or six product pairs that are most often bought together, and review what the site currently recommends on those pages.

Then choose one tactic and test it. If repeat customers already buy frequently, a loyalty threshold slightly above the current average basket is a reasonable pilot. If many carts are abandoned at the end, a thoughtful cross-sell on the cart page may help. Define a control group, run the test for several weeks, and compare AOV, margin per order and repeat purchase. Do not roll out a tactic that raises revenue and lowers margin, and do not abandon one that works on a single segment because it fails on another. The Persona Playbook Toolkit can help the team define which customer each tactic is meant for. For the conversion side of the store, the earlier piece on 5 marketing tools that every eCommerce should have complements this one.

A last piece of advice concerns reporting. Present AOV to the leadership team every month as a short trend, split into new and returning customers, with the margin per order next to it. When the two lines move together, the tactics are working. When the ticket rises and the margin falls, the committee has an early warning and can adjust thresholds, discounts or recommendations before the quarter closes.

It is important to remember that these strategies are not exclusive and that they do not depend on a single decision. Combining a first-time incentive, an engaging experience, a loyalty program and well-placed recommendations compounds the effect on the average bill, and each one reinforces the others.

How ICX helps

ICX Consulting, a commercial strategy and customer experience firm headquartered in Miami, helps retailers and consumer brands in the United States and Latin America grow revenue per customer without eroding margin. Its loyalty strategy consulting designs programs around buyer personas and profitability, and its pricing and revenue practice tests promotions and bundles against margin before they reach the market. Technology, including Adobe Commerce and HubSpot when they fit, is selected after the commercial design to automate the offers and measure the results. To define the customer each tactic is meant for, begin with the Persona Playbook Toolkit.

Frequently asked questions

What is a good average order value?

There is no universal benchmark, since AOV depends on the category, price points and channel. A good AOV is one that comfortably exceeds the cost of acquiring and serving the customer, and that grows over time among repeat buyers. Track it by segment and compare it with your own history before comparing it with competitors.

Which of the five strategies should a store try first?

Start with the one closest to existing behavior. If customers already buy often, a loyalty threshold or a well-placed cross-sell is quick to test. If most customers are new, a category-specific first-time incentive may create the second purchase. Choose based on where your data shows the largest gap.

Can raising AOV hurt the customer experience?

Yes, when offers are irrelevant or pushy. Recommendations that do not match the shopper's interest add friction, and unclear loyalty rules cause frustration. Keeping suggestions relevant, easy to ignore and transparent protects the experience while still lifting the basket.

How is AOV different from customer lifetime value?

AOV measures the average value of a single order, while customer lifetime value estimates the total contribution a customer makes over the whole relationship. Raising AOV improves the economics of each order, and loyalty efforts raise lifetime value by increasing how many orders occur and how long the relationship lasts.

If your growth depends on acquiring customers who spend too little to repay the investment, request a diagnostic with an ICX consultant and find out how much more each order could be worth.