🔥 Tier 1 - Must KnowID: aov
AOV - Average Order Value
Average revenue generated per single customer transaction
In Simple Words (Zero Jargon):
The average amount of money a customer spends each time they place an order on your website.
Official Mathematical Equation
AOV = Total Revenue ÷ Total Number of Orders
Why It Is Critical
AOV sits right next to CAC in every D2C unit economics decision. A ₹500 CAC is profitable against a ₹2,000 AOV and fatal against a ₹400 AOV. Raising AOV via bundles and free-shipping thresholds lifts profit without spending extra ad dollars.
Strategic Rules of Thumb & Execution Playbook
- Track AOV by channel - Meta impulse buys often skew lower AOV than high-intent Google Search orders.
- Use product bundling, minimum free-shipping thresholds (e.g. 'Free shipping above ₹999'), and 'Buy 2 Get 1' offers to lift AOV.
- Watch AOV during festive sales - a revenue spike often hides eroded profit margins from heavy discounts.
What You Get: A powerful lever to improve unit economics without spending a single extra rupee on customer acquisition.