Why aov matters
It sets how much you can afford to pay for a customer. Two accounts with identical CPAs can have completely different outcomes if one sells at three times the basket size.
What this looks like with real numbers
An AOV of $84 at 60% gross margin leaves about $50 of contribution per order, so a $50 CPA is breakeven on first purchase and only works if customers return. Raise AOV to $120 with a bundle and the same CPA becomes profitable immediately.
What it does not tell you
An average is distorted by a small number of large orders. If the distribution is skewed, the median tells you more about the typical customer.
The mistake people actually make
Using the mean when a handful of wholesale orders sit in the data. The median tells you far more about the customer you are actually buying.
Questions, answered.
How do you calculate aov?
Revenue ÷ number of orders. The average value of one order.
What goes wrong with aov?
Using the mean when a handful of wholesale orders sit in the data. The median tells you far more about the customer you are actually buying.
What does aov not tell me?
An average is distorted by a small number of large orders. If the distribution is skewed, the median tells you more about the typical customer.
Change the creative, not the dashboard
The average value of one order.