Live From the Lenser Summit: AOVs Can Be Overinflated

Sep 25, 2008 8:29 PM  By

San Rafael, CA—Say a merchant has an average order value of $200 on Monday, and it plunges to $35 the next day and soars to $450 on Wednesday.

What could this mean? Lenser partner Al Bessin believes it may be a case of the average order value being a little overrated.

Speaking at the Lenser Summit on Sept. 24, Bessin said in one case, it could be because the merchant sells to both business-to-business and business-to-consumer clients. So if a business places an order for 100 computers on Wednesday, it could explain the sales boom.

On the other hand, Tuesday may have been a big day for consumers to stock up on printer cartridges, he noted. And Monday may have just been business as usual, or a case of customers buying a computer and a printer cartridge.

“Almost every business I’ve looked at has peaks and valleys based on price points,” Bessin said. “In some cases like these, the average order value change is so different that it’s almost meaningless.”

So how do you analyze the activity if you’re a seller of computers and accessories and trying to determine the lifetime value of your customers?

“You might want to strip down who is buying what,” Bessin noted. “Segment your customers by who is only buying computers, who is buying a cartridge, and who is buying both.”