5 Strategies to Increase Average Order Value (AOV) and CLV

Before discussing ways to improve Average Order Value (AOV) and Customer Lifetime Value (CLV), let’s quickly look at these and why they are important to your e-commerce business.

Average Order Value (AOV)

As the name suggests, the average order value is the amount customers pay in a single checkout. It can be calculated for a given period by dividing the total revenue by the total number of orders.

Customer Lifetime Value (LTV)

Customer Lifetime value is the total sales on average that you expect a customer to purchase from the store during their lifetime. It can be calculated by dividing the total revenue by the total number of customers in a given period.

Given that definition, it’s quite obvious that increasing these values will mean more revenue, but there are some other considerations where these become important. One such consideration, for example, is how much a store should spend on customer acquisition costs (CAC). Let’s take the case of a store that’s considering a Google Pay-Per-Click Campaign per the following parameters.

1. Subscriptions

As long as the store is not selling something that the customer usually needs only a few times in a lifetime, this is a highly impactful way to increase Customer Lifetime Value. And it’s quite common as indicated by a McKinsey survey that found that almost half of all e-commerce customers held at least one subscription. However, merely offering a subscription might not do the trick. The same survey also found that most customers don’t subscribe because they love subscriptions but do it for other reasons, like a recommendation from a friend or a financial incentive, as seen in the diagram below.


Replenishment Subscription: Replenish the same or similar items

Curation Subscription: Receive a curated selection of different items with differing levels of customer decision-making required. Access Subscription: Membership provides access and can convey additional VIP perks. As is evident from the numbers, offering a discount and providing a great customer experience, leading to recommendations, are the top two strategies to increase Customer Lifetime Value through subscriptions.

2. Rewards

Rewards are another great way to encourage repeat business and improve Customer Lifetime Value. Here are three statistics from a survey by Bond Brand Loyalty that prove this assertion.

Rewards can be offered not only for purchases but for other actions such as referrals and even social media sharing. However, engagement in rewards programs varies depending on how much value the customers perceive them to be. Here are the two biggest differentiators to make your rewards program stand out.

Recognition & Support

The above survey found that recognition is the top reason customers stay on and engage with a rewards program. Customers expect to be treated better than non-program members. Other surveys have shown that levels of program membership with increasing rewards or experiences are one great way to make a customer feel recognized.


The other big reason for customers to engage with a program is personalization. The survey found that rewards programs that can personalize offers can achieve a much higher lift in outcomes as against the ones that don’t.

Having a great rewards program not only lifts lifetime value by making the customer more likely to buy again but also increases Average Order Value (AOV), as found by another survey.

3. Cross Sell And Up Sell

Upsells and Cross-sells have been known to increase AOV long before eCommerce, but for the skeptics, here are a couple of statistics that should convince anyone to adopt this strategy

  • Amazon reported that 35% of its revenue comes from cross-selling and up-sell
  • Forrester Research estimates that 10-30% of eCommerce revenues come from product recommendations.

There are a few different forms of upselling and cross-selling related to e-commerce. Let’s look at a few in more detail.

Frequently Bought Together

“Frequently Bought Together” or “People Also Bought” sections show customers what other customers have added to the cart and what they are looking at. The former strategy is useful when a customer needs an accessory to utilize an item they are looking at fully. The latter is more generic but usually also less effective. Stores can use tests both together or the latter when the former doesn’t apply.

Upgrades And Quantity Upsells

Upsells can be achieved through newer or upgraded versions of products or increased quantities. Customers landing on an older product can be guided to a newer, more expensive version, along with an indication of what the new product provides that the older one does not offer. Customers buying a product with different quantities (coffee, anyone?) can also be offered a discount for increased quantities.

Product Bundles

Upselling and cross-selling can also be achieved using product bundles. Carefully planned product bundles have shown an extraordinary increase in Average Order Values (AOV). A study by Harvard Business Review on Nintendo showed that the company sold about 100,000 more video game consoles when bundled with a game, and sales of games also increased when bundled. However, providing customers flexibility was essential since pure bundling (making the products available only as a bundle) reduced sales by 20%. Many other success stories of product bundling increase average order values by more than 100%. It’s worth trying different combinations to increase the Average Order Value (AOV) where possible.

4. Wish List

The wish list is a feature that allows customers to save items they like but are not ready to buy. Providing a wish list is convenient, but there are other ways to optimize a wish list further. For example, making a wish list shareable can increase sales if a customer shares their wish list with like-minded friends. Wish lists can also be a reason for increased email marketing engagement when for example, the price of an item in a wish list drops due to a new discount. It can also allow companies to personalize emails better and have more information about customers individually and as a whole to optimize inventory.

5. Email Marketing

This one is obvious. To increase Customer Lifetime Value, customers have to return to the store. What better way to remind them than a nice little email with products they might like, a special promotion, or an email about any of the other strategies above? Here are some tips that will help you ace email marketing.

Welcome Email

Welcome emails are a great way to promote other products after the first purchase. These emails have a fantastic open rate of 82% per research from GetResponse. So, regardless of whether the customer signed up for an account, send them an email welcoming them to your store.


Per Yes Lifecycle Marketing research, a personalized email subject led to a 50% more open rate than the generic ones. Even personalization as simple as including the first name in the subject increases open rates significantly. However, open rates are only part of the story. Actual conversion rates will depend on the personalization of the content itself. Similar or frequently bought together products or products of the same category can increase conversion rate and, ultimately, customer lifetime value.