Personalization Glossary

A/B testing? Recommendation models? The personalization engine space uses several acronyms that may seem daunting, so we're here to help. You can find definitions to the most common e-commerce customer experience optimization terms here!

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Average Order Value (AOV)

It helps measure the amount spent each time an order is placed by a customer either on a mobile or website. For example, if an Ecommerce retailer generated a revenue of $100,000 in June 2019 with a total number of 10,000 purchase orders, the AOV for that month of that year would be $10.

AOV can help understand the interests and commonalities in customers towards products from a cost and variety standpoint, the number of products ordered by these customers, and also transaction costs in relation to AOV is the average of the revenue earned from all the checkout orders during a specified period.

AOV is the average of the revenue earned from all the checkout orders during a specified period. Mathematically, it is represented as: 

Average Order Value = Total Sales Revenue / Number of Orders Taken

eCommerce retailers need to understand that AOV is evaluated using sales/order. This is where a single customer can start multiple transactions, but every order is factored into AOV separately.

Recommendations to Increase AOV:

  • Free Shipping Threshold: Even when the customer purchases items for a minimum amount, offering free shipping helps the retailer add value to their e-store. This is because it promotes more purchases with the customer, which directly affects engagement rates. Especially for fashion retailers, this is an offering that needs to be communicated with the customer at the initial touchpoints in the item to ensure dwell time and conversion rates.
  •  Frequently Bought Together/Ensemble Generator: Showcasing complimentary and add-on products at the last touchpoints like cart pages help in cross-selling with customers even at the thematic level.

Fact:’s ensemble generator helps create a 2.6x increase in AOV 

  • Targeted Product Recommendations: The most effective way to increase AOV is to set the customer on a track that they might be interested in! This may be based on their previous purchase or search history that ensure that the customer sees what is most relevant to them in their journey through the site. VueCommerce helps set them on this path with its journey personalization capabilities. 

Increasing AOV

Retailers can increase AOV by focusing on giving all customers tailored experiences that take into consideration their preferences for a wide range of attributes. Increasing your AOV is a way to drive direct revenue and profit. Some of the other ways of increasing AOV include bundling, upselling, and cross-selling additional products, applying discounts on minimum order value.

While there are different factors of increasing AOV segmenting your customers based on their purchase history, type of the products they purchase and encouraging your customers to shop more by delivering them a personalized experience

Product recommendations personalized to every individual shopper are a crucial part of the powered shopping experience. Visitors who engage with product recommendations have shown to generate 250%+ higher ROI per visit. An array of recommendation strategies implemented at regular touchpoints can maximize revenue and Average Order Value. You can indulge your shopper to buy additional products related to what is in their cart. 

In addition to AoV, metrics such as Customer Lifetime Value and Cost Per Conversion also help in delivering improvement in ROI performance.


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