Introduction: In addition to seeing website Average Order Value (AOV), sometimes businesses will want to see the distribution of orders in discrete revenue groupings or bands.
Analysis Overview:
Most online retailers know how to compute their Average Order Value (AOV) or their Revenue per Visit (RPV), by dividing Orders, Revenue and Visits. However, there are cases in which you want to know what percent of orders are between one dollar and fifty dollars or between one hundred dollars and two hundred dollars. This is a very different question, because you are looking for a percentage breakdown of each revenue band, vs. one total revenue amount. You may also want to see how these bands trend over time to see if improvements are being made.
Analysis Benefits:
The benefits of this analysis are that you can see how website changes, new website functionality or new marketing campaigns impact the various revenue bands. For example, if your site consistently has 50% of its orders in the over $100 revenue band and you launch a new marketing campaign on May 1st and the following weeks, the percent of orders over $100 rises, you may be able to attribute that success to the new marketing campaign. You can also use segmentation in analytics tools to see which segments perform best/worst for each revenue band.
DAA Members, see full recipe here.
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Adam Greco
Senior Partner, Analytics Demystified
adam@analyticsdemystified.com(847) 948-7965
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