Understanding Customer Spending for New and Repeat Customers

Analysis > AOV > New vs Repeat

Summary

The report breaks down key metrics such as Number of Orders, Average Order Value (AOV), and Variance % over time allowing you to track trends in customer behavior and helping you to understand whether customer acquisition and retention efforts are effective.

Questions the report answers

• What is the overall trend in customer purchasing behavior for both new and repeat customers?
• What does the relationship between AOV and the number of orders suggest about overall customer engagement?

How to read the report

Understanding AOV trend over time

The trend lines for new vs. repeat customers allow you to track the Average Order Value (AOV) over time. By analyzing these trends, you can spot whether certain strategies or tactics such as promotions or campaigns, have a positive or negative effect on customer behavior.

Comparing the Number of Orders and AOV over time

When analyzing the Number of Orders and Average Order Value (AOV) over time, several cases can arise, understanding these cases will help you understand the customer behavior better. Let’s break down the potential scenarios and what they suggest about your business performance.

1. Both the Number of Orders and AOV are increasing
   • Shows more customers are making purchases, and they are also spending more per transaction indicating strong customer engagement.
   • Your acquisition, retention, product offering, and upsell strategies are likely working well.
2. Number of Orders increasing and AOV decreasing
   • Customers may be buying low-priced or fewer products, indicating they are cautious about spending.
   • If New customers are making smaller purchases this could suggest that strategies are bringing in lower-value customers.
   • Discounts or sale events might encourage customers to purchase, but only at reduced prices.
3. Number of Orders decreasing and AOV increasing
   • Shows you are acquiring high-value customers who make bigger purchases, but overall customer engagement is falling.
   • While high-value customers are spending more, there may be a drop in overall engagement or repeat purchases.
4. Both Number of Orders and AOV are decreasing
   • Show fewer customers are making purchases and they are also spending less per transaction indicating a decline in customer engagement.
   • The decline may be due to external factors (seasonality, competition) or internal factors (product mix, pricing, and more).
5. Number of Orders increasing and AOV stagnant
   • You’re successfully acquiring customers, but you're not maximizing the value of each transaction limiting potential upselling.
   • Growth may be driven by sales or promotions that attract more buyers without increasing the value of their purchases.
6. Number of Orders decreasing and AOV is stagnant
   • Your customer base may be shrinking, while those who continue to purchase aren’t changing their behavior.
7. Number of Orders is stagnant and AOV increasing
   • Shows you’re doing well at increasing the value of each transaction, likely through upsell and cross-sell strategies or introducing higher-priced items.
8. Number of Orders is stagnant and AOV decreasing
   • Customers may be buying lower-priced items or purchasing fewer items per order, leading to a drop in AOV.

Glossary

Number of Orders

Total count of orders placed by customers. It is calculated by counting the number of orders.

Average Order Value (AOV)

The average amount a customer spends per order. It is calculated by dividing the total sales amount by the number of orders.

YoY Variance %

The percentage change in a metric between this year and the same period last year. It is calculated by dividing the difference between the metric of the selected year and the same period prior year by the metric of the same period prior year.