How to Analyze Average Order Value for Affiliate Marketing

Average order value (AOV) tells you how much, on average, each customer spends when they complete a purchase through your funnel. 

This article goes over how to analyze average order value for affiliate marketing

The Initial and Total AOV

AOV is calculated by dividing your total revenue by the number of orders. However, to get a more accurate picture, it is important to examine the two parts of AOV: the initial average order value and the total average order value.

Direct response marketers often focus on both the initial and total AOV, as many funnels include upsells after the initial purchase. By analyzing both initial and total AOV independently, sellers can pinpoint where there is the greatest potential to increase revenue.

The initial average order value plays the most critical role in boosting AOV numbers.

Relying on Upsells for AOV Increase 

While upsells may contribute to a higher total AOV, it may not be prudent for product owners to rely too heavily on them. Instead, the focus should start with the initial cart value. Most of experienced affiliates earn from the front end funnels than backend.

For example, the top 10% of ClickBank Top Earners have an average initial order value of $406.52. While that amount may seem unrealistic for product owners with a top priced product of $75, it's important to note that the same group only relied on upsells for 8.45% of their total AOV.

This means that for someone with an average total AOV of $50, their average initial AOV would be $48.78.

Segmenting Data for Accurate AOV 

Calculation It's important to keep in mind that the AOV may be skewed by a few high-value orders or a few unusually low-value orders. To get a more accurate picture, it's a good idea to look deeper at the data and possibly eliminate any outliers that may be pulling the average to one end or the other.

Segmenting the data can also help build a more accurate picture of what may be affecting the AOV calculation.

AOV vs. LTV 

In addition to AOV, another important metric to consider is customer lifetime value (LTV). LTV is a measure of how much a customer is worth for their entire lifetime as a customer with you.

While AOV represents your short-term profit potential, the LTV represents your overall profitability in the long term. Customers who buy from you over the long term generate more profit. Therefore, having a high LTV is critical to your overall profitability.

Pricing Your Product Based On Data

As an affiliate marketing expert, it's crucial to optimize your pricing based on data rather than arbitrarily setting a price point. In the digital products realm, the $37 ebook is a popular and effective initial offer, with an average order value of $50-60 (including upsells), a conversion rate of around 2.5%, and commissions at or near 75%.

However, it's essential to note that this AOV may not generate significant profits, and the focus should be on building a list and monetizing customers over time.

To scale with affiliates, it's recommended to aim for a payout of $50 or more for a digital product, providing media buyers with the flexibility to experiment and learn what works with your offer before generating significant profits. Similarly, physical products vary in size, shape, and type, and it's essential to analyze your data to determine an optimal price point.

For instance, health and fitness supplement products have been successful on ClickBank, with an average order value of $120-180 and commission payouts of around 65%.

If you can raise your AOV to $150 or higher, you'll be in an excellent position to scale with affiliates and maximize your profits. However, it's crucial to strike a balance between initial costs, backend profits, and the ability to scale your offer with affiliates. It's also worth considering combining digital offers with physical products to increase AOV and reduce the refund rate.

By carefully analyzing your data and setting your prices based on data-driven insights, you can optimize your AOV, generate profits, and achieve long-term success in the affiliate marketing space.

Increasing Your Average Initial Order Value 

Analyzing your own data and increasing your average initial order value can be challenging, but it's crucial to your overall profitability. Here are some ways to increase your AOV:

  1. Offer bundle deals or upsells.
  2. Implement a free shipping threshold.
  3. Use persuasive copywriting and visuals to encourage customers to buy more.
  4. Personalize your recommendations to suit customers’ interests and behaviors.
  5. Provide exceptional customer service and post-purchase follow-up to build trust and encourage repeat business.
  6. Consider offering a loyalty or rewards program to incentivize customers to make larger purchases.