Key takeaways
- AOV = total revenue ÷ number of orders.
- Repeat purchase rate = customers with 2+ orders ÷ total customers.
- Both raise LTV and shorten CAC payback without spending more on ads.
- AOV levers: bundles, thresholds, and post-purchase upsells.
- Repeat-rate levers: product experience, timing, and lifecycle marketing.
How do you calculate AOV and repeat purchase rate?
The two formulas
AOV = Total revenue ÷ number of orders. Repeat purchase rate = customers with 2+ orders ÷ total customers, over a chosen window.
Pick a consistent time window for repeat rate (e.g. trailing 12 months) so the number is comparable period to period. AOV is simpler but still benefits from segmentation — new vs returning customers often have very different order values.
Why do these two metrics compound?
AOV and repeat rate both feed directly into lifetime value and CAC payback. Raising either improves the return on customers you've already paid to acquire — which is why they're often a faster path to profit than lowering CAC.
| Lever | Immediate effect | Downstream effect |
|---|---|---|
| Higher AOV | More revenue per order | Faster CAC payback, higher LTV |
| Higher repeat rate | More orders per customer | Higher LTV, cheaper revenue |
| Both together | Compounding | Materially better unit economics |
Cheaper than acquisition
Existing customers already trust you and cost nothing to reach again. Repeat revenue typically carries far lower acquisition cost than net-new sales.
How do you increase average order value?
- Bundles and kits that raise the natural basket size.
- Free-shipping or gift thresholds set just above current AOV (funded by margin).
- Post-purchase and cart upsells of complementary, relevant products.
- Volume or subscription incentives for buying more at once.
- Merchandising that surfaces higher-value or higher-margin items.
Protect margin while raising AOV
Discount-driven AOV increases can lift revenue while cutting profit. Check that higher AOV also improves contribution margin per order.
How do you raise repeat purchase rate?
- 1
Deliver a great first order
Product quality, fast fulfillment, and clear communication drive the second purchase more than any campaign.
- 2
Time the next touch
Reach out around the natural repurchase window for your products, not on a generic schedule.
- 3
Identify high-retention products
Some products drive repeat buying far more than others; feature them in acquisition and post-purchase flows.
- 4
Use lifecycle marketing
Email and SMS flows tailored to where the customer is in their journey keep you top of mind.
Frequently asked questions
Is it better to increase AOV or repeat purchase rate?
Both improve unit economics, and the best choice depends on your products. Consumables and replenishables benefit most from repeat-rate work; considered, one-time purchases benefit more from AOV. Many brands work on both in parallel.
Does increasing AOV always increase profit?
Not if it's driven by discounting. A higher AOV achieved through bundles or upsells usually helps profit, but a higher AOV from price cuts can reduce contribution margin per order. Always check margin alongside AOV.
What's a good repeat purchase rate?
It varies hugely by category — replenishable consumables see far higher repeat rates than durable, one-time products. Rather than chasing a benchmark, track your own repeat rate over time and work to improve it for your specific catalog.
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