Mastering Commerce: Understanding, Calculating, and Optimizing Your Average Basket Value
What is the average basket?
The average order value is a key performance indicator (KPI) used in the context of commerce to evaluate the profitability and performance of points of sale. It represents the amount spent per customer during a visit or purchase over a given period. The average basket allows merchants to understand the evolution of turnover and identify opportunities for improvement.
This concept should not be confused with that of the “average household basket”, which rather refers to all the products purchased by a household over a given period.
How to calculate the average basket?
To calculate the average basket, simply divide the total turnover achieved during a given period by the total number of customers who made a purchase during this same period:
Average Basket = Turnover / Number of Customers
This formula can be applied over different time frames, such as daily, weekly, monthly or yearly. Depending on the specific needs and objectives of each company, it may be relevant to use several time intervals to monitor the evolution of the average basket.
Why follow the evolution of turnover using the average basket?
Monitoring the average basket is crucial to understanding the evolution of turnover and the performance of points of sale. Indeed, it makes it possible to identify trends in terms of customer spending, as well as possible problems or opportunities to be seized.
Additionally, this indicator can be compared to that of competitors to assess the company’s competitiveness in the market and identify successful distribution channels.
How to optimize the average basket?
To increase the average basket and improve profitability, several techniques can be implemented:
Cross-selling and up-selling
- Cross-selling: This involves offering customers products that complement those they have already purchased or are about to purchase. For example, offering a protective cover when purchasing a smartphone.
- Up-selling: This technique consists of encouraging customers to choose a more expensive product than the one initially considered by highlighting its superior characteristics. For example, offering a model with more memory when purchasing a laptop.
Diversification of payment methods and additional services
To facilitate the purchasing process and encourage customers to spend more, it is important to offer various payment methods (credit card, check, cash, online payment) and additional services such as home delivery or collection at the store.
Compare your average basket to that of competitors
To evaluate the company’s performance in the market, it is essential to compare its average basket to that of competitors. This comparison makes it possible to identify the strong and weak points of the commercial offer, as well as the efficient distribution channels.
Conclusion: the overall usefulness of average basket tracking
Average basket tracking is a valuable tool for improving the profitability and performance of points of sale without increasing customer acquisition expenses. By identifying opportunities for improvement and implementing appropriate strategies, it is possible to increase turnover while optimizing the customer experience.
For more information on calculating the average basket or to benefit from services related to this subject, do not hesitate to consult our Libeo site. We are here to support you in your continuous improvement process and help you achieve your business objectives.