What is Average Transaction Value (ATV), and Why is it Important?

Whether you run a traditional brick-and-mortar retail business or an ecommerce website, boosting your ATV is an ideal way of increasing the bottom line and overall success of your company.

By Adi Krysler December th, 2018

As a business owner, you always need to be aware of what your ATV (average transaction value) is. This is a very important part of running a business, and knowing how to positively affect your ATV is one of your keys to success. Whether you run a traditional brick-and-mortar retail business or an ecommerce website, boosting your ATV is an ideal way of increasing the bottom line and overall success of your company.

ATV Basics and How to Calculate It

Average transaction value is the average dollar amount that a consumer spends with you, within a single transaction. If you’re looking to learn how to calculate your ATV, here’s a quick primer: take the total value of each of your transactions from a specific time period and divide that number by the total number of transactions your business had during the same timeframe. This will give you an average of how much each transaction was worth during that period. Generally, the higher the ATV is, the more income your company generated on each customer who made a purchase.

Why Is ATV Important to Your Business?

Your retail ATV is very important when evaluating the total success of your business. Attracting customers is no easy feat, and it costs you money to secure each customer’s business. If you can increase your ATV with each customer, you will end up with a higher return on investment (ROI) on your sales and marketing costs.

Ways to Increase Your ATV

There are several ways to increase your ATV and increase your revenue. The first involves upselling your products. This requires knowledge of the customer’s product selection, and of other items that are similar but more expensive. The idea is to show a customer that by spending a little more on a higher quality item, they will get a lot more value out of their purchase and a better product.

Another option to increase your ATV in ecommerce and retail is to offer flexible payment solutions. Individual customers have a budget, just like a business does, but it is often tighter and has less wiggle room. If you can offer your customers a way to pay for larger purchases in phases or installments, they are more likely to buy more items or larger quantities of items in a single purchase.

There are companies that offer flexible payment solutions to merchants, but Splitit is the only company that is able to offer installment payments on an existing MasterCard or Visa without extending a new line of credit or requiring the merchant to become a financier on top of running a business. This lets customers buy what they need and pay for it over the course of several months instead of having to put the entire amount up at the beginning of the process or pay high interest fees until the debt is paid off.

Get to know the numbers of your business on an intimate level. Make sure you keep track of your ATV and speak with your sales and finance teams to figure out ways of boosting the amount your customers are spending in a single transaction. If you cater to your customers and their needs, they will be also be able to fulfill yours.

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