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The Three E-Commerce Multipliers


Do you want to double the revenue in your e-commerce store this year? Who doesn’t, right?!

Most people tend to focus on the wrong kinds of metrics when they’re thinking about growing their e-commerce store so today I wanted to go through what I call the “Three E-Commerce Multipliers”.

And later in the article, I’ll show you how just a small lift in all three can lead to doubling your revenue.

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Here’s a video if you prefer to watch rather than read, but I go into more detail in the post below.

First up… let’s talk about how much your customers are buying.

Multiplier #1: Average Order Volume (AOV)

Average Order Volume (AOV)

Your AOV one of three important metrics that you should be focusing on most.

I actually think it could be the most important because it’s the one that has the most potential for easy change.

AOV stands for Average Order Volume and refers to how much a person orders on average when they place an order on your store.

The Average comes from the way you calculate it:

  1. Take a period of time
  2. Export all your orders and their totals
  3. Sum all of the totals together
  4. Divide the total by the number of orders

This gives you the AOV for that period of time.

Monitoring and computing your AOV is something you should do regularly so you can measure the impact of your changes.

For example, if you’ve recently introduced some automated cross-sells and upsells into your email sequence, you might want to measure the AOV from the previous 30 day period where you didn’t have the changes in place vs. this current 30 day period where you did have those changes. That will give you a great way to compare and check the effect of your changes.

Multiplier #2: Frequency (F)

Frequency (F) e-commerce

The frequency multiplier is all about how often your customers order. What is the frequency with which they come back and reorder?

There is an old home truth in marketing which says its cheaper to market to your existing customers than it is to acquire new customers.

I couldn’t agree more and the simple way to think about it is that to get a new customer, you have to pay money on ads or whatever and to get another order from your existing customers all you need to do is send an email or contact them in some way to make an offer.

Simple, right?

There are two things you check when measuring frequency:

  1. For the period you’re examining, how many orders did your customers make on average?
  2. How long was it before your customers made another order?

By getting a grip on these things you’ll be really well placed to make marketing decisions that affect Frequency.

Multiplier #3: Total Customers (C)

Total Customers (C) e-commerce

The total number of customers, aka C, is the final way to affect growth.

And it’s probably the most obvious, right? Increase the number of customers, duh.

But it is also probably the hardest.

So here are my 2 quick tips on increasing customers:

1. Can you spend more on ads?

If you end up increasing #1 and #2 you should be able to spend more to acquire a customer, often far more than what your competitors can.

That’s the power of increasing those two, it gives you more freedom when trying to increase multiplier #3.

2. Can you have your customers to get more customers for you?

You’ve probably heard of the viral coefficient number. Basically, it means that for every one customer, how many other customers will that person bring with them.

If you’re amazing and have a VC over 1 you’re doing bloody well. In fact, you won’t be reading this article because you’ll be off sailing the Carribean wearing your origami money hats. A VC over 1 is pretty much a license to print money.

Most people have a VC under 1 and that’s OK too, but the higher you make this the more customers will get other customers to come to you for zero acquisition cost.

The Math Bit

Math Warning

I’ll keep this pretty light because I don’t want to give you flashbacks to Math & Economics class.

If you get a 30% increase – which sounds pretty doable, right? – over the next year in each of these categories, you’ll double your revenue.

If 30% sounds like a big stretch in one of these categories and sounds easy in one of the others, then go with a bigger percentage on that one instead.

But keep that 30% target on the board and you’ll be on track to double up in no time.

Keep These Levers In Mind

So next time you’re sitting down to come up with your marketing plan for the next little while, try separating your ideas into these three buckets.

These are the levers you have for growth. Press on them hard and wonderful things will happen for your business.


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