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The average purchase amount is the revenue that the business gets per purchase order. It is the revenue that the business gains per sale or per order. Calculation for this metric is relatively easy if you have a count of the total number of orders that you have received in a given period of time. Average purchase amount – Total revenue in a given period / number of orders placed in the period The average purchase amount can be calculated for the business at an aggregate level. It can also be calculated for specific customers. Knowing the average purchase amount for customers can help you segment them and service them accordingly. It can also be coupled with the conversion rate so that a business can forecast at the expected revenue for the next year. The calculation obviously needs to take into account the total targeted population. The order value or purchase value of specific customers can also be used to identify some customers that may respond to cross selling. This can help increase the average purchase amount while ensuring that the customer stays in the family. Estimated customer lifetime value – Customer lifetime revenue – customer lifetime cost |
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