What is ATV in Retail?

If you own a small business, you’ve more than likely heard the acronym “atv” thrown around. But what does it mean, why does it matter, and how can you improve it? We take a look at all three in this article, and examine some strategies that could help you improve your ATV.

ATV Defined

ATV stands for average transaction value, which means how much, on average, one customer spends in one transaction with your business, either online or in-person [1].

Sometimes, especially for e-commerce-based sellers, this is also called AOV, or average order value, and is calculated the same way [2].

You could have a small number of transactions where customers are paying large sums each time, a large number of transactions where customers are paying small amounts each time, or a mix of the two.

It’s fairly simple to calculate and can be invaluable to your small business.

How to Calculate ATV

It’s okay if you’re not a math whiz—when it comes to calculating ATV all you need is a calculator. You can also easily automate the calculation by using formulas in a spreadsheet program.

Your average transaction value is calculated by taking the total dollar value of transactions in a given time period divided by the total number of transactions.

For example, let’s say you wanted to determine the ATV from 1-5 p.m. last Friday afternoon. You’d take the total amount spent by your customers during that time period and divide that by the number of customer transactions during the same period.

If the total amount customers spent between 1 p.m. and 5 p.m. last Friday was $15,000 and you had a total of 250 transactions during that same period, you would use the following formula:

ATV = total dollar amount spent / total number of transactions [3]

Or, $15,000/250 = $60

You’ve just determined that the average transaction value was $60, meaning that customers spent an average of $60 on each transaction last Friday between 1 p.m. and 5 p.m.

Of course, you can calculate ATV for any time period that matters for your business.  You can choose to look at average transaction values for one week, one month, or even over several months using the same formula.

While it can feel overwhelming to calculate one more business statistic, when evaluated properly, understanding your ATV could help you make better pricing and marketing decisions.

Why ATV Matters

Your customers aren’t all the same. And your traffic patterns are as unique as your customers. You could have different ATV values on Tuesday morning than Thursday morning. Maybe your highest ATVs are on Saturday afternoons, or on sales made after midnight online.

Understanding your average transaction value can help you set appropriate price points for your retail items or services offered [4].

For example, you notice that your ATV is extremely low—even though you have a high number of transactions. That could be an indication that you need to set higher prices. 

A low ATV could be telling you that your higher-priced items aren’t attractive enough to customers to get them to make a purchase; and that customers are only willing to buy your less expensive offerings.

Taking the time to understand your ATV can make a huge difference to your business. But how do you increase it?

How To Increase Your ATV

Is there anything you can do to increase your ATV so that customers are spending more per transaction on average than they currently are?

Whether your ATV is good, great, or terrible, there’s always a chance for improvement, and we look at how all of the following can impact your bottom line:

• Pricing strategies
• Product placement
• Store layout
• Creating a safe, inviting e-commerce experience
• Adding or revising products/services offered

Pricing Strategies

As noted above, raising or lowering product prices, depending on the issue, could go a long way toward increasing your average transaction value.

You may also notice patterns for certain days of the week, which could impact your pricing strategy for those days [5]. You might decide to offer incentives on your lower-performing ATV days to encourage customers to spend, such as 2-for-1 deals, discounts on certain products or services, etc. 

Product Placement

Improving your ATV could even be as simple as product placement [6]. Are your products easily visible and easily accessible to customers? Do your product displays invite customers in, or is everything crowded together, hidden behind fixtures, or jumbled in ways that don’t make sense to your customers?

Store Layout

This one really only impacts brick-and-mortar business owners, but it’s a big factor in your average transaction value.

There are certain things you can do to maximize your store layout and potentially increase your sales, like putting children’s clothing at the back of a store [7]. This forces the parent to walk through every other area of the store (and see more of your merchandise) before reaching the children’s section.

You can also group similar items together, so customers can find everything they’ll need in the same area. For instance, you could create a kitchen display with knives, forks, spoons, and a utensil organizer all in one place.

Of course, you also want to make sure any walkways are free of clutter, the store is easy to navigate, and your checkout areas are easy for customers to access.

Ecommerce Experience

You may also need to examine your customers’ e-commerce experience [8]. Is it easy for customers to make purchases through your website? Is the website easy to navigate and visually interesting? Are there any reviews of, or testimonials about, your products or services?

It may surprise you to learn that almost 95% of customers read online reviews about a product before making a purchasing decision [9]. If your product has no reviews, the data shows customers will be less likely to make a purchase.

Ensure you have the proper level of security for your site, as well. If you’re accepting payments through an online platform, you’ll want SSL encryption to protect customer information [10].

Add or Revise Products/Services

A thorough evaluation of your ATV may even prompt you to re-evaluate your product line [11]. You may decide to keep only those items or offer only those services that seem to resonate with customers the most and drop underperforming products or services.

Or maybe it’s time to introduce new products to attract additional customers. You may want to expand your brand or product offerings or provide more options for customization to existing products.

Whatever you choose to do, you’ll want a point of sale system that can help you track your ATV and move your business forward.

ATV Analytics Made Easy

Believe it or not, your point of sale system can also help you calculate your average transaction value. How, you may wonder? A POS system like Epos Now tracks sales over time and you’ll also have the number of transactions for any given time period at your fingertips with easy-to-understand reports. 

You can even break down sales by product, so you know exactly which products are popular with your customers and when they’re selling.

Not only that, but Epos Now easily integrates with popular spreadsheet applications and accounting software and some of the most widely used e-commerce platforms in the world, including Shopify. 

With a point of sale system like Epos Now on your side, understanding and improving your average transaction value becomes a lot simpler.