What changed beneath the average?

Average order value is rising. A founder or CEO might reasonably see a stronger offer or a more effective sales approach. What if neither has changed?

Imagine an SME selling a standard service and a more expensive specialist service. Prices stay the same. Specialist orders remain steady, while standard orders fall. Average order value rises because fewer smaller orders enter the calculation. Total revenue falls.

In this constructed illustration, the average is correct. The explanation attached to it could still mislead the next decision.

A change in the mix can change the meaning

The Australian Bureau of Statistics makes a related distinction in its Average Weekly Earnings release: changes in average earnings can reflect both earnings per employee and the composition of the workforce. That guidance concerns wages, not SME sales. It illustrates why a moving average needs an explanation of what sits beneath it.

For the imagined SME, sales might welcome the higher average as evidence that customers value the offer more. Delivery might see fewer routine jobs. Finance might see a shrinking revenue base. Those observations can all be accurate without supporting the same growth decision.

Perhaps moving towards specialist work is exactly what leadership intended. Perhaps the loss of standard orders signals a problem. The average alone cannot distinguish those possibilities, or establish that the business has become better at winning either kind of work.

Which explanation will the business act on?

Our proposed research framework asks how leaders keep customer value, commercial choices, commitments and learning connected. Here, the question is whether the account of progress travelling through the business explains the number well enough for others to rely on it.

When a headline measure improves in your business, what gives you confidence that the explanation improved with it?