Average transaction value (ATV) is a derived metric calculated as total revenue or sales divided by the number of invoices or transactions. It adds a customer-level spending measure to raw variables such as Revenue and Invoices. section 2.6.2 section 3.4
Customer-level calculation
A customer with two invoices, five items, and total sales of 100 has an ATV of 50. The same table can derive average basket size as 2.5 items per invoice. section 3.4
Use ATV when combining transaction variables for analysis or dimensionality reduction. It can reduce several variables to a more interpretable representation, but it should not automatically replace sales; inspect data quality and variable relationships before dropping information. section 3.4 section 3.8
Figure 3.3 In the first table, we have the sales, invoices, and number of items as the variables. In the second table, they have been combined to create new variables.
Compare the original sales, invoices, and item-count variables with the reduced table containing ATV and average basket size. section 3.4
