What is LTV?
LTV stands for Customer Lifetime Value.
LTV (or CLV) is the profit a customer brings over their whole relationship with your store. A practical formula: AOV × orders per year × gross margin × years.
Example
$60 AOV × 3 orders a year × 40% margin × 2 years = $144 LTV.
Why it matters
An LTV:CAC ratio of about 3:1 or better is a common sign of healthy, sustainable growth.
Calculate it: CAC & LTV Calculator
Acquisition cost vs customer lifetime value
Flashcard
What is LTV (Customer Lifetime Value)?
Tap to reveal the answerLTV (or CLV) is the profit a customer brings over their whole relationship with your store. A practical formula: AOV × orders per year × gross margin × years.
Related terms
CAC
CAC is what you spend on marketing to win one new customer: marketing spend ÷ new customers.
AOV
AOV is the average amount a customer spends per order: revenue ÷ number of orders.
Gross margin
Gross margin is revenue minus the direct cost of the goods sold, as a percentage of revenue. It excludes overheads like software and salaries.