LTVCustomer Lifetime Value
LTV is the total revenue (or profit) a customer is expected to generate over their entire relationship with your brand. It determines how much you can sustainably spend to acquire a customer.
What is LTV?
Customer Lifetime Value (LTV, also CLV) is calculated by multiplying average order value, purchase frequency, and customer lifespan. If a customer orders twice per year at $60 AOV for an average of 3 years, their LTV is $360. Gross LTV multiplied by margin gives contribution-basis LTV — the actual profit value of that customer.
LTV is the most important long-term health metric for any subscription, repeat-purchase, or DTC business. It determines the maximum sustainable customer acquisition cost (CAC). If LTV is $300 and gross margin is 50%, the customer generates $150 in contribution. A CAC below $150 is profitable; above $150 is loss-making. A rising LTV allows you to raise your CAC ceiling and outspend competitors on acquisition.
For Amazon-only sellers, LTV is difficult to measure precisely because Amazon doesn't provide buyer identity across multiple purchases. For DTC Shopify brands, LTV is measurable in Shopify Analytics and Klaviyo cohort reports — enabling data-driven acquisition decisions.
Why it matters for sellers
LTV unlocks acquisition scale. A brand that knows their 12-month LTV is $180 can profitably acquire customers at $60 CAC (3:1 LTV:CAC ratio, a common benchmark). A brand that doesn't know its LTV either underinvests in acquisition (scared of costs) or over-invests without knowing if the math works. LTV is the denominator that makes CAC meaningful.
How to use LTV
Segment LTV by acquisition channel. Customers acquired via email opt-in may have 2× the LTV of customers acquired via paid social — this difference should dictate where you invest most in acquisition. In Klaviyo, use cohort analysis to track how LTV evolves at 30, 90, 180, and 365 days post-first-purchase for each acquisition cohort.
Increase LTV by: adding subscription or replenishment options, building post-purchase email flows that drive second purchases, improving product quality to reduce returns and increase satisfaction, and launching complementary products that existing customers naturally want.
Real-world example
A supplement brand calculates LTV by cohort: customers acquired via Meta ads have 12-month LTV of $94; customers acquired via email pop-up have 12-month LTV of $167. They shift 30% of Meta budget to email acquisition (optimising for list growth) and reduce paid acquisition spend slightly. Blended CAC stays flat but LTV rises from $112 to $141 — making their unit economics 26% more efficient.
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Frequently asked questions about LTV
What is a good LTV:CAC ratio for ecommerce?
3:1 is the commonly cited benchmark — LTV should be at least 3× your CAC. A ratio below 2:1 suggests you're losing money on customer acquisition when operating costs are factored in. Above 5:1 may indicate you're underinvesting in acquisition and leaving growth on the table.
How do I calculate LTV for my Shopify store?
Shopify Analytics shows 'Customer lifetime value' in the Customers section. For more granularity, export order data and calculate: average number of orders per customer × average order value = revenue LTV. Multiply by your gross margin % for contribution-basis LTV. Klaviyo's predictive LTV (available on paid plans) forecasts expected future LTV per customer.
Can Amazon sellers measure LTV?
Directly, no — Amazon doesn't provide customer identity data for attribution across orders. Indirectly, you can estimate category repeat purchase rates and apply them to your average order value. For precise LTV measurement, building a DTC channel alongside Amazon is the only reliable approach.