LTV (customer lifetime value) is the total revenue, or profit, you expect to earn from one customer over your whole relationship with them. A simple version is average order value × purchases per year × years as a customer.
A simple LTV formula
LTV ≈ average order value × purchases per year × years retained
For profit-based LTV, multiply by your gross margin.
LTV and CAC together
The LTV:CAC ratio tells you whether growth is sustainable: if a customer is worth far more than it costs to acquire them, you can afford to spend more on ads.
How to grow LTV
- Retarget past buyers with new products (exclude them from first-purchase campaigns).
- Bring back lapsed customers with a re-introduction message.
- Use WhatsApp for follow-ups and repeat orders.
Related: Read the full guide → · All glossary terms →