GLOSSARY · L
LTV (lifetime value)
Total revenue from a customer over their relationship with your store.
WHY IT MATTERS
Why it matters for a Shopify store.
LTV tells you how much a customer is worth over time, which decides how much you can spend to acquire one.
Repeat purchase, subscriptions and good post-purchase flows raise LTV; a high first-order discount with no retention plan lowers it.
HOW CREATIVE LABS HANDLES IT
What we do about it on every project.
01
Measure by cohort
LTV is tracked by first-order month and channel, not as one blended number.
02
Build the second order
Post-purchase flows, replenishment reminders and loyalty focus on the next purchase.
03
Use margin, not revenue
Contribution margin LTV shows what you can afford to spend.
EXAMPLE
A typical example.
A store acquires many customers from a big discount but few come back.
Cohort reports show discount-acquired customers rarely reorder, so the offer changes and a replenishment flow targets the moment the product runs out.
COMMON MISTAKES
What usually goes wrong.
Blended averages
One LTV number hides which channels bring good customers.
Counting revenue only
Returns, discounts and shipping change real lifetime value.
Ignoring time
A value reached over five years is worth less than one reached in a year.
LTV
2 questions
How do I calculate LTV?
A simple version is average order value × purchase frequency × customer lifespan; cohort analysis gives a more reliable view.
What is a good LTV to CAC ratio?
It depends on margins and payback period. Compare your own cohorts over time rather than a fixed rule.
Related terms
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