Customer lifetime value (CLV or LTV) is what an average customer is worth over the whole time they buy from you. Enter your order value, how often they buy and how long they stay, and add your CAC to see whether the acquisition pays back.
Customer lifetime value
This is a simple historical estimate built from averages. It assumes the customers you've had behave like the ones you'll get.
$55 × 2.4 orders × 2.5 years is $330 of revenue. At a 55% gross margin that's about $182 of gross profit, which is the number to weigh against what you paid to win the customer.
Use the gross-profit version for decisions. Revenue CLV flatters you because it ignores what the products cost. Compare gross-profit CLV with your blended CAC and you have LTV:CAC, a common rule of thumb for whether acquisition is sustainable. Many teams aim for at least 3:1, though the right level depends on your cash and growth plans.
Payback time is how many months of gross profit it takes to earn back the CAC. The shorter it is, the less cash you tie up in growth.
| Input | Typical lever | What can quietly hurt it |
|---|---|---|
| Order value | Bundles, free-shipping thresholds, upsells | Discount-led acquisition |
| Orders per year | Replenishment emails, new drops, subscriptions | A product that doesn't hold up after the first order |
| Lifespan | Support, quality, community | Bad reviews and unanswered complaints |
| Gross margin | Sourcing, pricing, fewer refunds | Rising shipping and returns |
Lifespan and frequency are the ones most tied to how customers feel after buying. Watching what they say publicly, with social listening, is an early signal before repeat rates move.