Customer lifetime value (CLV / LTV)
Customer lifetime value is the total revenue (or profit) a customer generates across their entire relationship with your store.
Customer lifetime value (CLV, often shortened to LTV) is the total amount a customer is worth to your business over the whole time they buy from you. At its simplest it's the sum of every order a customer has placed; more advanced versions use gross profit instead of revenue and project future value. LTV matters because it tells you how much you can afford to spend to acquire and retain a customer — if your average LTV is far above your acquisition cost, growth spend is profitable.
How it's measured
Average LTV = total revenue from all customers ÷ number of customers. Or compute per-customer lifetime spend and average it. Use gross profit for a truer figure.
Related terms
Average order value (AOV)
Average order value is the mean amount spent per order — total revenue divided by number of orders.
Repeat purchase rate
Repeat purchase rate is the share of customers who have placed more than one order.
Churn rate
Churn rate is the share of customers who stop buying over a given period.
RFM analysis
RFM (Recency, Frequency, Monetary) scores customers on how recently and often they buy and how much they spend, to segment them for marketing.