LTV / CLV – Customer Lifetime Value
Total expected profit from a customer over the entire relationship. A healthy LTV:CAC ratio is 3:1.
In practice
LTV is the 'lens' that reshapes every decision. LTV of $220 versus CAC of $40 is an excellent deal.
Common misconception
'LTV is theoretical.' Klaviyo calculates LTV automatically for every customer. Export orders and group by customer.
How to fix it
Low LTV? (1) improve the post-purchase experience, (2) run a win-back campaign, (3) launch a loyalty program, (4) note that a one-time product means low LTV by definition.
Example
A coffee shop: LTV was $105. A subscription option raised LTV to $340. Converting 30% of customers to subscriptions doubled revenue (2.1x).
Priority
Calculate LTV now: export 24 months of orders and group by email.
Related terms
Keep learning. Metrics that touch the same area:
- Churn RateFinanceThe percentage of customers/subscribers who stopped buying or paying in a given period. High churn means every new customer just replaces an old one. Per Harvard research: cutting churn by 5% increases profit by 25-95%.
- ROI – Return on InvestmentFinanceA general profitability metric: (net profit / investment cost) × 100. Different from ROAS — it includes all expenses.
- AOV – Average Order ValueFinanceTotal revenue divided by number of orders. The biggest lever for increasing revenue without more advertising.
- Gross MarginFinance(Sale price - COGS) / sale price × 100. The basis for every pricing and advertising decision.
- COGS – Cost of Goods SoldFinanceThe direct cost of producing or acquiring products sold. Includes: product + import shipping + customs + packaging.
- Cash FlowFinanceThe movement of cash in the business. 'Profitable on paper, broke in the bank' — a common problem in growing stores.
Jimmy tracks your LTV / CLV – Customer Lifetime Value, automatically
WhatsApp alerts when something important changes. No dashboards, no hassle.