Lifetime Value (LTV) is one of the most important metrics for any eCommerce business—it tells you how much revenue you can expect to earn from a single customer over the entire duration of their relationship with your store.
Put simply:
LTV shows how valuable your customers are beyond just their first order.
Why Is LTV So Crucial in eCommerce?
In the world of eCommerce, most of your revenue doesn’t come from one-time shoppers—it comes from repeat buyers. That’s where LTV comes in.
Tracking customer LTV helps you:
Understand your best customers – Which user cohorts spend the most over time?
Optimize your marketing budget – Which channels bring in the most valuable customers, not just the cheapest ones?
Improve retention – If you know when customers usually repurchase, you can time your email or ad campaigns accordingly.
Forecast revenue more accurately – A rising LTV means your business is building loyalty and momentum.
What Can You Learn by Tracking LTV?
LTV isn’t just a number—it answers key questions like:
Are your ad campaigns attracting loyal or one-time buyers?
Is your repeat purchase rate improving over time?
Are certain products or bundles linked to higher customer value?
Do customers from one channel (e.g. Meta or Google) spend more over time than others?
Should you be investing more in retention strategies for high-LTV segments?
By understanding these insights, you can tailor your acquisition, retention, and upsell strategies more effectively.
What Influences LTV?
LTV can be calculated differently depending on your business model.
For subscription-based stores, LTV often depends on the average length of a subscription and the recurring revenue it generates.
For non-subscription eCommerce, LTV is based on historical shopping behavior.
In both cases, the calculation takes into account:
When a customer made their first purchase
How many times they’ve come back to shop again
What kind of items they’re buying—are they high-value or low-value?
How much they typically spend per order
It’s not about a one-time transaction—it’s about the long-term relationship.
Why LTV Is More Than Just a Retention Metric
While LTV is often used to measure retention, it’s equally useful for acquisition. If you know your average LTV, you’ll have a clearer sense of:
How much you can afford to spend on acquiring new customers (Customer Acquisition Cost or CAC)
Which audiences or marketing campaigns lead to the highest long-term value
Where you should shift your ad spend to boost profitability
Need Help?
If you’re unsure how to analyze LTV in your account or want help interpreting the data, feel free to reach out:
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Schedule a Call: Book a personalized consultation with our Customer Success team and speak directly with:
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We’re here to help you turn data into action.
You might find the following articles relevant:
Understanding The LTV Analysis Feature
What Are User cohorts?
LTV By Product
LTV By Marketing Channel
Can I exclude some groups of customers from the LTV Analysis?