Customer lifetime value (LTV)

Customer lifetime value is the total profit you expect from a customer across every order they place with you.

The simple version: average order value × purchase frequency × expected lifespan, then multiplied by gross margin.

LTV sets your acquisition ceiling. If a customer is worth $120 in gross profit over two years, you know what you can afford to pay to acquire one.

For a new store, use a 90-day or 180-day LTV instead of a lifetime estimate. You'll get a number you can actually act on.

• Average order value (AOV)
• Retention