Customer Lifetime Value (CLV)
Customer Lifetime Value is the total revenue a business can expect from a single customer account over the entire duration of their relationship. It combines purchase frequency, average order value, and customer lifespan into one forward-looking metric. CLV helps you understand the long-term worth of acquiring and retaining each customer.
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Customer Lifetime Value
$900.00
average_order_value×purchase_frequency×customer_lifespanHow to Calculate Customer Lifetime Value (CLV)
Why Customer Lifetime Value (CLV) Matters
Knowing your CLV tells you how much you can afford to spend acquiring a new customer while remaining profitable. Businesses that optimize for lifetime value rather than single transactions build more sustainable growth. CLV also helps you identify your most valuable customer segments so you can invest in retention where it matters most.
Industry Benchmarks
What is a good CLV? Based on industry benchmarks, a CLV considered low is under $100, average is $100 - $500, and good is $500+. These figures vary by industry, product category, and business model, so use them as directional guidance rather than hard targets.
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Repeat Purchase Rate
Repeat Purchase Rate is the percentage of customers who have made more than one purchase from your store. It is calculated by dividing the number of customers with multiple orders by your total customer count. This metric reflects how well your business retains customers and drives loyalty over time.
Customer Churn Rate
Customer Churn Rate is the percentage of customers who stop purchasing from your store over a given period. It is calculated by dividing the number of customers lost during a period by the number of customers at the start of that period. Churn rate is the inverse of retention and a key signal of customer satisfaction.
LTV to CAC Ratio (LTV:CAC)
The LTV to CAC Ratio compares the lifetime value of a customer to the cost of acquiring that customer. It is calculated by dividing Customer Lifetime Value by Customer Acquisition Cost. This ratio is one of the most important indicators of business sustainability and growth efficiency.
Average Revenue Per User (ARPU)
Average Revenue Per User is the total revenue divided by the total number of unique customers over a given period. It measures how much revenue each customer generates on average and provides a snapshot of per-customer monetization. ARPU differs from AOV in that it accounts for all purchases a customer makes, not just a single order.
Customer Retention Rate
Customer Retention Rate is the percentage of existing customers who continue to purchase from your store over a given period. It is calculated by subtracting new customers from end-period customers, dividing by start-period customers, then multiplying by 100. Retention rate is the positive inverse of churn and directly measures your ability to keep customers coming back.
Average Order Value (AOV)
Average Order Value is the mean dollar amount spent each time a customer places an order on your store. It is calculated by dividing total revenue by the number of orders over a given period. AOV is one of the simplest yet most impactful levers for growing revenue without acquiring new customers.
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