LTV (Customer Lifetime Value)

What Is LTV?

Customer Lifetime Value (LTV, CLV, or CLTV) is the total amount of money a customer will spend with your store over their entire relationship with your brand. It is one of the most important metrics for Shopify merchants because it determines how much you can afford to spend to acquire a new customer.

How to Calculate LTV

The simplest formula for Shopify stores:

LTV = Average Order Value x Purchase Frequency x Customer Lifespan

For example:

• Average order value: $65
• Purchases per year: 2.5
• Customer lifespan: 3 years
• LTV = $65 x 2.5 x 3 = $487.50

A more precise approach uses contribution margin instead of revenue:

LTV (profit-based) = (AOV x Gross Margin %) x Purchase Frequency x Customer Lifespan

Using the same numbers with a 60% gross margin:

• LTV = ($65 x 0.60) x 2.5 x 3 = $292.50

This profit-based LTV is what you should compare against your CAC to determine sustainability.

Why LTV Matters for Attribution

LTV changes how you think about ROAS and CPA. A campaign that looks unprofitable on first-order ROAS might be highly profitable when you account for repeat purchases:

Scenario	First-Order View	LTV View
CPA	$40	$40
First order revenue	$55	$55
Lifetime revenue	—	$487
Profit	$15	$447

This is why cutting ad spend based on first-order ROAS alone can be a costly mistake. Channels that bring in loyal, high-LTV customers are worth paying more to acquire from.

LTV by Acquisition Channel

Not all customers are created equal. Customers acquired through different channels often have very different LTV profiles:

• Organic search customers tend to have higher LTV because they sought you out deliberately.
• Discount-driven customers from coupon sites tend to have lower LTV and rarely return at full price.
• Social media customers vary widely depending on whether they were acquired through brand content or aggressive promotions.

Understanding LTV by channel helps you allocate budget to the channels that bring your best long-term customers, not just the most first-time buyers.

How to Increase LTV

• Email and SMS retention: Post-purchase flows, replenishment reminders, and loyalty offers
• Product quality and experience: The best retention strategy is a great product
• Subscription or replenishment models: Predictable recurring revenue raises LTV dramatically
• Cross-selling and upselling: Recommend complementary products
• Loyalty programs: Reward repeat purchases with points or perks

LTV in Detectly

Detectly tracks repeat purchases from the same customer and attributes them back to the original acquisition source. This lets you see not just first-order ROAS but the full revenue trajectory by channel, helping you invest more in the sources that bring your highest-value customers.