Customer Lifetime Value (LTV)
Customer lifetime value is the total profit or revenue a single customer is expected to generate across the entire relationship, from first purchase to last, which tells you how much you can afford to spend acquiring that customer and still come out ahead.
LTV reframes a customer as a relationship rather than a transaction. A first order at 46 looks thin against a 30 acquisition cost, but if that customer reorders four times a year for two years, the real value is many times larger. This is why LTV, not the first sale, sets the ceiling on what you can responsibly pay for ads, influencers, or discounts: when LTV comfortably exceeds customer acquisition cost, growth spend pays for itself.
The inputs make clear what moves it. Lifting average order value, getting people to buy more often, or simply keeping them around longer all raise LTV, and repeat-purchase behaviour is usually the biggest lever of the three. Trust feeds directly into that loop. A shopper who had a good first experience, saw honest reviews, and felt the brand was credible is far more likely to return, so retention work and reputation work are not separate projects.
Treat any LTV figure as an estimate, not a fact. Early-stage stores have too little history to project a full lifespan, so the number is often a forecast built on a few months of data and can swing hard as cohorts mature. Read it as a directional signal alongside repeat-purchase rate and acquisition cost, and be honest about how much of it is assumption.