LTV Calculator: Calculate Your
Customer Lifetime Value
Use our free LTV calculator to instantly determine your Customer Lifetime Value, LTV:CAC ratio, and annual customer value.
LTV Calculator
Calculate your Customer Lifetime Value instantly
Input Values
Average amount spent per order
How many times a customer orders per year
Average years a customer remains active
Enter to calculate LTV:CAC ratio
Results
Enter your customer metrics
Results will appear here
Track LTV Automatically
StoreRadar calculates LTV automatically for every customer segment, giving you real-time insights into customer value and retention.
What is Customer Lifetime Value (LTV)?
Understanding the total value each customer brings to your business
Customer Lifetime Value (LTV or CLV) is the total revenue you can expect from a single customer throughout their entire relationship with your business. It's one of the most important metrics for ecommerce because it tells you how much you can profitably spend to acquire customers.
The LTV Formula
Example: If customers spend $75 on average, order 4 times per year, and remain customers for 3 years:
LTV = $75 × 4 × 3 = $900
Understanding your LTV is essential because it determines how much you can spend on customer acquisition while remaining profitable. If your LTV is $900 and you spend $150 to acquire a customer (CAC), you're making $750 profit per customer over their lifetime. This 6:1 LTV:CAC ratio is excellent—you're earning 6 dollars for every dollar spent on acquisition.
How to Track LTV in WooCommerce
Three ways to calculate Customer Lifetime Value for your WooCommerce store
Option 1: Spreadsheet Analysis
Export your WooCommerce orders to a spreadsheet and manually calculate AOV, purchase frequency, and customer lifespan. Requires regular data exports and complex formulas.
- No additional software costs
- Full control over calculations
- Time-consuming data exports
- Formulas prone to errors
- No real-time updates
- Hard to segment customers
Option 2: Google Analytics
Use Google Analytics e-commerce tracking to estimate customer value. Limited to session-based data and doesn't track true customer-level lifetime value across purchases.
- Free to use
- Good for traffic analysis
- Session-based, not customer-based
- Can't track repeat purchases accurately
- No churn or retention data
Option 3: StoreRadar
Connect StoreRadar to your WooCommerce store for automated LTV tracking across customer segments. See real-time LTV by acquisition channel, product category, and customer cohort.
- Automatic LTV calculation
- Segment by any dimension
- Track LTV trends over time
- Retention & churn analysis
- Monthly subscription
How to Calculate LTV (Step-by-Step)
Follow these four steps to calculate your Customer Lifetime Value
Calculate Average Order Value
Divide your total revenue by the number of orders in a given period. For most accurate results, use at least 12 months of data to account for seasonality.
Determine Purchase Frequency
Count the average number of orders per customer per year. Divide total orders by unique customers over a 12-month period.
Estimate Customer Lifespan
Calculate how long customers remain active on average. You can use churn rate (Lifespan = 1 / Churn Rate) or analyze when customers typically stop ordering.
Apply the LTV Formula
Multiply Average Order Value × Purchase Frequency × Customer Lifespan to get your Customer Lifetime Value.
LTV vs Related Metrics
Understanding how LTV relates to other key customer metrics
| Metric | Definition | Formula | Example |
|---|---|---|---|
| LTV | Total expected revenue from a customer | AOV × Purchase Frequency × Lifespan | $900 |
| CAC | Cost to acquire one customer | Total Acquisition Cost / New Customers | $150 |
| LTV:CAC Ratio | Return on acquisition investment | LTV / CAC | 6:1 |
| Payback Period | Months to recover acquisition cost | CAC / (AOV × Margin × Frequency / 12) | 4 months |
| Retention Rate | Percentage of customers retained | (End Customers - New) / Start × 100 | 75% |
How to Improve Your LTV
Four strategies to increase the lifetime value of your customers
Increase Average Order Value
Implement upselling and cross-selling, create product bundles, offer free shipping thresholds, and use personalized product recommendations to increase basket size.
Boost Purchase Frequency
Launch email marketing campaigns, create loyalty programs, offer subscription options, and use retargeting to bring customers back more often.
Extend Customer Lifespan
Improve customer service, implement win-back campaigns for churned customers, gather and act on feedback, and continuously improve product quality.
Reduce Customer Acquisition Cost
Improve targeting efficiency, invest in organic channels, optimize conversion rates, and focus on referral programs to lower CAC and improve LTV:CAC ratio.
Understanding LTV:CAC Ratio
What your LTV:CAC ratio tells you about your business health
Losing Money
You're spending more to acquire customers than they're worth. Urgent action needed: reduce CAC through better targeting or increase LTV through retention.
Room for Improvement
You're profitable but leaving money on the table. Focus on increasing purchase frequency and customer retention to improve the ratio.
Healthy Business
Strong unit economics. You can confidently invest in customer acquisition knowing each customer generates significant profit over time.
Pro Tip: Consider Payback Period Too
A high LTV:CAC ratio is great, but if it takes 24 months to recoup your acquisition cost, cash flow becomes a challenge. Aim for a payback period under 12 months—ideally under 6 months for fast-growing ecommerce businesses. This lets you reinvest in growth more quickly.
Common LTV Mistakes to Avoid
Four errors that lead to inaccurate lifetime value calculations
Using Too Short a Timeframe
Calculating LTV from only a few months of data leads to inaccurate estimates. Use at least 12-24 months of data to capture seasonality and true customer behavior patterns.
Ignoring Customer Segments
Averaging LTV across all customers hides valuable insights. Your best customers might have 10x the LTV of average customers. Segment by acquisition channel, product category, or behavior.
Not Accounting for Gross Margin
Revenue-based LTV overstates actual value. For profitability decisions, use gross margin LTV (LTV × Gross Margin %) to understand true profit contribution per customer.
Forgetting About Time Value of Money
A dollar today is worth more than a dollar next year. For high-value decisions, consider discounting future revenue. This is especially important for businesses with long customer lifespans.
Frequently Asked Questions
Common questions about Customer Lifetime Value
Customer Lifetime Value (LTV or CLV) is the total revenue you can expect from a single customer throughout their entire relationship with your business. It helps you understand how much each customer is worth and informs decisions about customer acquisition spending, retention efforts, and marketing strategies.
The basic LTV formula is: LTV = Average Order Value × Purchase Frequency × Customer Lifespan. For example, if customers spend $50 on average, order 4 times per year, and remain customers for 3 years, your LTV is $50 × 4 × 3 = $600. You can also calculate lifespan from churn rate: Lifespan = 1 / Churn Rate.
A healthy LTV:CAC ratio is generally 3:1 or higher, meaning you earn $3 in lifetime value for every $1 spent acquiring a customer. A ratio below 1:1 means you're losing money on customer acquisition. Ratios between 1:1 and 3:1 suggest room for improvement in either reducing CAC or increasing LTV.
There are three main levers to improve LTV: increase average order value (upselling, cross-selling, bundles), increase purchase frequency (email marketing, loyalty programs, subscriptions), or extend customer lifespan (better customer service, retention campaigns, product quality). Focus on the lever with the most room for improvement.
LTV (Lifetime Value) and CLV (Customer Lifetime Value) are the same thing—different abbreviations for the same metric. Both terms are used interchangeably in the industry. Some businesses also use CLTV.
Historical LTV looks at actual past customer behavior, while predictive LTV uses models to forecast future value. Historical LTV is simpler and more accurate for mature businesses with stable customer behavior. Predictive LTV is better for growing businesses or when launching new products. Most ecommerce businesses benefit from starting with historical LTV.
Track Customer LTV Automatically
Stop calculating LTV manually. StoreRadar tracks customer value in real-time so you always know which customers and segments are most valuable.
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