LTV (Customer Lifetime Value)
LTV is the total profit a customer generates across the entire relationship, which distinguishes it from average order value — the size of a single order.
How is it calculated?
The simplest form is average order value × purchase frequency × relationship length, multiplied by margin for a profit-based figure. Precision matters less than measuring it the same way over time and watching the trend.
Why does D2C live help LTV?
Raising LTV requires knowing who the customer is so you can prompt the next purchase. On marketplaces and social, buyer identity stays with the platform; on your own store, watch and purchase history attach to the member account, which makes repeat business designable.
Frequently Asked Questions
Q. How is LTV different from AOV?
AOV is one order. LTV is everything across the relationship. A low AOV with frequent repeat purchases can still produce high LTV.
Q. How does LTV pair with CAC?
LTV has to comfortably exceed customer acquisition cost for marketing to be sustainable. Teams usually manage the LTV/CAC ratio together.