What is LTV? Customer lifetime value explained

LTV (customer lifetime value) is the total revenue — or gross profit — a customer generates over their relationship with your store.

How is LTV calculated?

LTV ≈ average order value × purchase frequency × customer lifespan

Example

A customer who orders three times a year at $60 for two years has an LTV of about $360 in revenue.

Why does LTV matter for e-commerce?

LTV sets how much you can spend to acquire a customer. Brands with strong repeat purchase can accept a first-order loss that a one-time-purchase brand cannot.

How does Posta use LTV?

Posta's agents use LTV when reviewing your accounts and recommending changes. See the AI marketing analytics page for how it fits into your workflow.