Glossary · Customers
Customer lifetime value (LTV)
What a customer is worth over every order they place, not just the first — best counted in what the orders kept, not in what they sold.
- Counted inmarginnot in sales
- Starts atorder oneand follows every repeat
- Setsthe CPAa first order can bear
01 / How it is worked out
The formula
Formula
Sum, over a customer’s orders, of what each order left after its costs
Example
A first order that leaves €20 from a customer who orders three times more is worth about €80 in contribution, not €20 — that is how much it could have cost to win.
02 / Why it matters
What it changes in a decision
Lifetime value is what lets a store pay more for a first order than that order leaves. It is also easy to overstate: counted in sales instead of margin, it can be three times too large.
The useful version follows the customers a product or a channel brought in and counts what their later orders left.
03 / Go further
Where it is used
Cost per acquisition
What the ads cost for each order they brought. The most an order can cost is what it contributes before ads.
Open →Channel profit
Which channel brought margin, not clicks — each judged on its own orders.
Open →Next: Break-even point
The number of orders a month has to sell before it stops losing money: ads and fixed costs, divided by what each order contributes.
Open →
See every one of these on your own store.
Profflow works them out from your orders, ads and costs, order by order — read-only, in about ten minutes.