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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.

First order leaves€20
Three more orders leave€60
Lifetime contribution€80
Illustrative figures
An example to show the arithmetic.

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.

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.