Customer Lifetime Value: Formula & 5 Tips to Increase Yours (2025)
- What CLV is and why it matters for eCommerce stores
- The key differences between CLV and Lifetime Value (LTV)
- How to calculate CLV effectively
- Best strategies to increase CLV
- A customer subscribes to a $20/month plan.
- They stay subscribed for an average of 24 months.
- Their CLV = $20 x 24 = $480.
- CLV focuses on individual customers, considering purchase frequency, retention, and spending habits.
- LTV applies more broadly to products, brands, or customer segments, assessing overall lifetime revenue potential.
- Improves customer acquisition: Helps identify high-value customers to refine targeting strategies.
- Enhances retention efforts: Enables businesses to nurture relationships with their most valuable customers.
- Increases profitability: Encourages businesses to invest in customer experience, leading to repeat purchases and referrals.
- Optimizes resource allocation: Guides decision-making on marketing spend, loyalty programs, and service improvements.
- Average Order Value (AOV): The average amount a customer spends per purchase. Calculate this by dividing total revenue by the number of transactions within a specific period.
- Number of Repeat Transactions: The average number of times a customer buys from you over their lifetime. Estimate this using historical retention data or customer surveys.
- Average Retention Time: The typical duration a customer remains active with your business. Determine this by analyzing past retention trends or survey responses.
- Sign up & connect TrueProfit to your Shopify store.
- Input key values like COGS, shipping, and ad spend.
- Let the app analyze customer data to calculate CLV.
- Review insights on customer behavior and retention.
- Starbucks: A loyal customer generates an estimated $14,000 in lifetime value—nearly three times that of an occasional visitor—thanks to frequent visits and higher spending.
- Amazon: With an average CLV of $1,400, Amazon benefits from repeat purchases, larger order sizes, and Prime memberships.
- Zappos: Prioritizing exceptional service, Zappos sees 75% higher CLV from loyal customers, driven by repeat purchases and referrals.
- Enhance Customer Experience: Deliver personalized interactions, fast service, and quick issue resolution to build loyalty.
- Implement Loyalty Programs: Reward repeat purchases with discounts, points, or exclusive perks.
- Leverage Upselling & Cross-Selling: Encourage additional purchases by offering higher-value or complementary products.
- Drive Referrals: Incentivize word-of-mouth marketing through referral programs.
- Analyze Customer Data: Use purchase history, feedback, and engagement metrics to refine strategies.
- Enhance Customer Experience: Deliver personalized interactions, fast service, and quick issue resolution to build loyalty. Streamlining ecommerce customer support across channels—using tools like eDesk—can help ensure faster response times and more consistent service.
Tracy Ng
Senior Content Executive at TrueProfit & SEO/Content Specialist
Tracy is a senior content executive at TrueProfit – specializing in helping eCommerce businesses scale profitably through content. She has over 4 years of experience in eCommerce and digital marketing editorial writing. She develops high-impact content that helps thousands of Shopify merchants make data-driven, profit-focused decisions.
