Find out what each customer is actually worth to your brand — and whether you're paying too much to acquire them.
Average amount spent per order
Average orders per customer per year
How long an average customer stays active
Revenue minus cost of goods sold
Enter your CAC to see your LTV:CAC ratio. Calculate your CAC
Most brands have no idea what a customer is worth. They pour money into ads, celebrate each sale, and wonder why growth feels like a treadmill. That guessing game ends when you know your CLV.
Customer Lifetime Value tells you the total revenue you can expect from a single customer across your entire relationship with them — not just today's order, but every order they will ever place. Once you know that number, every decision gets clearer:
For DTC brands competing in markets like Malaysia and Singapore, understanding CLV is the difference between growing sustainably and burning cash on customers who never come back.
The math behind CLV is refreshingly simple — three numbers multiplied together:
CLV = Average Order Value × Purchase Frequency × Customer Lifespan
Here is a real example. Say your average order is $65, customers buy 3.5 times per year, and they stick around for 3 years. Your CLV is $65 × 3.5 × 3 = $682.50. That is not what they spend today — that is what they are worth to you over the full relationship.
But here is the number that really matters: profit-adjusted CLV. Multiply by your gross margin to see what each customer actually puts in your pocket:
Margin-Adjusted CLV = CLV × Gross Margin %
With a 50% gross margin, that $682.50 CLV becomes $341.25 in gross profit per customer. This is the number you should compare against your customer acquisition cost to know if your growth is sustainable or if you are slowly bleeding money.
And here is what makes CLV so powerful: each of those three inputs — order value, purchase frequency, and lifespan — is a lever you can actively pull to grow your business without spending a single extra dollar on ads.
Acquiring a new customer costs 5-7x more than keeping an existing one. That means the fastest path to profit is not finding more buyers — it is getting more value from the buyers you already have. Here is how to pull each lever:
But here is where it gets interesting. You do not need dramatic improvements in any single area. A 10% increase in AOV, frequency, and lifespan each compounds to a 33% total CLV increase. Small changes, big impact. For brands looking to optimize their overall profitability, CLV optimization is the highest-leverage work you can do.
Short answer: they are the same thing. CLV (Customer Lifetime Value) and LTV (Lifetime Value) are used interchangeably across ecommerce, and you will see both in analytics dashboards, industry reports, and marketing articles. Some practitioners draw a subtle line — CLV as the forward-looking prediction, LTV as the observed historical value — but in practice, nobody enforces that distinction.
The terminology does not matter. What matters is what you do with the number. The single most important use of CLV is comparing it to your customer acquisition cost. That gives you your LTV:CAC ratio. At 3:1 or higher, your customers are worth at least three times what you paid to win them — that is sustainable, scalable growth. Below 1:1, you are losing money on every customer, regardless of what you call the metric.
Beyond the ratio, tracking CLV by customer segment reveals which audiences are most valuable, which channels attract the best buyers, and where to adjust your pricing strategy for maximum long-term return.
It is the total revenue you can expect from a single customer across your entire relationship — not just their first purchase, but every order they will ever place. CLV factors in how much they spend per order, how often they buy, and how long they stay active. Knowing this number tells you exactly how much you can afford to spend to acquire a customer and still come out profitable.
Multiply three numbers: Average Order Value x Purchase Frequency (orders per year) x Customer Lifespan (in years). So a $60 AOV with 4 purchases per year over 3 years gives you a $720 CLV. To see actual profit, multiply that by your gross margin. A 50% margin on that $720 means each customer puts $360 in your pocket over their lifetime.
The average across ecommerce sits around $168, but the range is wide. Food & Beverage brands average $203, Beauty around $188, Apparel $135, and Electronics $120. The raw number matters less than how it compares to what you spend to acquire each customer. A $120 CLV is strong if your CAC is $30. A $300 CLV is dangerous if your CAC is $200.
3:1 is the benchmark — your customer should be worth at least three times what you paid to acquire them. Below 1:1 means you are losing money on every customer. Between 1-2:1 is survivable but thin. 3-5:1 is the sweet spot for sustainable growth. Above 5:1 is excellent, though it may mean you are under-investing in growth and leaving market share on the table.
Pull all three levers at once. Increase AOV with bundles, upsells, and a free shipping threshold set just above your current average. Boost purchase frequency with post-purchase email flows, subscriptions, and loyalty rewards. Extend lifespan with fast support, win-back campaigns, and community building. A 10% improvement in each lever compounds to a 33% CLV increase — no extra ad spend required.
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