Customer Lifetime Value, often called LTV, is the total amount of money a customer is expected to spend in your business during their time as a customer.
This is an important metric that provides you insights into your estimated revenue, high-valued customers, and your financial viability. It is less expensive for your business to keep the existing customers than to acquire new ones. Therefore, increasing the value of your current customers is a great way to drive growth in your business. Tracking this metric can help you develop strategies to retain your current customers and acquire new ones while maintaining profit margins.
Your average customer lifespan is the average time that the customers remain active before going dormant. If you have a new store, then you might not have enough data to determine the average customer lifespan of your store.
Learn how to design a revenue analytics strategy for your D2C brand.
Find out how to track the same metrics as Huel, for your Shopify store.
Learn how to identify your most valuable customers using the RFM analysis framework.
5 steps to import your Shopify data to Google Sheets.
The industry standard is to use three years as an average customer lifespan if your store is less than three years (Source: Shopify).
There are a number of ways to improve your Customer Lifetime Value. You can invest in creating a more robust onboarding process to build stronger relationships with your users. You can sustain these relationships by producing content relevant to your user base in the form of newsletters or blogs.
See also: CAC
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