Customer Lifetime Value (CLV): The Definitive Guide for E-Commerce

Customer Lifetime Value (CLV or LTV) is the total revenue — or profit — a business can expect to generate from a single customer over the entire duration of their relationship.

It answers the question: how much is a customer actually worth?

CLV is arguably the most important metric in e-commerce because it determines:

• How much you can afford to spend acquiring a customer (CAC)
• Which acquisition channels are sustainable
• Which customer segments to prioritise
• Whether your business model is viable long-term

Revenue CLV: total revenue from a customer over their lifetime.

Profit CLV: total contribution margin (revenue minus variable costs) over their lifetime.

Profit CLV is more accurate for business decisions but requires COGS and fulfilment cost data. Revenue CLV is simpler and still useful for relative comparisons between customer segments.

AskBiz calculates both if you've entered your COGS in Settings → Products → Cost of Goods. If COGS is not entered, AskBiz shows revenue CLV and flags that profit CLV is unavailable.

AskBiz uses two CLV calculations:

Historical CLV (actual): sum of all orders from a customer since their first purchase. This is exact for existing customers but doesn't project future value.

Predictive CLV: uses purchase history, recency, frequency, and average order value (AOV) to forecast future revenue from a customer over a defined time horizon (90 days, 12 months, or lifetime).

View CLV in Analytics → CLV → Overview. Switch between historical and predictive views using the toggle at the top.

CLV varies enormously by business model and product category:

| Business type | Typical 12-month CLV |

|---------------|---------------------|

| Subscription (monthly box) | £120–£300 |

| Consumables / replenishment | £80–£200 |

| Fashion / apparel | £60–£150 |

| Home goods / furniture | £100–£400 |

| Electronics | £80–£250 |

| Beauty / personal care | £60–£180 |

The meaningful comparison is your CLV:CAC ratio — CLV relative to your customer acquisition cost. A healthy ratio is 3:1 or higher.

Budget more for channels with high CLV customers: if customers from organic search have 2× the CLV of customers from Facebook Ads, that justifies higher investment in SEO even if the CPA looks similar.

Set a maximum CAC: your maximum sustainable CAC = CLV × target profit margin. For a 12-month CLV of £120 and a target 25% margin, maximum CAC = £90.

Identify high-CLV customer profiles: use CLV by acquisition channel, demographic, and first-purchase product to build profiles of your best customers. Use these profiles to guide product development, marketing targeting, and retention strategy.