Customer lifetime value on Shopify
Your first sale to a customer is rarely the most valuable one. Lifetime value tells you what a customer is worth over everything they've bought from you, and it changes how much you can sensibly spend to win one.
What lifetime value means
Customer lifetime value (LTV) is the total a customer has spent with you, from their first order to today.
Average lifetime value = total spent by all customers who've ordered ÷ number of those customers
Count what they actually paid: leave out sales tax, and take off refunds and cancellations.
Why it matters
Say it costs you $25 in ads to win a new customer, and their first order is $40. On that one order, you barely break even. If your average customer's lifetime value is $120, that same $25 is a bargain.
LTV tells you:
- how much you can afford to spend to win a customer,
- whether customers come back, and
- which customers deserve special treatment, like early access or a thank-you.
Repeat customer rate
The quickest way to see whether lifetime value is growing is your repeat rate:
Repeat customer rate = customers with more than one order ÷ customers with at least one order
A low repeat rate usually means customers aren't hearing from you after their first purchase.
How to raise it
- Follow up after the first order. A thank-you, then a review request, then a reason to come back.
- Remind people who run out. For products people use up, a reminder just before they'd reorder works well.
- Win back lapsed customers before they forget you, with an offer that steps up only if they don't respond.
- Recognise your best customers with early access rather than discounts.
See your numbers
Nesvo is a free Shopify app that shows your average customer lifetime value, your repeat purchase rate and your churn, calculated from your full order history. On paid plans, its automated campaigns (first-time follow-up, replenishment, win-back and VIP) work on exactly those numbers.