LTV (Customer Lifetime Value)

Total revenue or margin you expect from one customer over their relationship. Formula: AOV × purchase frequency × lifespan × gross margin %.

By Growthegy Team

Benchmarks

Average ecommerce conversion rate is often ~2–3% (varies widely by industry and traffic mix).

Source: IRP Commerce — Ecommerce Market Data (Jan 2026)

Average ecommerce cart abandonment rate is 70.19%.

Source: Baymard Institute — Cart Abandonment Rate Statistics (2024)

Key takeaways

  • LTV (Customer Lifetime Value) — focus on one metric or lever at a time; validate with data before scaling spend.
  • Pair reading with the Ecommerce Simulator on Growthegy to practice unit economics and decisions before you spend.
  • Bookmark growthegy.com/ecommerce-simulator/ for hands-on scenarios; use the blog for deeper guides.

Definition

LTV — Total revenue or margin you expect from one customer over their relationship. Formula: AOV × purchase frequency × lifespan × gross margin %.

Related tool

Open related calculator or tool · Back to glossary hub

Frequently asked questions

What is a good LTV:CAC ratio?

A common ecommerce benchmark is 3:1 or higher—each customer worth at least three times what you paid to acquire them. Tighter margins or higher fixed costs may require a higher ratio before scaling hard.

How do you calculate LTV for ecommerce?

Multiply average order value by purchase frequency per year, by average customer lifespan in years, and by gross margin percent (for contribution LTV). Alternatively use cohort revenue minus variable costs over a defined window.

Where can I model LTV with my own numbers?

Practice LTV trade-offs in the Growthegy Ecommerce Simulator, or read related guides linked from this glossary term.

Get weekly tips

Growth strategies and tool updates in your inbox.

Ready to practice a scenario?

Play a few turns in the Ecommerce Simulator and see how small decisions compound.

Open Ecommerce Simulator