Customer lifetime value (LTV or CLV) is the total revenue, or gross profit, a business expects to earn from a single customer across the entire relationship. It moves the focus away from a single order and toward the full pattern of repeat purchases over months or years. Most teams compare LTV against customer acquisition cost (CAC) to judge whether a customer is profitable once you account for what it took to win them.
How it works
A simple version multiplies three inputs: average order value, purchase frequency over a period, and the expected length of the relationship. So a buyer who spends 1,200 per order, orders four times a year, for three years has a revenue LTV of 14,400. Swap average order value for average gross profit per order if you want a profit-based figure, which is usually the more honest number for planning spend.
Why it matters
LTV tells you how much you can afford to spend to acquire and retain a customer. A common rule of thumb is an LTV to CAC ratio of at least 3 to 1. It also shifts priorities: a low first-order margin can still be worth chasing if the account reorders for years.
LTV in B2B quoting on Shopify
B2B buyers rarely convert on one order. They request a quote, negotiate, then reorder on a cycle, so lifetime value matters more than the first deal. Tracking which quotes convert and which accounts keep coming back helps you see real LTV rather than a single sale. Because a tool like ShopQuotes converts quote requests into real Shopify draft orders paid through native checkout, repeat purchase history lands in your normal Shopify customer records. See the B2B quoting glossary for related terms.