Back when I started selling online, I obsessed over traffic and new sales.
Every day I was refreshing my analytics, hoping to see new orders. What I wasn’t doing? Looking at how much value my existing customers were already bringing in.
And when I finally crunched the numbers, I realized something wild: 35% of my revenue was coming from repeat customers — people I’d already paid to acquire. That’s when I knew I had to learn how to measure customer lifetime value (CLV). It’s not just a metric — it’s a game plan.
What Is Customer Lifetime Value (CLV)?
CLV is the total amount of money a customer is likely to spend with your store over their entire “lifetime”, which could be months or years.
It answers one of the most important questions in business:
“How much is a customer really worth?”
If someone buys once for $20 and never comes back, their CLV is $20.
If someone spends $50 every month for a year? Their CLV is $600.
Understanding this helps you:
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Know how much you can spend to acquire a customer
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Focus on loyalty and retention instead of constant new traffic
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Build smarter marketing and product strategies
If you’re new to analytics, this ties closely to e-commerce analytics for smarter store decisions, where tracking these metrics starts.
How to Calculate Customer Lifetime Value?
Here’s the basic formula I started with:
CLV = Average Order Value × Purchase Frequency × Customer Lifespan
Let’s break that down:
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Average Order Value (AOV): Total revenue ÷ number of orders
If you made $5,000 from 100 orders, your AOV is $50 -
Purchase Frequency: Total orders ÷ total customers
If 100 orders came from 40 customers, your frequency is 2.5 -
Customer Lifespan: How long a customer keeps buying
Maybe 6 months, maybe 2 years, depending on your product
Now plug those numbers in. Even if it’s just an estimate, it’ll show you which types of customers are most valuable — and worth keeping around.
Want to dive deeper into patterns behind buying habits? Check out how to analyze customer behavior on your store to uncover trends that impact CLV.
Tools I Use to Track CLV
You don’t need enterprise-level dashboards. Here’s what’s worked for me:
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Google Sheets: I built a simple calculator for AOV × frequency × lifespan
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Payhip: It shows repeat customers and total revenue per buyer
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Klaviyo: Lets me segment high-value customers and track their journey
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Google Analytics GA4: Helps track returning visitor behavior and event conversions
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Shopify: Built-in lifetime value metrics if you’re using their platform
Honestly, even a spreadsheet works if you’re just starting out.
If you’re selling on Payhip, here’s how to track repeat customers to help uncover your most loyal buyers.
Why CLV Matters More Than You Think?
Here’s a mistake I made: I spent $25 on ads to get a $20 sale. I was frustrated… until I saw that the same customer came back and bought 3 more times.
Suddenly, I didn’t lose money — I made $75 from a $25 investment. That’s the power of CLV.
When you know your CLV:
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You can spend more confidently on ads
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You’ll care more about email and retention
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You’ll prioritize customer service because it actually pays off
To go further, try using analytics to improve upsells, increasing AOV is one of the easiest ways to boost CLV.
How to Increase Your CLV?
This is where it gets fun, because boosting CLV often costs less than chasing new leads.
Here’s what worked for me:
1. Upsell and Cross-Sell
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Recommend related products in the cart or thank-you page
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Bundle products to increase AOV
2. Send Smart Emails
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Reminders to restock or repurchase
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Product recommendations based on past purchases
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Early access to new drops
3. Loyalty and Referral Rewards
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Give points or perks for multiple purchases
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Reward people who refer friends
4. Collect Feedback and Actually Improve
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Ask them why they buy and why they don’t
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Use reviews and surveys to refine your store
5. Overdeliver on Customer Experience
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Fast, reliable shipping
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Clear communication
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Easy returns
These small things keep people coming back and each return visit means a higher CLV.
If you’re running campaigns, consider A/B testing for e-commerce success to identify what boosts repeat sales.
Final Thoughts
Customer Lifetime Value isn’t just a fancy metric for big brands. It’s something every e-commerce store should track especially if you want to build long-term success, not just short-term sales spikes.
Start with the simple formula. Track it monthly. Watch who your best customers are and make sure you’re keeping them around.
Because once you know your CLV, every other business decision gets clearer.
