Free tool
Estimate what a customer is worth over their whole relationship with you, so you know how much you can afford to spend to acquire one.
Add margin for lifetime profit instead of lifetime revenue.
Customer lifetime value
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Enter order value, frequency, and lifespan.
Customer lifetime value, or LTV, is the total revenue you expect from a customer across the whole time they buy from you, not just their first order. It is what turns a scary-looking acquisition cost into a smart investment: paying $80 to win a customer worth $400 over three years is a bargain.
A practical formula is LTV = average order value x orders per year x lifespan in years.
For lifetime profit rather than revenue, multiply by your gross margin. An $80 order value, four
orders a year, over three years is 80 x 4 x 3 = $960 in revenue, or $576 in profit
at 60% margin.
The business that knows its true LTV can afford to pay more to acquire a customer and still come out ahead. But that only works if LTV and acquisition cost are measured against the same customers. Trakt ties each customer back to the campaign that won them and counts their repeat orders, so you can see LTV by acquisition source and pay confidently to grow. Compare it against cost with the CAC calculator.
Connect a store, run Trakt in shadow mode, and compare it against your ad account before you change a thing.