Black Friday and Cyber Monday are a bit of a Catch-22 for Shopify store owners — the big sales and deals typically bring in tons of orders and new customers, but how can you ensure you maximize a lifetime of value from those shoppers?
In marketing and commerce, experts often refer to “lifetime value” of a customer, which is commonly shortened to “LTV.”
LTV is typically based on a combination of past and predictive data that calculates how much a new customer is likely, on average, to spend over the course of their lifetime.
There are numerous articles and theories on LTV, but in this post we'll tackle the general concept and more widely accepted theories.
In terms of semantics, “lifetime” can refer to either, quite literally, the lifespan of a person — or simply the time of someone’s life where your products or services are relevant.
Getting a LTV that’s significantly higher than your overhead and business expenses plus your cost of goods sold (COGS) plus the cost of acquisition is a key way to make any business profitable in the long term.