Customer Lifetime Value (CLV)
The total profit one customer generates over the entire time they shop with you. If CLV is $72 and CAC is $40, you're in good shape — each customer makes you $32 net. If CLV is lower than CAC, no amount of marketing will save you.
Example
A customer buys from you 4 times over two years, spending $60 each time. Your margins are 30%. CLV = 4 × $60 × 30% = $72 in profit. You paid $40 to acquire them. Net gain: $32.
Why It Matters
CLV is the number that tells you how much you can afford to spend acquiring a customer. If you only look at first-order profit, you'll under-invest in marketing and leave growth on the table — or over-invest and bleed cash.
Pro Tip
Set up a simple spreadsheet tracking how many times each customer has purchased and their total spend. Even a rough CLV estimate beats guessing.
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