{"id":11,"date":"2023-01-06T14:42:00","date_gmt":"2023-01-06T14:42:00","guid":{"rendered":"https:\/\/new.postpurchase.deals\/?p=11"},"modified":"2023-10-23T14:18:42","modified_gmt":"2023-10-23T14:18:42","slug":"what-is-customer-lifetime-value-and-how-to-calculate-it","status":"publish","type":"post","link":"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/","title":{"rendered":"What is Customer Lifetime Value and how to calculate it"},"content":{"rendered":"\n<p>Customer Lifetime Value or LTV or CLV is an incredibly valuable metric for your Shopify stores. It\u2019s used to calculate the long term value of a customer.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/#How_to_calculate_Customer_Lifetime_Value_or_LTV_or_CLV\" title=\"How to calculate Customer Lifetime Value or LTV or CLV\">How to calculate Customer Lifetime Value or LTV or CLV<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/#Why_is_Customer_Lifetime_Value_important\" title=\"Why is Customer Lifetime Value important?\">Why is Customer Lifetime Value important?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/#How_to_increase_your_Customer_Lifetime_Value_or_LTV\" title=\"How to increase your Customer Lifetime Value or LTV?\">How to increase your Customer Lifetime Value or LTV?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/#Encourage_your_customers_to_spend_more\" title=\"Encourage your customers to spend more\">Encourage your customers to spend more<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/postpurchase.deals\/blog\/2023\/01\/06\/what-is-customer-lifetime-value-and-how-to-calculate-it\/#Going_to_the_next_level_with_BYG_Post_purchase_upsell_offers\" title=\"Going to the next level with&nbsp;BYG Post purchase upsell offers\">Going to the next level with&nbsp;BYG Post purchase upsell offers<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_calculate_Customer_Lifetime_Value_or_LTV_or_CLV\"><\/span>How to calculate Customer Lifetime Value or LTV or CLV<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Customer Lifetime Value is calculated by multiplying the&nbsp;<a href=\"https:\/\/postpurchase.deals\/blog\/what-is-aov-average-order-value-in-shopify\">Average Order Value<\/a>&nbsp;by&nbsp;<code>Number of purchase per year<\/code>&nbsp;multiplied by the&nbsp;<code>lifetime of the customer<\/code>. Let\u2019s take a simple example of $2 coffee. I buy a coffee every weekday, so for the coffee shop my LTV is:<\/p>\n\n\n\n<pre class=\"wp-block-code\"><code>\n$2 per cup x 52 weeks x 5 days a week = $520 spent on coffee per year\n\n<\/code><\/pre>\n\n\n\n<p>If I\u2019m buying coffee for 5 years from the same coffee shop, my lifetime value would be<\/p>\n\n\n\n<pre class=\"wp-block-code\"><code>$520 per year x 5 years = $2600<\/code><\/pre>\n\n\n\n<p>This is what I am worth in that coffee shop\u2019s books.<\/p>\n\n\n\n<p>LTV identifies which customers are likely to be the most valuable over the long haul. The higher the LTV, the greater the possibility of them being with you for a long time.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_is_Customer_Lifetime_Value_important\"><\/span>Why is Customer Lifetime Value important?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Not all customers are the same. They vary in various ways. Some you acquired organically, for other you had to spent ad dollars. Some are new, some are old. Some differ in the frequency or volume of how much they order. In face, from Shopify\u2019s estimate the top 1% of ecommerce customers are worth upto 18 times more than than average customers.<\/p>\n\n\n\n<p>With customer acquisition costs getting higher and higher each year, it\u2019s extremely important that you focus your efforts on acquiring the right customers, the customers who are easier to acquire and are worth more.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_increase_your_Customer_Lifetime_Value_or_LTV\"><\/span>How to increase your Customer Lifetime Value or LTV?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In simple terms, your customer LTV is the total value of all their sale. So selling more will definitely improve your LTV. But rather than just any selling, this metric focuses on selling to the customers who have already bought from you. If you sell $500 worth of merchandise to 10 customers, your LTV is still $500, as that\u2019s what one of your customer is worth. Where if you sell $4000 worth of merchandise to 2 of your high value customers, their LTV is ~$2000. So the key is to<\/p>\n\n\n\n<p>Know who is more likely to buy more from you and help them buy more from you<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Encourage_your_customers_to_spend_more\"><\/span>Encourage your customers to spend more<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you want to treat your high value customers right, you have to make them feel special. Let them know that they are treated differently, some of the methods our high volume merchants continue to see results in are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Better pricing\/offers<\/strong><\/li>\n\n\n\n<li><strong>Create scarcity<\/strong><\/li>\n\n\n\n<li><strong>Add free shipping<\/strong><\/li>\n\n\n\n<li><strong>Create urgency<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Going_to_the_next_level_with_BYG_Post_purchase_upsell_offers\"><\/span>Going to the next level with&nbsp;<a href=\"https:\/\/apps.shopify.com\/post-purchase-offers-2\" target=\"_blank\" rel=\"noopener\">BYG Post purchase upsell offers<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After interacting with Shopify merchants for years, we\u2019ve come up with the perfect solution that helps you increase your Customer Lifetime Value. The best part? It runs on autopilot and once configured, can keep making you additional sales without you spending time on it every week. Here is how it works:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>You create your&nbsp;<a href=\"https:\/\/apps.shopify.com\/post-purchase-offers-2\" target=\"_blank\" rel=\"noopener\">Post purchase campaigns<\/a>&nbsp;using our eligibility criteria to target high value customers by their LTV<img decoding=\"async\" src=\"https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=3840&amp;q=75\" srcset=\"https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=640&amp;q=75 640w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=750&amp;q=75 750w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=828&amp;q=75 828w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=1080&amp;q=75 1080w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=1200&amp;q=75 1200w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=1920&amp;q=75 1920w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=2048&amp;q=75 2048w, https:\/\/postpurchase.deals\/_next\/image?url=%2Fimages%2Fblog%2Feligibilty-criteria-for-post-purchase-offers.png&amp;w=3840&amp;q=75 3840w\" alt=\"eligibilty-criteria-for-post-purchase-offers\"><\/li>\n\n\n\n<li>You specify the offer for that customer segment.<\/li>\n\n\n\n<li>That\u2019s it!<\/li>\n<\/ol>\n\n\n\n<p>Now&nbsp;<a href=\"https:\/\/apps.shopify.com\/post-purchase-offers-2\" target=\"_blank\" rel=\"noopener\">BYG<\/a>\u2018s campaigns will keep on running and every time a high LTV (&gt; $5200) customer places an order, they will get their special offer created just for them! Also when other customers buy more and graduate to that LTV, they will automatically start seeing those VIP offers! without you ever have to change anything!<\/p>\n\n\n\n<p>BYG is now live on the&nbsp;<a href=\"https:\/\/apps.shopify.com\/post-purchase-offers-2\" target=\"_blank\" rel=\"noopener\">Shopify App Store<\/a>&nbsp;and we are onboarding the first 50 stores for free! Once we\u2019ve received 50 stores, we\u2019d change to paid only plans. But existing stores will be grandfathered and will get the free subscription for life!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Customer Lifetime Value or LTV or CLV is an incredibly valuable metric for your Shopify stores. It\u2019s used to calculate the long term value of a customer.<\/p>\n","protected":false},"author":1,"featured_media":260,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","footnotes":""},"categories":[4,12],"tags":[16],"class_list":["post-11","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-byg-help","category-guides","tag-customer-lifetime-value"],"uagb_featured_image_src":{"full":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b.jpg",1024,1024,false],"thumbnail":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b-150x150.jpg",150,150,true],"medium":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b-300x300.jpg",300,300,true],"medium_large":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b-768x768.jpg",768,768,true],"large":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b.jpg",1024,1024,false],"1536x1536":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b.jpg",1024,1024,false],"2048x2048":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b.jpg",1024,1024,false],"mailpoet_newsletter_max":["https:\/\/postpurchase.deals\/blog\/wp-content\/uploads\/2023\/01\/3466591f-2ac2-4532-9854-45e3fc19fe5b.jpg",1024,1024,false]},"uagb_author_info":{"display_name":"Tim","author_link":"https:\/\/postpurchase.deals\/blog\/author\/abhinav\/"},"uagb_comment_info":53,"uagb_excerpt":"Customer Lifetime Value or LTV or CLV is an incredibly valuable metric for your Shopify stores. It\u2019s used to calculate the long term value of a customer.","_links":{"self":[{"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/posts\/11","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/comments?post=11"}],"version-history":[{"count":6,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/posts\/11\/revisions"}],"predecessor-version":[{"id":262,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/posts\/11\/revisions\/262"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/media\/260"}],"wp:attachment":[{"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/media?parent=11"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/categories?post=11"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/postpurchase.deals\/blog\/wp-json\/wp\/v2\/tags?post=11"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}