Win the second order. Then the third.

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Getting a customer to place a first order is expensive. Getting that same customer to come back is where the money, and the margin, is made. This guide covers four things:

What LTV is. How to calculate it. How to find it in Shopify. And ten brands that built loyalty on purpose, each with the one idea you can borrow and a link to where we found it.

You can read it straight through, or use the contents section to jump to the case that interests you most.

How do you calculate it?

There are three common methods. Start with the first, graduate to the third.

Method 1 · Simple

Method 2 · Cohort

Take a group of customers who made their first purchase in the same period. Add up their total revenue over a fixed window (for example 90 or 180 days) and divide by the number of customers in the group. Always compare cohorts over the same window.

Method 3 · Profit-based

Subtract product cost, shipping, payment fees and returns from revenue before you divide. This is the number that tells you whether the customer is actually worth keeping.

Then compare it with your customer acquisition cost (CAC). A common rule of thumb is LTV of roughly 3× CAC or more. It is a rule of thumb, not a law.

Try it with your numbers

Prefilled with our worked example. Change any box.

Illustrative example: ₹2,000 × 2.5 orders a year × 2 years = ₹10,000 revenue LTV. At a 40% contribution margin that is ₹4,000 profit LTV. Against a ₹1,200 CAC, the ratio is about 3.3 : 1. Your numbers will differ. The method is what matters.

How to find your customers' LTV on Shopify

Shopify does not hand you one labelled "LTV" number in its standard reports. These steps get you closest.

1. 1Open the cohort reportGo to Analytics › Reports › Customers › Customer cohort analysis. Customers are grouped by the month of their first order, and you can see how many came back.
2. 2Open a cohortLook at average order value, orders per customer and amount spent per customer. Amount spent per customer is the closest thing to LTV in the standard reports.
3. 3Turn on predicted valuesChoose the "Amount spent per customer" metric and switch on the Predicted values toggle. This needs an Advanced plan or above and at least 24 months of order history.
4. 4Check the supporting reportsPredicted spend tier and the Returning customer reports show who is likely to be your best customers and how repeat rate moves over time.
5. 5Convert revenue to profitShopify reports are revenue-based. Subtract product cost, shipping, fees and returns to get a profit-based LTV.
6. 6Optional: add an appApps such as Lifetimely and Everhort add CAC and LTV by product and by channel.

Report names and plan limits change, so check Shopify's help centre for the current version. Shopify only sees its own orders, so Amazon or offline sales are not included. Compare cohorts at the same age.