LTV IS THE MOST IMPORTANT NUMBER IN D2C
Most D2C brands optimise for first-purchase ROAS. The best brands optimise for LTV. A brand with $200 LTV can sustainably pay 4× more to acquire each customer than a brand with $50 LTV — unlocking scale that would otherwise be unprofitable.
THE 3 VARIABLES THAT DRIVE LTV
- Purchase frequency: Highest-leverage variable. One extra repeat purchase can double LTV.
- AOV: Fastest to move with upsells, bundles, and free shipping thresholds.
- Customer lifespan: Slowest to move but most valuable. Win-back flows and loyalty programmes are the primary levers.
WHAT'S INSIDE — PREVIEW
01
LTV = AOV × Purchase frequency × Customer lifespan. Template includes margin-adjusted LTV.
Core LTV formula · Margin-adjusted
02
Max profitable CAC: LTV × (1 ÷ target LTV:CAC ratio). The number you cannot exceed.
Max CAC · Profitability ceiling
03
LTV:CAC benchmark: 3:1 is healthy. Below 2:1 = growing unprofitably. Above 5:1 = under-investing.
3:1 benchmark · Growth health signal
04
12-month vs. 24-month LTV: Project cohort value from early purchase behaviour.
Cohort projection · 12M vs 24M
05
Repeat purchase rate: Most influential variable in LTV. How to improve with Klaviyo.
Repeat purchase · Klaviyo retention
06
LTV by acquisition channel: Facebook vs Google vs organic side-by-side.
Channel LTV · Acquisition mix
07
Subscription LTV: Modified formula for subscription and replenishment brands.
Subscription · MRR-based LTV
08
LTV improvement levers: AOV upsell, email retention, subscription — ranked by impact.
Growth levers · LTV improvement