Customer lifetime value (CLV)

Updated 1 November 2026

Customer lifetime value (CLV or LTV) is the profit or revenue a customer brings over the entire relationship with your business, not just on the first purchase.

A simple formula

CLV = average order value × purchases per year × relationship length in years × margin. Example: £80 × 3 purchases × 4 years × 40% margin gives a CLV of £384 in gross profit.

Why CLV matters so much

If you only look at the first purchase, you often underinvest in advertising. Knowing your CLV tells you which CPA is worth paying. If a new customer brings £384 of gross profit over the years, an acquisition cost of £60 can be very profitable, even if the first order barely breaks even.

Using CLV in online marketing

• Use the new customer acquisition goal in Google Ads with a higher value for new customers
• Upload customer lists with value for lookalike audiences
• Drive repeat purchases with marketing automation
• Judge channels by customer value, not only by ROAS

Digitalman aligns campaigns with the value of your customers. Learn more on our PPC agency page.

Related terms: CPA, ROAS, customer journey, marketing automation, lookalike audience.