Question 1

What is Customer Lifetime Value (LTV)?

Accepted Answer

LTV is the total revenue a business expects from a customer over their entire relationship. It's calculated as: Average Order Value × Purchase Frequency × Customer Lifespan.

Question 2

What is a healthy LTV to CAC ratio?

Accepted Answer

A ratio of 3:1 or higher is considered healthy. Below 1:1 means you're losing money on customer acquisition. The ideal range is 3:1 to 5:1.

Question 3

How do I calculate CAC?

Accepted Answer

CAC = Total Marketing & Sales Spend ÷ Number of New Customers Acquired. Include all advertising, sales team costs, and marketing tools.

Question 4

How can I increase customer LTV?

Accepted Answer

Strategies include: loyalty programs, upselling/cross-selling, improving retention, subscription models, personalized marketing, and excellent customer service.

Question 5

Why is LTV important for ecommerce?

Accepted Answer

LTV helps determine how much you can afford to spend on acquiring customers, predicts long-term revenue, and guides marketing budget allocation.

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