Customer lifetime value (CLV)
Customer lifetime value is the revenue, or the margin, that one customer brings a store across all the orders they place.
How it works
A customer’s value is the first order plus every later one. In a store without subscriptions nobody announces they have stopped buying, so CLV is either added up from past orders or forecast. Counted on margin rather than revenue, it shows the money left to pay for winning the customer, so it is set against customer acquisition cost (CAC).
By default, Google Ads bidding values each order at its conversion value, not a customer’s future orders. A store can add its estimate of them to a new customer’s first purchase with the new customer acquisition goal, or build it into LTV-adjusted ROAS targets. There is no single benchmark: it depends on category, margin and purchase frequency.
Formula
Average order value × orders per customer × margin
Ways to calculate
- From past orders. Klaviyo’s historic CLV totals a customer’s previous orders, net of refunds and returns (Understanding Klaviyo’s predictive analytics).
- By formula. Shopify multiplies average order value by purchase frequency and average customer lifespan (What Is Customer Lifetime Value? How to Calculate CLV (2026)).
- By prediction. Klaviyo’s predicted CLV is a model’s estimate of spend over the next year. It requires 500 customers with orders and 180 days of order history, among other conditions.
Where you see it
In Google Ads reporting, new customers’ lifetime conversion value includes the extra value the store entered in the new customer acquisition goal. That extra value is the store’s own estimate.
Example
Example store, not client data.
The tableware shop’s average order value is 600; its customers place 1.6 orders each over two years. CLV on revenue = 600 × 1.6 = 960. At a 35% margin, CLV on margin = 960 × 0.35 = 336. Against an ad-only CAC of 222, 336 − 222 = 114 is left for delivery, fees and profit.
Not to be confused with
- Average order value — revenue from one order. CLV adds up all of a customer’s orders.
Right and wrong readings
- Wrong: “CLV is 960, so a new customer can cost up to 960 in ads.” Right: 960 is revenue; the cost of goods takes 624 of it, leaving 336.
Sources
- What Is Customer Lifetime Value? How to Calculate CLV (2026) — Shopify: the CLV formula. Checked 2 October 2026.
- Understanding Klaviyo’s predictive analytics — Klaviyo: historic and predicted CLV. Checked 2 October 2026.
- Metrics and Lifecycle goals — Google Ads API: the metric, value added to a first purchase. Checked 2 October 2026.