What is Customer Lifetime Value (LTV)?
LTV = AOV × purchase frequency × customer lifespan × gross margin. It tells you how much you can afford to spend acquiring a new customer.
A real Kenyan example
AOV 1,500 × 12/yr × 3 yrs × 35% GM = KES 18,900 LTV. Max CAC at 3:1 = KES 6,300.
Formula
LTV = AOV × Frequency × Lifespan × Gross margin
Why it matters
Without LTV, marketing is guessing. With LTV, marketing is math.
How Veira helps
Veira tracks AOV, frequency and last-purchase per customer automatically.
FAQs
What is CAC?
Customer Acquisition Cost, what you spend to get a new customer.
Why 3:1?
Covers overhead and leaves profit.
Retention matters most?
Yes, doubles retention doubles LTV.
Without customer accounts?
Survey only. Loyalty programmes attribute purchases.
Does Veira measure?
Yes, via customer accounts on POS.