LTV is calculated by multiplying average order value by purchase frequency by customer lifespan, then often adjusting for gross margin. For a D2C brand selling at €60 AOV, with customers buying 4× per year over 3 years at 60% gross margin, LTV is €60 × 4 × 3 × 0.6 = €432.
LTV matters because it's the ceiling on what you can spend to acquire a customer (CAC) and still grow profitably. A common heuristic is LTV:CAC of 3:1 or better.
In e-commerce, voice-channel reactivation and post-purchase NPS can both lift LTV directly. By extending lifespan and increasing reorder frequency.