Customer Lifetime Value (CLV) is the total revenue a customer generates during their relationship with your Shopify store. Tracking CLV helps you make smarter decisions about marketing, customer retention, and product development. Here’s how to calculate and improve CLV:
Key Metrics for CLV:
- Average Order Value (AOV): Total revenue ÷ number of transactions.
- Purchase Frequency: Total purchases ÷ number of unique customers.
- Customer Lifespan: Average duration of customer relationships.
Formula:
CLV = AOV × Purchase Frequency × Customer Lifespan
Tools to Use:
- Shopify Analytics: Includes features like returning customer rate and cohort analysis.
- Third-Party Apps: Tools like Lifetimely, Predictify, and Lebesgue offer advanced insights.
Ways to Boost CLV:
- Set up loyalty programs (e.g., points-based, tiered rewards).
- Improve store experience (faster checkout, better support).
- Leverage customer reviews for insights and trust-building.
By tracking and improving CLV, you can increase profits by up to 95%. Use Shopify’s built-in tools or third-party apps to get started.
How to Calculate CLV in Shopify
Accessing Sales Data in Shopify
To calculate CLV for your Shopify store, start by gathering your sales data. Head to Analytics > Sales > Revenue and Orders in the Shopify admin panel. Here, you’ll find crucial metrics like total revenue and the number of transactions – everything you need to get started.
Key Metrics for CLV
To calculate CLV, you’ll rely on three main metrics:
| Metric | How to Calculate | Example |
|---|---|---|
| Average Order Value (AOV) | Total Revenue ÷ Number of Transactions | $320,000 ÷ 4,571 = $70 per order |
| Purchase Frequency | Use the "Returning customer rate" from Shopify Analytics | – |
| Customer Lifespan | Total customer lifespans ÷ Total Customers | Average: 2.08 years |
Once these metrics are clear, you can move on to the calculation.
Steps to Calculate CLV
Here’s how to put it all together:
-
Find Average Order Value (AOV):
Divide your total revenue by the number of transactions. -
Measure Purchase Frequency:
Use Shopify’s "Returning customer rate" to determine how often customers make repeat purchases. -
Calculate Customer Lifespan:
Average the total active lifespans of your customers by dividing the total by the number of customers. -
Combine Metrics Using the CLV Formula:
Multiply the three metrics:
CLV = (AOV × Purchase Frequency) × Customer Lifespan
It’s a good idea to revisit and update your CLV calculations quarterly or yearly. Shopify’s analytics tools are a great starting point, but apps like Lifetimely or Lebesgue can simplify the process and provide more detailed insights into customer trends.
"Increasing customer retention by just 5% can boost profits by 25% to 95%."
What Shopify Customer Lifetime Value (CLV) Is & How to Calculate It
Built-in Shopify CLV Tools
Once you’ve calculated Customer Lifetime Value (CLV), Shopify offers built-in tools to provide deeper insights and create targeted customer segments.
Shopify Analytics CLV Features
Shopify’s analytics dashboard helps you track CLV effectively. One standout feature is Customer Cohort Analysis, which groups customers by their first purchase date to uncover buying patterns over time.
Here are some key metrics available in the dashboard:
| Metric | Description |
|---|---|
| Returning Customer Rate | Percentage of customers who make repeat purchases |
| Customer Cohort Data | Insights into purchase patterns based on acquisition date |
| Total Spend per Customer | Total value of all purchases made by an individual customer |
These tools don’t just track data – they help you identify trends and opportunities for better customer segmentation.
Customer Groups by CLV
Shopify’s segmentation tools let you filter customers based on their CLV, making it easier to create targeted marketing campaigns. To get started, navigate to Customers > Customer Lists, create a new list, apply filters like Total Spent and Order Count, and save your segment.
Here’s how you can use segmentation to personalize your marketing:
| Customer Segment | Description | Marketing Focus |
|---|---|---|
| High-Value | Top spenders with the highest lifetime value | Offer VIP rewards and exclusive deals |
| Mid-Tier | Customers with steady but moderate spending | Focus on loyalty programs and incentives |
| New Customers | Recently acquired or infrequent buyers | Promote onboarding offers and first-purchase discounts |
While Shopify’s tools cover the basics, you may need additional third-party apps for deeper insights and predictive analytics to take your strategy further.
External CLV Tools and Services
Third-party tools can enhance Shopify’s analytics with advanced customer insights and predictive features. These solutions are designed to boost customer retention and revenue growth. Below, you’ll find some specialized services and top apps that can expand your store’s capabilities.
E-commerce Dev Group
E-commerce Dev Group helps integrate advanced CLV tools into Shopify. Their services include optimizing store performance, integrating custom apps, conducting store audits, and providing training to make the most of CLV tools. They aim to ensure smooth implementation and actionable insights.
Top CLV Apps for Shopify
Several apps go beyond Shopify’s built-in CLV tracking. Here’s a comparison of some of the most popular ones:
| App | Key Features | Monthly Cost | Best For |
|---|---|---|---|
| Lifetimely | • Cohort analysis • Predictive modeling • Customer segmentation |
$19-$79 | Stores of all sizes |
| Lebesgue | • Market analysis • AI-powered insights • Competitive benchmarking |
$19-$79 | Small to medium stores |
| Predictify | • Inventory management • CLV forecasting • Automated tracking |
$19.99 | Small to medium stores |
| EigenAI | • Machine learning • Churn prevention • Advanced analytics |
Free-$80 | Enterprise stores |
- Lifetimely: Offers tools like cohort analysis and predictive modeling, making it great for targeted marketing.
- Lebesgue: Combines CLV tracking with market analysis, helping stores benchmark against competitors.
- Predictify: Links inventory management with CLV forecasting, which helps improve stock planning.
- EigenAI: Uses machine learning to reduce customer churn, making it perfect for complex, large-scale stores.
These apps cater to different store needs, from small businesses to enterprise-level operations, offering a range of features to improve customer lifetime value tracking and analysis.
5 Ways to Increase CLV
Once you’ve calculated CLV, the next step is figuring out how to improve it. Here are some practical strategies to help you do just that.
Setting Up Loyalty Programs
Loyalty programs are a great way to keep customers coming back and spending more. Tools like Smile.io or Loyal make it easy to automate rewards and track how engaged your customers are.
| Program Type | Benefits | Ideal For |
|---|---|---|
| Points-based | Customers earn points for purchases | Frequent purchases |
| Tiered rewards | Exclusive perks at different levels | Premium products |
| VIP program | Early access and special offers | High-end brands |
Improving the Store Experience
Loyalty programs are just the beginning. Enhancing every interaction with your store can make a big difference in CLV.
Checkout Optimization
- Simplify the process to make it quick and easy.
- Reduce the number of fields customers need to fill out.
- Offer guest checkout options.
- Enable one-click purchasing for convenience.
Boosting Performance
Make your site faster by compressing images, optimizing themes, ensuring mobile-friendliness, and improving server response times.
Customer Support
- Add live chat to assist customers in real-time.
- Clearly outline return policies to build trust.
- Provide automated updates on orders.
- Respond to inquiries quickly to keep customers happy.
Leveraging Customer Reviews
Customer reviews can be a goldmine of insights for improving CLV.
Managing Reviews
- Use automated tools to gather and manage reviews.
- Encourage customers to leave detailed feedback.
- Track satisfaction levels to spot trends.
- Address negative feedback quickly and transparently.
- Share how you’re acting on customer suggestions.
Using customer feedback wisely can strengthen loyalty and encourage repeat purchases.
Summary
Tracking Customer Lifetime Value (CLV) is key to boosting profitability. In fact, improving CLV can increase profits by as much as 95%, making it a metric every e-commerce business should prioritize.
To understand and improve CLV, focus on these three main areas:
| Component | Description | Impact |
|---|---|---|
| Shopify Analytics | Shopify’s built-in CLV tracking and cohort tools | Supports basic customer segmentation |
| External Tools | Apps like Lifetimely ($19–79/month) and Predictify ($19.99/month) | Offers advanced insights and forecasting |
| Customer Experience | Enhancing store usability, loyalty programs, and review systems | Encourages repeat purchases and retention |
Shopify’s native tools provide foundational features like customer grouping and basic reporting. For deeper insights, apps like Lifetimely and Predictify offer capabilities such as predictive modeling and cohort analysis. Meanwhile, improving customer experience through loyalty programs and streamlined store design helps retain customers and boost revenue.
Specialized apps also bring advanced features to the table, such as:
- Predictive modeling
- Cohort analysis
- Inventory management tailored to customer behavior
To get the most out of CLV tracking, combine data from analytics tools with customer feedback. This mix of quantitative and qualitative insights will help you fine-tune your strategies and deliver more value to your customers.
For quick guidance on viewing CLV in Shopify, check out the FAQs below.
FAQs
How to see customer lifetime value in Shopify?
Here’s a quick guide to finding customer lifetime value (CLV) in Shopify:
| Step | Action | Formula |
|---|---|---|
| AOV (Average Order Value) | Go to Analytics and divide total revenue by the number of transactions | Total Revenue / Number of Transactions |
| Purchase Frequency | Divide total purchases by the number of unique customers | Total Purchases / Unique Customers |
| Customer Lifespan | Calculate the average duration of customer relationships | Sum of Customer Lifespans / Total Customers |
| CLV | Multiply AOV, purchase frequency, and average lifespan | AOV × Purchase Frequency × Lifespan |
For a detailed explanation, check out the ‘How to Calculate CLV in Shopify’ section.
To get basic metrics, use Shopify Analytics and look for the "Returning customer rate" in the Analytics dashboard. If you need more advanced insights, tools like Lifetimely or Predictify can help you dive deeper into customer behavior and value trends.
These insights can guide better decisions to improve customer retention and boost store profitability. For more details, refer to the earlier sections of this guide.
