Key E-commerce Metrics: AOV, LTV, CAC and Repeat Purchase Rate

The short answer: four metrics and why they matter

To know whether an online store actually makes money, four numbers are enough:

• AOV (average order value) — how much one order brings on average.
• LTV (customer lifetime value) — how much gross profit one customer generates over the whole relationship.
• CAC (customer acquisition cost) — how much you spend to win one new buyer.
• Repeat Purchase Rate — the share of customers who buy more than once.

Together they answer the key question: does each acquired customer pay off, and when.

Formulas and examples

The numbers below are made up and only illustrate the calculation.

Details that matter:

• Revenue for AOV should exclude cancelled and returned orders, or the figure will be inflated.
• Calculate LTV on margin, not revenue. Revenue-based LTV looks impressive, but comparing it to CAC is meaningless — ads are paid out of profit.
• CAC should include more than ad spend: agency fees, first-order discounts and sign-up bonuses count too.
• The period must be the same and stated for every metric: month, quarter or year.

Which decisions each metric informs

AOV

• A low AOV combined with expensive shipping is a signal to set a free-shipping threshold slightly above your current average order.
• Bundles, "frequently bought together" blocks and cart-page upsells help.
• Make sure AOV growth does not come from discounts that eat your margin.

LTV

• Tells you the maximum you can afford to spend on acquiring a customer.
• Grows through retention: loyalty programs, email and messenger campaigns, good post-purchase service.
• Track LTV by cohorts (customers who joined in the same month) to see how audience quality changes.

CAC

• Calculate it per channel: search ads, social ads and influencers usually have very different CAC.
• If a channel's CAC exceeds LTV, the channel loses money even if it brings plenty of orders.
• Also track the payback period: how many months of customer margin it takes to cover CAC. This matters for cash flow.

Repeat Purchase Rate

• A low rate is a reason to check product quality, delivery speed and the returns experience.
• For replenishable goods (cosmetics, pet food, consumables) this is a core metric: subscriptions and reorder reminders help.
• For infrequent purchases (furniture, electronics) repeat rates are naturally lower — compare against your own history, not other stores.

The key ratio: LTV to CAC

Read the metrics together, not in isolation:

• LTV below CAC — every new customer loses money; do not scale ads.
• LTV roughly equal to CAC — you break even without covering operating costs.
• LTV clearly above CAC — acquisition pays off; you can increase budget on profitable channels.

What counts as "enough" depends on your fixed costs, payback length and available cash, so there is no universal number.

Common mistakes

• Calculating LTV on revenue and comparing it with CAC.
• Dividing the whole marketing budget by all customers, including returning ones — this makes CAC look lower than it is.
• Mixing periods: yearly AOV but monthly CAC.
• Not excluding returns and cancellations.
• Judging LTV of new cohorts too early, before customers have had time to come back.

How to start tracking

1. Set up your analytics to send orders with their value and a customer identifier.
2. Tag ad links with UTM parameters so you know each new customer's channel.
3. Export orders from your CRM or admin panel and calculate the metrics in a spreadsheet once a month.
4. Once the process is stable, move it into a dashboard broken down by channel and cohort.