The 2025 LTV Playbook

LTV has never mattered more than it does right now.

The game is getting harder, and blind “pump and scale” doesn’t work anymore. In a growth market, you can get away with anything. When things start getting tighter, like they are now, only brands with solid fundamentals (like strong LTV) stick around.

In a down market, just “staying in the game” is a major win. In the long-term, online shopping is not going anywhere. We’re not going to stop buying things, and we’re not going to stop buying them online.

That means the brands that are able to weather the storm will come back to a greater share of the pie once the market rebounds.

LTV is a growth metric, but it’s also a survival metric. And increasing it should be your main goal.

In this week’s newsletter, I’m sharing seven practical ideas to help you think about LTV the right way — so you’re not just playing the game, you’re positioned to win it.

On the Pod

Last week we had Devyn Merklin on the Retention Edge Podcast.

Devyn runs X Scale, a growth agency focusing on subscription businesses.

He had some great takes on choosing the right agency, the simple formula behind retention, and why copying & pasting other brands’ playbooks is killing your business.

Check it out below (or go to YouTube or Spotify to get it direct).

1. Retention > Reacquisition: LTV Starts on Day 1

Acquiring a customer is expensive. So you’d rather not have to do it twice.

But the fact is, if you’re not investing in retention, you’re investing in reacquisition… which costs a lot more.

Winning back lapsed customers means spending on discounts, which crush your margins, or worse — paying all over again to capture them through paid channels.

Retention begins the second a customer checks out. Don’t think of it as the end of the customer’s journey. Think of it as the end of the first act.

What this means tactically:

• Set up a “Post-Purchase Window” (Day 0–30) as a high-leverage moment: welcome emails, usage education, proactive support, social proof reinforcement.

• Map out “Moments of Value” and automate nudges: when the package ships, arrives, and gets used.

• Reorder flows should begin before customers “need” the product again. Anticipation beats reaction.

Acquisition lights the match. Retention keeps the fire going. Don’t let it burn out.

2. Think Deeper than "Average LTV"

Average LTV is a trap. It smooths over what actually matters.

You need to get granular — because LTV is never uniform across your business. Break it down by:

• Cohorts by SKU (e.g., flagship vs. accessory)

• Acquisition source (e.g., Meta vs. YouTube vs. Organic)

• Entry offer (discount vs. bundle vs. full price)

• Time period (Q4 buyers often behave differently)

Once you’ve got that LTV breakdown, you can strategically attack each cohort, segment, channel or offer.

You’ll find that some areas deliver much higher LTV than others. That’s normal.

You’ve got two clear plays:

• Lift the stragglers: Improve the low-LTV segments with better onboarding, post-purchase, and product experience.

• Scale the winners: Push harder on channels and offers that yield higher payback and better retention. (App users are a classic example.)

Both paths are valid. But in my experience? Scaling what’s already working is faster, cheaper, and more compounding than trying to fix what's broken.

3. Churn & LTV

In SaaS, churn is the north star. You can mess up a lot — UI, pricing, even product — and still survive if churn is low.

In ecom, it’s not quite the same. But there’s still a major difference between high-churn and low-churn brands.

If 70%+ of your customers are one-and-done, you don’t have a business. You have a leaky funnel, and you’re paying to refill it every month.

Most ecommerce brands (outside of subscription) don’t talk about churn. But they should. Because your churn rate directly shapes your LTV, and whether you’re building something sustainable.

Here’s how to measure it:

• Passive churn: Customers who ghost you — no reorders after 90, 180, or 365 days.

• Active churn: Subscription cancelations. Track by timing and reason codes if possible.

The higher your retention rate, the higher your LTV. And with CAC rising across the board, that delta is everything.

So treat every post-purchase interaction as a chance to prevent churn:

• Educate on product use and benefits.

• Create usage nudges and reorder prompts before they’re “needed.”

• Reinforce value with social proof, personalization, and proactive CX.

Because LTV isn’t a one-time metric. It’s a reflection of how well you keep your promises.

4. LTV is Margin-Bound

Not all revenue is equal. A customer who spends $300 over 6 months might look great on paper. But if you’re selling at 20% margin with high returns, that LTV is a mirage.

Top-line metrics can fool you. Especially when they’re not tied to actual profit.

If you’re not measuring LTV correctly, you’ll end up scaling what looks good on a dashboard… right up until your accountant calls with bad news.

Here’s how to ground your growth in real numbers:

• Track CM-LTV (Contribution Margin LTV) — not just revenue-based LTV.

• Subtract reality: refunds, returns, COGS, shipping, pick/pack, and any platform fees.

• Break it down by channel + promo: How does Meta at a 30% discount perform vs. YouTube at full price? Same LTV? Not even close.

This is how real operators think: optimize for profit per customer, not just revenue per customer.

Because the goal isn’t to sell more stuff. It’s to build a business that actually makes money when it does.

5. LTV Is a Function of 3 Inputs

Whenever LTV feels stuck, zoom out and go back to the fundamentals. Because LTV isn’t magic — it’s math:

LTV = AOV × Purchase Frequency × Gross Margin

That’s your entire playbook, in one line.

So if you’re struggling to figure out how to grow LTV, think instead about:

• AOV: Increase with bundling, upsells, and cross-sells.

• Purchase Frequency: Use replenishment flows, seasonal triggers, subscriptions.

• Margin: Improve with COGS reduction, better fulfillment, lower returns, or scaling high-margin channels.

Even modest gains compound fast. A 10% lift in each input can drive a 30%+ increase in LTV.

And looking at it by the metrics that actually drive LTV

This framework gives you clarity when things feel messy.

If you’re trying to grow LTV but don’t know where to start? Start here.

6. The Retention Formula: Trust × Availability

This one’s simple but powerful. Devyn Merklin shared this on our latest podcast episode, and I loved it for its simplicity.

Devyn’s “Trust × Availability” framework breaks retention into three stages:

1. Sow the initial seeds of trust: give customers information that helps them understand their problem (social media, email, etc, which makes them feel heard).

2. Solve the customer’s real problem: give them the product that works; that solves their problem.

3. Stay available (email, SMS, app, content, community, customer support). It’s just about not disappearing. Keep the relationship going.

This is the formula behind almost all successful brand-customer relationships. Ecom or otherwise.

It’s a longer route than just throwing money at ads to brute force a relationship. But that’s why it wins.

7. Retention is Great… But Profit & Cash Flow Comes First

Retention is a luxury if you can’t survive the next 3 months. LTV only works as a strategy if:

• You can acquire profitably

• Your cash conversion cycle supports the payback timeline

If your payback period is 120+ days, but you have to pay Meta and suppliers in 30, you’re in trouble. This is why early-stage brands should focus on:

• High-margin SKUs

• Short payback windows (under 60–90 days)

• Clear path to reorder (vs. speculative long-term retention)

LTV is the long game. It’s crucial. But as much as I like to tout it as the #1 north star metric, it’s not as important as making enough money right now to maintain the cash you need to keep the business running.

Be profitable first. But once you’ve got that, retention & LTV is how to take the next step.

Quick Hits

Temu’s Back

Temu just started running ads on Meta again.

The giant had pulled back on ads a couple of months ago, amidst the tariffs + de minimis madness.

Now they’re back in the game — which may have implications for your ad reach.

Read more →

Prime Day Signals

A few takeaways from Prime Day 2025.

Even if you’re fully DTC, it’s still worth paying attention to what’s happening on Amazon; because your buyers are Amazon buyers too.

Notable? A major surge in traffic from AI search engines, plus solid adoption of Amazon’s agentic AI shopper.

Read more →

How to Get the Most Out Of AI Deep Research

Deep research, I’ve found, is one of the most powerful uses for AI right now. Every LLM has a “deep research” mode, and you can get super personalized with this by setting up your own agentic workflows, as well.

Deep research has huge potential for ecom brands; whether you’re researching consumer trends or putting together a GTM plan for your new product line. But at the end of the day, it’s a tool, and you’ve got to use it right.

If you’re interested in this kind of thing, I recommend checking out this article. There are some great tips on how to choose the right tool for the right job, and how to get higher-quality outputs.

Read more →

Visibility is Now Your Most Important Marketing Metric

With GEO and AI search taking over, success metrics are changing.

Traffic doesn’t tell the whole picture anymore. People don’t scroll, click, and learn more on your site. They get all the info they need in one place… and if you’re not invited to the party, you may as well be invisible.

Read more →

AI Fueling $100 Billion Social Commerce Boom

Social commerce keeps trending up. People love TikTok Shop, and brands that are riding this wave are seeing serious growth right now.

This article dives deeper into the social commerce boom (it’s driving amazing results for certain categories in particular, such as beauty & cosmetics), and how AI is at the core of everything.

Read more →

Breaking Down Chat GPT Prompts

This is a really good breakdown & comparison of a Chat GPT shopping prompt vs a Google search for the same thing.

The awesome thing about Chat GPT is it will literally tell you how it decided to show the results it showed. You just have to ask it.

If you want your brand to show up more in Chat GPT (and other LLM searches), start decoding the search results (especially if you’re not showing up) just like this.

Read more →

Perplexity + PayPal

More steps towards an AI-native era for online shopping. Perplexity recently partnered with PayPal, which will let users pay directly from the chat interface, using PP.

Read more →

To Buy or Not To Buy

Yotpo released their annual shopper behavior report; and it’s a must read if you want to stay on top of how people are buying right now — the middle of 2025.

Highlights? The majority of power shoppers (people buying more than once a week) are using AI to assist their shopping journey. Some are already seeing how much more streamlined the shopping experience can be with AI.

• “I give a budget and stores I want to shop at and they provide a detailed list to shop for along with meals for the week.” Lily, 20, New York, US

Check it out below.

Read more →

Tariff Effects

We’re starting to see the implications of this year’s tariff drama come into effect.

It’s hitting ecom brands, and factories as well. Some Chinese manufacturers are shutting down, some temporarily, some for good.

Just a reminder this is a volatile time: and if you’re staying in the game, you’re winning.

Read more →

Saving BarkBox

Great breakdown here of BarkBox’s business and CX, and how they could make a few small changes to turn everything around.

Your brand might not be in the same position, but the takeaways are pretty much universal. In particular:

• Don’t overcomplicate. Make it easy for the customer.

• Don’t brute force customers into the path you want them to take.

Great CX isn’t hacks or complicated strategies. It’s just getting out of your own way.

Read more →

Anti-Algorithm

Social media has been a mess for a while now, and people are starting to react.

Enter the “anti-algorithm” movement. Algorithm fatigue (prioritizing engagement over quality) is leading many people towards smaller, closed communities, to take more control over what they’re being served.

Another good reminder of the value of apps. Your best customers, your loyal fans, want a place to go that filters out the noise, and gives them a more direct connection with the brands they love.

Read more →

That’s all for now.

I’ll be back in touch next week, with more on how successful brands are doing CX and retention right, plus the latest news and content you need to know about in ecom.

If there’s any topic you’d like to see us dive into, for either the newsletter or the podcast, just shoot me a message here.

Until next time,

Pietro and The Retention Edge Team

PS: want to boost retention, revenue and profitability? If so, launching your own app could be the best move you make this year.

See how: go to our website to get a preview of your app for free, or shoot me a DM on LinkedIn to talk about it.