A good LTV to CAC ratio for a store is one where lifetime gross profit comfortably exceeds acquisition cost, and for most ecommerce brands that means being far more careful than three to one implies. The widely quoted three to one benchmark comes out of subscription software, where revenue repeats monthly by default and marginal cost is near zero. Under those conditions three to one is prudent. Under a store's conditions it can be ruinous.
The problem is not the ratio. It is what people put in the numerator.
Why the software benchmark does not transfer
Three things differ, and each one moves the ratio against you. A software customer pays again every month without being persuaded, while a store customer has to be persuaded to come back at all. Software has almost no cost of goods, so revenue and gross profit are nearly the same number, while a store at a forty per cent margin keeps forty pence in the pound. And software lifetime value is projected over years of contracted renewals, while a store's projection rests on whether people buy a second time, which many of them never do.
Put those together and a store quoting three to one on revenue is often running at closer to one to one on profit, which is to say it is working for nothing.
Use gross profit, not revenue
Lifetime value should be the gross profit a customer produces over their life with you, not the revenue. Take the average order value, subtract cost of goods, shipping you actually pay, payment fees and your expected return rate, then multiply by the number of orders that customer will place. That figure is the money that can pay for acquiring them and for everything else the business has to cover.
Revenue based lifetime value is the most flattering number in ecommerce and the least useful.
The same mistake in its per order form is covered in the note on break even ROAS, where the test is whether acquisition cost sits below the gross profit on the order it buys.
What is a realistic multiple for a store?
It depends almost entirely on repeat purchase rate, which is why the honest answer is that you have to measure your own rather than adopt anybody's. A brand where most customers buy once has a lifetime value close to its first order profit, and its acquisition cost has to sit under that single number. A brand where a third of customers come back twice a year is a fundamentally different business and can pay several times more for the same customer.
Shopify will tell you which one you are without any extra tooling. Customer cohort analysis is one of the reports that carries a benchmark, so you can see your repeat behaviour against stores of your size in your category, which is the same mechanism described here.
How long is a lifetime?
Pick a window you can actually observe and say what it is. Twelve months is the usual honest choice for a store. An unbounded lifetime lets you justify any acquisition cost, because there is always another year of imagined orders to add, and a business can spend itself out of existence on a projection nobody ever checks.
The discipline is to write the window next to the number every time you quote it. Lifetime value over twelve months is a measurement. Lifetime value is an argument.
What we do with it
We hold acquisition cost against twelve month gross profit per customer, and we watch repeat purchase rate as the thing that changes what you can afford. Repeat purchase is the only lever that lowers your break even rather than raising your return, which is why it gets attention earlier than most agencies give it. The email side of that is on measuring email against the store.