Hi there,

If there’s one thing we’ve learned working with early and growth-stage consumer brands, it’s this: The difference between a brand that grows and one that just sells is how it maximizes a customer’s lifetime value (LTV). The brands that win long-term don’t just acquire customers, they build relationships that compound over time.

So, what exactly is Customer Lifetime Value? At its core, LTV is the amount of revenues your company can expect to generate from a single customer, for the full time that person remains a customer. Far too often, it’s overlooked.

In today’s newsletter, we break down how the team at Vivaio uses LTV to help brands reach their next stage of growth.

This metric shows the % of orders from repeat buyers, a clear indicator of customer loyalty and brand maturity.

In the early stages, it’s normal for this rate to be low as the focus is on acquisition. But as the brand grows, a higher rate reflects strong customer satisfaction, lower reliance on paid acquisition, and a more sustainable revenue base.

Different industries have different benchmarks for a healthy RCR, which reflect typical customer behavior by category. For example:

The difference often comes down to buying cycles. Beauty products are typically replenished quickly, while furniture or home goods are not.

Once customers begin returning, their value starts to compound. The basic LTV formula looks like this:

So let’s say a customer spends $50 per order, buys 4 times per year, and sticks around for 3 years:

But revenue alone doesn’t tell the whole story. To make smart decisions, you can adjust LTV for gross margin and then compare it to your Customer Acquisition Cost (CAC) to get a clearer view of how profitably your business is operating.

About these two metrics:

Simply multiply LTV by your gross margin % to obtain the Gross-Margin Adjusted LTV - which gives a clearer view of long-term profitability. Comparing this to your CAC is the next step.

What is a good LTV:CAC ratio? Traditionally, consumer brands aimed for around 3 — earning $3 in lifetime value for every $1 spent to acquire a customer. This ratio is lower once adjusted for gross margin, since it already accounts for the cost of goods sold.

At Vivaio, we aim for a higher standard. Since many of our portfolio brands are led by strong creators who manage acquisition effectively, our goal is to operate with an LTV:CAC ratio closer to 4. This ensures customer acquisition spend is not just driving revenue, but doing so profitably and sustainably.

Founders often ask: “How do I grow LTV without spamming customers or constantly discounting?”

Here’s our answer:

1. Start With a Great Product: There’s no substitute. Loyalty starts with delivering something worth coming back for. This is where Vivaio brings value as a strategic partner: we leverage our network of world-class Italian manufacturing partners to help creators bring their product vision to life.

2. Design for the Second Purchase: The second order is where loyalty begins. Use post-purchase flows to build connection and trust. Thank you notes, how-to guides, and repurchase reminders go a long way.

3. Reawaken One-Time Buyers: One-time customers aren’t lost, they’re waiting for the right nudge. Use email flows, early access drops, or “we miss you” offers to re-engage them.

4. Layer Value Over Time: The best LTV brands make staying feel rewarding. That means loyalty perks, refer-a-friend bonuses, member-only drops, community events, subscribe & save options just to mention a few.

One of our partner beauty brands had built a strong acquisition engine, but we saw an opportunity in driving more repeat purchases. While only 12% of customers purchased more than once, they accounted for 23% of total revenue - a signal that loyal customers were highly valuable but underdeveloped.

Vivaio stepped in to help the brand reframe its CRM strategy around lifetime value (LTV).

Rather than chasing more new customers, we helped the brand turn one-time buyers into loyal repeaters, transforming their revenue curve and profitability in just months.

Customer Lifetime Value isn’t just a number. It’s the story of how well your brand builds lasting relationships.

Returning Customer Rate gives you the early signal. LTV shows the compounding effect of trust and repeat behavior. And as this portfolio example shows, even modest improvements in retention can deliver outsized results within months.

👉 At Vivaio, we help brands design for LTV from day one. Because growth isn’t about the first purchase, it’s about every purchase after.