How LTV works
LTV is the merchant's perspective: over the full lifetime of a customer, how much money will they spend with us? Two simplified formulas cover most cases:
- Transactional businesses:
LTV = AOV × Purchase Frequency × Customer Lifespan - Subscription businesses:
LTV = ARPU × Average Months Retained
A SaaS company charging $50/month with average retention of 18 months has an LTV of $900 per customer. A meal-kit subscription at $80/month with 6-month retention has an LTV of $480. An e-commerce brand with $60 AOV, 4 purchases per year, and a 2-year customer lifespan has an LTV of $480.
Why LTV matters to affiliates
Affiliates almost never see the LTV number directly — but it controls almost everything:
- It sets the CPA payout ceiling. If a customer is worth $200 in lifetime revenue, the merchant can pay $50 CPA and still profit. If LTV is $20, the math doesn't work — they can only pay you a few dollars per sale.
- It determines whether RevShare beats CPA. On a high-LTV product, RevShare can pay 3-10× what a one-time CPA would. On low-LTV products, the math flips: take the CPA upfront.
- It explains why some programs fail and others compound. A program with churning customers will quietly cut commissions or scrub conversions. A program with sticky customers can afford to keep affiliates happy for years.
LTV ranges by category
Rough LTV bands by vertical, useful for comparing affiliate program economics:
- Retail / Amazon-style products: $50–$300 per customer
- Subscription consumer (meal kits, beauty): $200–$800
- Online courses / info products: $100–$2,000+ depending on continuity
- Consumer SaaS (B2C apps): $200–$1,500
- B2B SaaS (small business): $1,000–$10,000
- B2B SaaS (mid-market & enterprise): $10,000–$200,000+
- Finance & credit cards: often $200–$5,000+ over the relationship
- Insurance: $500–$5,000+ per policyholder
The highest-LTV programs are where the smartest affiliates concentrate, even if conversion volume is lower.
The LTV:CAC ratio
The standard SaaS metric: LTV ÷ CAC (customer acquisition cost). A healthy SaaS business sits at 3:1 — for every $1 spent on acquiring a customer, they return $3 over the lifetime.
For affiliates running paid traffic, the same principle scales down. Your "CAC" is the ad spend to land one buyer. Your "LTV" is the total commission earned over the affiliate cookie window plus any RevShare tail. If commission per sale is $30 and your blended CAC is $10, you're at 3:1. If RevShare adds another $40 over six months, you're at 7:1 — and now you can outbid every CPA-only affiliate in the auction.
How to use LTV thinking when picking offers
Three questions to ask before joining a program:
- What's the average customer lifespan? Programs with 12+ month retention are where RevShare commissions get paid for years.
- Is the cookie window long enough to capture LTV? A 7-day cookie on a product whose customers research for 3 weeks loses you most of the commissions.
- Do they offer recurring or one-time payouts? One-time is fine on low-LTV products. On high-LTV ones, accepting CPA when RevShare is available is leaving money on the table.
The Offers Playbook walks through exactly how to evaluate this trade-off across program types.