Lifetime Value (LTV) helps merchants understand the long-term value of customers acquired through affiliates. A higher LTV justifies higher acquisition costs and commission rates, making affiliate programs more attractive and competitive.
Affiliates who bring in customers with high LTV are particularly valuable to merchants and may receive preferential treatment, higher commissions, or exclusive promotional opportunities. Understanding LTV helps affiliates focus on quality customer acquisition.
LTV calculations consider factors such as average purchase value, purchase frequency, customer lifespan, and expansion revenue. In SaaS businesses, LTV is particularly important due to recurring revenue models and the potential for account expansion over time.