LTV is why brands can afford commission. Shopify defines customer lifetime value as the total amount a customer spends with a business over the entire relationship, and gives the basic formula as average order value times purchase frequency times average customer lifespan (Shopify). A $40 order looks small. A customer who places that order every six weeks for two years is worth around $700.
That gap is the room in which a commission is paid. A brand that knows its LTV can pay a creator most of the first order’s margin and still profit on the relationship.
Example. A supplement brand has a $45 AOV, customers reorder every month, and the average customer stays eight months, so an LTV of $360. It offers creators 30 % of the first order, $13.50. Even if the first order barely breaks even after the commission, the next seven orders are the brand’s. A brand with no repeat purchase, say a one-time gadget, cannot do this and pays a lower rate. Example numbers, not a benchmark.
When brands use it. The pain this answers: “Why add to my CPA when I can just pay $200-300 a video?” Brands set commission rates and per-order amounts from LTV, not from the first order. High-LTV categories (consumables, subscriptions, software) pay the highest first-order commissions. Some brands pay a smaller share on renewals for a fixed period instead, which ties the creator to the customer’s lifetime.
The creator’s view. Asking a brand “how often do customers reorder” is a way of asking how much the brand can afford. A product people rebuy supports a higher commission or a recurring one; a product bought once supports a per-video fee more than a share.