If your business is plateauing, then you can make these assumptions and you can do this math about your business. A lot of people don't know what the LTV is because again, they're probably not going to know what that number is. So we say, okay, well, a thousand dollars, remember, do, do,. do, do,Do, do,do, do, times our margin percentage, right? I didn't put the margin in here. Let's just say it's 80%, right? Times 80%. And we divide it by chart, which is 10%, right? Which means that we're going to make $8,000 per customer, all right
It’s all about understanding the formulas. Today, Alex (@AlexHormozi) talks about the importance of understanding the two fundamental equations of business to make informed decisions. He also emphasizes the need to know the number of new sales per month and lifetime gross profit per customer.
Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.
Timestamps:
(1:05) - Fundamental equation: number of new sales or sales velocity
(2:38) - How to calculate lifetime gross profit per customer
(7:13) - Equilibrium point is where we level out
(9:08) - Cost to acquire a customer
(10:10) - 3:1 LTV to cap ratio or greater is necessary for growth
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(This episode is a re-run. Original airdate was November 16, 2021)