The Game with Alex Hormozi The Number That Will Scale Your Business More Than Anything Else | Ep 739
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Jul 19, 2024 Discover the magic of the LTV:CAC ratio and why it's vital for your business's success. This episode explains how to decipher lifetime value and customer acquisition costs, using examples from major brands like Starbucks. Learn impactful strategies to enhance these metrics and unlock predictable growth. Understand common misconceptions and the importance of accurate profit margin calculations. Get ready to transform your business into a powerhouse that can generate consistent revenue!
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LTV:CAC Importance
- The LTV:CAC ratio is crucial for business growth, revealing opportunities and scalability.
- A high ratio allows for reinvestment and rapid wealth creation, unlike traditional investments.
ROAS vs. Profitability
- Alex Hormozi recounts a Facebook ads agency boasting a 5:1 ROAS while losing money.
- Their mistake: calculating LTV based on revenue, not gross profit, ignoring delivery costs.
Lifetime Gross Profit
- Focus on lifetime gross profit (LTGP), which subtracts delivery costs from revenue.
- LTGP represents the profit available for reinvestment or personal use, driving growth.