The Game with Alex Hormozi The Pie Equation | Ep 254
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Nov 27, 2020 Discover the powerful 'Pie Equation' that can transform how you view your business metrics. Learn to calculate the lifetime value of customers and predict business sustainability. Delve into the significance of customer inflow and outflow, and how to maximize profits while retaining clients. Alex shares invaluable insights from his journey to a billion-dollar net worth, focusing on practical tools every entrepreneur needs to thrive.
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Hypothetical Max
- The Pi Equation, inflow divided by outflow, helps determine a business's hypothetical maximum size.
- This helps assess growth potential based on customer acquisition and churn.
Lifetime Value
- Calculate customer lifetime value (LTV) with the Pi Equation: average revenue per client per month divided by monthly churn rate.
- Knowing LTV informs marketing spend and customer acquisition cost.
Growth Tracking
- Track business growth or shrinkage by comparing customer inflow with outflow.
- Combine LTV and inflow to project potential monthly revenue.
