The Game with Alex Hormozi Money Marketing Ratios | Ep 248
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Nov 6, 2020 Dive into the essentials of business growth by exploring key financial metrics. Discover the relationships between Customer Acquisition Cost (CAC), Lifetime Value (LTV), and gross margin. Learn why having a solid 30-day cash flow is crucial for decision-making. Understand how to evaluate your business's viability with a goal of achieving a 3:1 ratio of LTV to CAC. Get ready to supercharge your understanding of scaling and profitability!
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Three Key Metrics
- Consider the Cost of Acquisition (CAC), Lifetime Value (LTV), and 30-day cash.
- These are key metrics for investment or partnership decisions.
LTV: Gross Profit, Not Revenue
- LTV is the total gross profit, not revenue, over a customer's lifespan.
- This matters because high revenue with low margins can be misleading.
30-Day Cash and CAC
- Aim for 30-day cash to equal or exceed CAC.
- This enables using other people's money via credit lines for customer acquisition.