The Game with Alex Hormozi Why LTV's Are Important In Business | Ep 391
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May 19, 2022 Discover the importance of Customer Lifetime Value (LTV) in driving business success. Learn three different methods for calculating LTV and how it can inform strategic decisions. Dive into ways to reduce churn and enhance customer experience, ultimately maximizing revenue. Alex shares insights on achieving substantial monthly income by focusing on customer retention and improving product quality. This episode is packed with actionable tips for entrepreneurs looking to scale their businesses effectively.
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LTV Importance
- LTV (Lifetime Value) is a crucial metric in entrepreneurship.
- It represents the total revenue generated per customer over their relationship with the business.
Calculating LTV
- Calculate LTV using lifetime sales, churn rate, or sales velocity.
- The lifetime method provides an underestimated LTV by dividing total sales by total customers.
Calculating Churn
- Calculate churn by dividing the number of customers lost in a month by the starting number of customers.
- Use the average churn rate to calculate a more accurate LTV.