The Game with Alex Hormozi LTV vs CAC: The Ratio That Runs Everything | Ep 928
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Jul 23, 2025 Dive into the crucial LTV to CAC ratio, the heartbeat of business success! Discover how understanding customer lifetime value and acquisition costs can supercharge your growth. Learn practical strategies to maximize customer value, such as effective upselling techniques and optimizing cash flow. Alex shares his real-world insights from building a vast portfolio, emphasizing the importance of refining your business model rather than blaming outside factors for setbacks. Unlock the secrets to sustainable profitability!
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Crucial Business Ratio: LTV to CAC
- The most important business concept is the ratio of how much you make from a customer versus how much it costs to acquire one (LTV to CAC).
- Managing this ratio and cash payback period drives growth and scaling speed.
Fitness Challenge Cash Flow Example
- Alex shares how his first paid ad for a fitness challenge cost $5 per lead with a 1 in 5 conversion rate on a $500 product.
- This resulted in a $25 CAC and $400 gross profit, showing highly profitable cash flow mechanics.
Speed of Cash Conversion Matters
- The speed of cash conversion strongly affects how fast you can reinvest and grow your business.
- Immediate payback allows multiple compounding cycles within a year versus waiting years for returns.