Why LTV's Are Important In Business | Ep 686

Watch the YouTube video of this episode HERE

"You will know and understand what your cap rate or your hypothetical max is for your business simply by doing the math." Today, Alex (@AlexHormozi) breaks down three primary methods for calculating customer Lifetime Value (LTV) — lifetime earnings, churn rate, and sales velocity — and their impact on strategic business decisions. The discussion emphasizes the importance of LTV in projecting business growth, enhancing customer acquisition strategies, and improving profitability, making it a must-listen for businesses aiming to optimize their growth trajectory.

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.

Timestamps:

(0:54) - Three different ways to calculate LTV

(1:21) - The significance of LTV in business growth

(2:19) - Calculating LTV based on churn

(4:23) - Calculating LTV based on sales velocity

(6:19) - The impact of LTV on business decisions

(10:18) - Strategic business decisions based on LTV

(12:23) - Conclusion: The power of LTV in business scaling

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(This episode is a re-run. Original airdate was on May 19, 2022)