Hey Guys, In Alex's video he talks about this crucial ratio for business growth is LTV (Lifetime Value) to CAC (Customer Acquisition Cost). Understanding this ratio helps in making better decisions, scaling advertising, and increasing profitability. If you are interested I have created a calculator to work this out message me and I'll send it over to you. Key Concept: LTV vs. LTV Gross Profit (0:30 - 1:32) - LTV refers to the total revenue from a customer. - Important to consider LTV Gross Profit, which is the profit after subtracting the cost of goods/services. - Example: $1,000 monthly revenue for five months = $5,000 LTV, but costs must be deducted for accurate gross profit. Understanding CAC (1:32 - 2:30) - CAC is the cost incurred to acquire a customer. - A healthy business aims to have a high LTV to CAC ratio. - Example: A 100:1 LTV to CAC ratio indicates potential for massive scalability. Real-World Example: Facebook Ads Agency (2:30 - 4:40) - Agency with a 5:1 return on ad spend was still losing money. - Breakdown showed their LTV calculation ignored key costs like ad spend and service delivery. - Importance of accurate LTV calculation to avoid losses. Benchmark: Starbucks Example (6:20 - 7:32) - Starbucks' LTV is high due to low CAC and repeat purchases. - Efficient business model allows high scalability and profitability. Improving LTV to CAC Ratio (7:32 - 21:56) 1. Increasing LTV: 2. Decreasing CAC: Case Study: Service Business with Two Front Ends (12:00 - 16:17) - Example of a hair salon business using a $2,000 course and $15,000 coaching program. - Recommendation: Focus on lower-cost, higher-LTV front-end offer, then upsell premium services. Operational Efficiency and Scalability (16:17 - 19:40) - Example: Glass repair business specializing in shower doors for higher operational efficiency. - Focus on products/services that are easy to sell and deliver, with large market demand.