The most important ratio in business

Author

Josh Crouch
September 06, 2024

At an intimate closed-doors event in Las Vegas this summer - an event so private the attendees were not even allowed to take pictures or videos - a friend of mine got to learn from and talk personally with Alex Hormozi & his team for a day…

If you’re not familiar with Hormozi, he’s one of the biggest entrepreneurs in the world right now and has written two best-selling books:

  • $100M Offers

  • $100M Leads

At this private event, my friend and the other attendees received a masterclass on the most important ratio in business. A single ratio that Hormozi and his team give large credit to for their massive scale.

They say if you can get this metric to 10:1, you’re prepared for big scale.

(100:1 is where Hormozi made most of his wealth)

The ratio?…

LTV:CAC

Lifetime Value compared to Cost to Acquire a Customer.

If you can get your customer lifetime value to be 10x the size of your cost to acquire that customer, you have a business built to scale.

In a previous email, I encouraged you to stop overemphasizing one-time average ticket value and start focusing more on lifetime value by following up with your leads & customers more.

I once heard Josh Kelly of Parker & Son’s Plumbing & Heating say “you should treat every customer like they will eventually be worth $10,000 to you.”

Wise words.

If you’re serious about this, one of the quickest ways to start working on your lifetime value is by growing your organic growth channels.

The LTV:CAC ratio on organic marketing is incredible. I mean… it’s almost free.

Josh Crouch

Relentless Digital