[0:00]What's going on everyone? If you've ever struggled to figure out all the different numbers in marketing and figure out what's important, what's not important, what's good, what's bad. Um and you just can't get your stuff to convert or you can't make you can't make sense of all this stuff, then this video is for you. All right. So when I got into marketing, there are so many different numbers, KPIs, CPL, CPC, like CTRs. I like I was I was I had no idea. My head was spinning, I was trying to figure it out. Um and over time, it's kind of like you you start to distill down what are the big buckets of things that matter? And then once you discovered those three are, then you can open up the drawer and look for more details and whatnot. And so what I want to do is outline the three numbers that I'm looking at at a high level in any business that I'm looking to invest in or I'm looking to partner with or whatever. All right. And I'll show you the relationship between them that I am looking for and hopefully that will help you for your own business. So the first number is what my cost of acquisition is, which I call CAC. All right. That's not I call it, that's what people call it, right? Cost of acquisition or CAC, right? So how much does it cost me to acquire a customer? Now, this number should include everything. So that means your sales commission, that means your ad spend, it means the marketing team that created the increase, whatever. Your software that's associated with it, it's all of the costs of acquisition put together. That is CAC. All right. Number two is LTV. Now, I define this a little bit differently, um because I think it's important. So LTV is not the total revenue that I'm going to get over the life span of a customer, but for me, it's the total gross profit that I'm going to get over the life span of a customer. So let me give you a simple example. So if I were selling meals, for example, or selling food, um and my cost of uh of of delivering food, let's say was uh nine bucks. All right. And I know that someone's going to order $700 a month of food and it cost me $9 and I'm selling it for 10. All right. That means I only have a 10% margin on gross profit, right, gross profit, uh on the meal sold. And so $700 um of food over the lifespan of a customer might sound like a huge LTV. But the reality is, it's actually only $70, which is what I'm going to make on that customer. Right? And so the reason I use gross profit is that if I were doing marketing for food, for example, and uh, you know, my marketing was like, hey, man, we're spending $200 to acquire a customer who's going to pay us $700. I would be like, that's horrible because we only make $70 on the $700, which means that we're spending $200 to make $70. Right? And that's why it's so important to understand the gross margin of your business, right? Because this is where all of your decisions should be based off of, all right, it's on that margin. The third number is what I call 30-day cash, all right? Now, in the formal business world, the fancy world, they call this, they they use a different uh metric, they call it payback period, which is how long does it take you to pay back your cost of acquisition? Right? Because inherently, whenever you're getting a customer, there's usually a cost that's put into it. And that cost might there's always a cost, you're either paying in time or you're paying in money or you're paying in someone else's time, which is then payroll hours, but there's always a cost, right? There's a cost of requiring a customer, and then you have uh the payback period. I use 30-day cash for this reason.

[3:26]I think that virtually every business can gain access to a credit line, which means a credit card or an Amex or even a bank can loan you, whatever. Um where over 30 days they can they can use that money and then pay it back virtually interest-free. Credit cards are all interest-free for the first 30 days, all right, at least all the ones that I'm aware of, right? And so what that means is that if I can, if I can know what my 30-day cash value is, and if I can get that to be at least equal to my CAC, then it means that I can use other people's money to acquire customers. And this is why we've had such big growth in the companies that I've had is that I don't actually need to use my own money to acquire customers. I can use someone else's money, acquire them, get the money in the first 30 days to pay back the debt, and now I'm left over with customers and ideally customers and profit that I can still continually upsell into continuity. If you can understand the words that I'm saying right now, you'll understand how big of a deal this is. All right. So what are the relationships that I'm looking for? So for me, for LTV, like if I'm looking at it because there's there's different relationships that I need to draw here and when I'm looking about how the marketing's working. All right. So my LTV to CAC ratio, I want to always have greater greater than three to one. All right. Three to one is the number that I am looking for, which means that I need to be able to generate more than three times the cost of acquisition in gross profit. All right. So that means that let's say my gross profit, I'll give a number another numbers. Let's say that my gross profit on a service that I sell uh is is 80%, all right, we'll use that as a number. And so it's 80% is my gross profit. And I have a $1,000 lifetime, all right? That's how much they're going to spend with me over the lifetime, which means $800 is what I am going to use as my number. Now, if $800 is what I make, then I have to, three to one, be able to acquire customers for less than $270 or whatever, $266, right? Um, so my cost of acquisition has to be less than $266, all right? That's the total thing. Now, that's the first uh relationship that I'm going to look at. The next relationship that I'm going to look at is the 30-day cash uh requirement compared to my CAC. And so for me, if I have a one-to-one relationship between my 30-day cash and my CAC, then that means that I am breaking even on getting customers. All right. And I'm breaking even within a window that I can use other people's money to finance the acquisition. And that's where this gets super cool. All right. And so using the example that we just had, if $260 is what it it has to be under, right, for me to get three to one, then let's say that if I can just get my, if I can get my 30-day cash to be greater than $260, then it means that in the first 30 days, I'm breaking even in my acquisition for free, and then I'm still going to collect the other $500 and whatever dollars, um, that's remaining from this process. That is the power of this concept. And so, to summarize this, the three numbers that you need to always know when you're marketing is going to be your CAC, is going to be your LTV. Important point is that it's the gross profit, not the total revenue, and the 30-day cash that you can make per customer. And you need to break even on 30-day cash to CAC, and you want this to be at least three times greater than your cost of acquisition for you to have a viable business. And that is the game, um, that I try to play. So, anyways, I hope that was valuable for you.