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How to Create Offers That Sell | 1 Hour of Alex Hormozi — Transcript

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0:00Many people still have terrible offers
0:02and/or terrible lead magnets. So, I'm
0:04going to cover kind of like the common
0:06troubleshooting that I go into with
0:08people who have bad offers, bad lead
0:11magnets, or both. All right. So, let's
0:13just focus on the offer side. I forgot
0:16to put the little thing so that it uh
0:17comes one at a time. So, I apologize.
0:20So, these are these are all popping up
0:21at once. Okay. So let's imagine
0:25that and this is actually probably the
0:27most common thing like this is
0:29especially true with home services but
0:31if you are in an industry where it's
0:32very difficult for other people to
0:34compare your offer or very easy for
0:35people to compare your offer to someone
0:36else's you need to win on one of these
0:38three vectors you need to either be
0:40faster than somebody else you need to be
0:42less risky than somebody else or you
0:43need to be easier or multiple but you
0:46have to from a strategy perspective you
0:48want to focus on at least one of those
0:49three things. And so whether you're
0:51doing kitchen remodeling, you're doing
0:52roofing, you're doing concrete, it
0:54doesn't matter. There's always a way to
0:56be faster, there's always a reason to be
0:58to less be less risky, there's always a
1:00way to make it easier for the customer.
1:01I promise you, there's always a way. Now
1:03then you might think, "Oh, but I can't
1:05afford to do that." No [ __ ] That's why
1:08you raise your prices to reflect this
1:10premium because you're no longer
1:11commoditized product. And guess what?
1:14People will pay for it.
1:17So, what I would encourage you to think
1:18about your offer is what would it take
1:22for me to get this outcome for a
1:24customer in one-third the time?
1:27Like, actually answer that question.
1:30This is why it's good to do this with
1:31your teams. Like, what would it really
1:33take? So, rather than saying we can't do
1:34it or we can't afford to do it, answer
1:37the damn question. What would it take?
1:40Now, if it would take paying contractors
1:4350% more to get them to do same day,
1:45next day responses for you, fine. Then
1:48the next question is, can we sell that
1:51to customers? Now, if the answer is yes,
1:54then ding ding ding, we have a winner.
1:56Now, if the answer is no, then we just
1:58go up market to rich people who
1:59absolutely value speed, risk, and ease.
2:03So, if you need to improve the offer,
2:05one of the first places I look is speed,
2:08right? What would it, you know, what
2:09would what would it take for us to get
2:11to get it all done in one third of the
2:13time? So, I know we're getting X-rated.
2:16Did I talk about this? This is going to
2:17be my launch of only Alex. I didn't I
2:19didn't I didn't tell you guys that.
2:21[snorts]
2:22The next one is is risk, right? So, can
2:26we ensure the biggest fear or can we
2:29guarantee against it? So, you can think
2:31about this from a warranties
2:32perspective. You can think about it from
2:33a guarantees perspective or one of my
2:35personal favorites because this is
2:36something that I've implemented with
2:37plenty of businesses is you actually
2:39just get an insurance policy on whatever
2:42their biggest fear is and you say don't
2:44worry we cover damages up to X
2:48because we already have insurance for it
2:51and you include that into your cost
2:54which typically is not nearly as
2:55expensive as you think as you think it
2:57would be. So, that's the second vector
3:00that you can consider from a from a from
3:01an offer angle.
3:03And yes, I'll be here all night and I
3:05I've got even less underneath. Calm
3:07down. Uh
3:10so the third uh is ease. And so the way
3:13to think about ease is how much can we
3:15kind of prepare the way for the customer
3:17ahead of time? Like how can we prepare
3:19for them? Is there anything we can do in
3:21the intake? Is there anything we can do
3:22the onboarding? Can we do any kind of
3:23this prep ahead of time so we can do
3:25pre-work for them so we can make their
3:27experience that much more seamless? And
3:28what's crazy is that so few businesses
3:30think this way or do it that customers
3:32will almost always appreciate and
3:35recognize it when you do in your
3:36business, right? like this is this is a
3:38this is a a soft toss. But for those of
3:40you who have been out to L1 um or L3 or
3:44L2 for for in person, many of you can
3:46probably tell like we take a huge amount
3:48of care in making this an exceptional
3:49experience for everyone and try to bring
3:51in as many of these tiny little details
3:52as we possibly can. Um so like when
3:55people know your name when you walk in,
3:56they know about your business. Like all
3:57that stuff takes work on our side so we
3:59can make it a delightful experience for
4:02you.
4:03And so when we're thinking about the
4:05offer like I think about these value
4:07vectors because these are the things
4:08that are really going to drive the
4:09business. And right now if you're like
4:11I'm suffering because I'm a commodity.
4:12This is how you solve it. Now the fourth
4:16one here is now introduced because we
4:17have money models book out. But you can
4:19always just wrap what you currently have
4:21in giveaways. Win your money back decoy
4:23pay less now pay more later or buy free.
4:26So you can immediately take whatever it
4:27is that you're selling and you're like,
4:28"Man, if I could just get cheaper leads,
4:31then do one of the attraction offer
4:32mechanisms, do a giveaway, do a kitchen
4:35remodel giveaway, and I promise you,
4:37guess what? You call everybody else uh
4:38who's in second place uh who who who
4:41didn't win the grand prize and offer
4:42them a second place prize. Offer them a
4:44participation pro. Hey, here second
4:47place, by the way, is $2,000 discount on
4:48your kitchen. You won. Congrats." Right?
4:53And if it's something that's more
4:54service based where they have to do
4:55stuff, win your money back works
4:56awesome. If you have a more
4:57transactional style business, decoy
4:59works great. Uh, buy get free works in
5:01so many different versions of this. The
5:03key with buy free by the way guys is you
5:06want to give away more free than someone
5:07pays for and you just adjust the price
5:09accordingly. So let's say instead of uh
5:11let's say it's $100 a month for 12
5:13months, it'll be 1,200 bucks. What you
5:15do is you do like buy six get six or buy
5:17four get eight. That's like a crazy
5:20deal, but you just make the four $300
5:23each.
5:24Just big tip. Um, and you know, check
5:28with the legal people in your area, all
5:29that stuff. Okay, great. Advertising
5:32laws differ by by county and region. And
5:34so, check with your attorney to make
5:36sure that things are advertising
5:37compliant. But these are the things that
5:39I would do upfront to improve my offer.
5:42Now, this one is super common, and let
5:45me see if I include this in my examples.
5:47Yeah.
5:48before I do. Okay, [snorts]
5:52we have a relatively large brand, right?
5:55And you might think, oh, uh, if I
5:59if I had Alex's brand, then I would be
6:01able to just say like, hey, just give me
6:02money. Doesn't really work that way. And
6:05so, you might find this interesting. Uh,
6:07we run ads for our workshops, right,
6:09that we have here in Vegas. And we also
6:12run ads to the scaling roadmap, which is
6:14a lead magnet that I made. Now, here's
6:16what's really interesting.
6:19The direct to workshop ads have higher
6:22rorowaz upfront, which sounds kind of
6:26obvious. Oh, when people come say, "Yes,
6:28I would like to buy a workshop," and
6:30then we offer them a workshop, more of
6:31them buy it. Duh. But what's more
6:34interesting to me is that the scaling
6:36road map has higher rorowes overall.
6:39ah when you expand out the time horizon
6:44and and this is the part that people
6:45miss and it scales better. So workshop
6:51is a very direct call to action. And if
6:53I if I if I made my whole business about
6:56saying, "Hey, come to a workshop, it
6:58would be tough because I'm only going to
6:59be offering the people who are the
7:00absolute warmest of my audience, right?"
7:02And so you guys, if you hopefully you
7:05went through the hooks and uh hooks
7:07playbook and the goated ads playbook,
7:08and if you didn't, shame on you because
7:09you should. But we talked about this
7:10with this uh the the pill the the
7:14advertising stages of awareness, excuse
7:16me.
7:18If I'm just saying, hey, buy a workshop,
7:20I'm really only hitting these two
7:22segments of the market, which are not
7:23that big. But if I'm if I'm going
7:26scaling roadmap, I'm going to be able to
7:28get way more people up here than all of
7:31this put together, right? And so if I
7:34have higher rorowes here and I can reach
7:36more customers, it's by far better front
7:38end, which is why I still, it's so funny
7:41because I hear people be like, "Lead
7:42magnets don't work." It's just like it's
7:44small businesses who say this, right?
7:47Right? And small is relative. Maybe
7:48maybe the person you listen to is making
7:50$5 million a year, whatever. But like
7:53everything's relative here. And so it's
7:55not right or wrong. If you only are
7:57trying to make a smaller amount of
7:59money, you for sure will get higher row
8:00if you just say, "Hey, go buy my stuff."
8:02Like there's no question about that. But
8:04if you want to get into huge higher
8:06realms, you have to soften the ask and
8:08make it more attractive for people to
8:10take action and then create the
8:12conversion process around that. if you
8:15have a better dream outcome match. So,
8:17right now it's like my lead magnet is
8:19just not First off, many of you don't
8:21have these. You just straight up,
8:22especially you home services guys, you
8:24guys do this all the time, right? Like
8:25you're like, I'm just running Google ads
8:28to my website. I'm like, well, what's on
8:29your website? They're like, well, just
8:30my website. I'm like, and then you look
8:32on it, it says request quote. For the
8:33love of God, no one wants to request a
8:35quote. All right. So, give them
8:37something in exchange for their contact
8:38information. And how do we make it even
8:40more enticing? Give them something they
8:42actually want. Give them a better dream
8:44outcome. Describe it in their own
8:46language of what they want. Right? 11
8:48frameworks we use to build wildly
8:49profitable gyms. Helpful. Now, there's
8:51three types of lead magnets. You can
8:54reveal a problem, you can do a trial of
8:56the solution, or you can do a one step
8:58of multi-step. All right. This is a
9:00splinter offer. So, reveal a problem.
9:02Seven mistakes homeowners make when
9:04fixing their HVAC. Very simple, right?
9:08Trial solution. Hey, so I actually had a
9:10really cool company come out for an L3
9:12last week. Um, basically they had
9:15figured out how to get any local
9:16business onto number one, two, or three
9:19in local maps. That was all they do.
9:21They just get people on one, two, or
9:23three. When someone searches like, you
9:24know, gym near me, one, two, or three
9:26local maps. That's what they're they're
9:28able to do. And so their their whole
9:31lead magnet is we'll just get you one,
9:32two, or three for free, and then we'll
9:34call you in seven days and ask you if
9:36you still want it.
9:38It works great. [laughter]
9:40They're crushing it. All right? Like if
9:42you can give a trial of the solution,
9:44one of the most valuable ways to do it.
9:45Super easy. You will get a ton of leads
9:47for it. Now, the third is the one step
9:49of multi-step. This is a splinter offer.
9:51All right? So, I had a cash episode
9:53where I had a lady named Ashley who did
9:55fashion consulting. And so, she had a
9:58request a quote type thing like just
9:59book a call with me for an assessment.
10:02It's okay. It's just like I' I'd rather
10:04have some sort of incentive to do it,
10:07right? And so we came up with she's
10:09going to figure out my my color palette,
10:11right? Like what are the what are the
10:12colors I should be wearing with my skin
10:14tone, with my personality, with my
10:15whatever with my zodiac sign. Who cares?
10:17All right. But the point is I'm going to
10:19get some some sort of value from this
10:21exchange. So then I ask, "Okay, how
10:22quickly can you automate it?" And she's
10:23like, "Yeah, I can auto prove quickly."
10:24Like great. So that's what we can do.
10:26And when you do a one step and
10:28multi-step, everyone like my push back
10:30that I almost always get is everything I
10:33do comes together.
10:35No, it doesn't. There are always pieces
10:38that you do in a process. Well, I I'm
10:40not going to fix someone's door. It's
10:42like, well, you can fix part of it. You
10:44can put a coat of paint on. You can put
10:45a sealant on before you before. There's
10:47always you can just measure it like you
10:49can there's always some piece that you
10:50can pull out and say, I'll do this for
10:53free or for a significant discount. And
10:56so, let's think about it like this.
10:58Let's say that you have an offer. All
11:00right, let's see if my drawing is going
11:02to be up to up to snuff here.
11:10F. Messed that one up. All right, there
11:12we go. Let's Oh, I almost had it. I just
11:15messed it up. Okay, so we've got this
11:17this this offer that has A, B, C, D. We
11:20got four components to our offer, right?
11:22And let's say you currently sell this
11:24for $2,000.
11:28It's often more powerful for you to have
11:31just take this guy,
11:33move it over here, and have
11:42B over here.
11:44That's gone. And then give this away for
11:4790% off
11:52or free.
11:59And then once someone has this, they
12:01then want to buy ACD.
12:04That's how that works. And so there's
12:07almost always a version of this that can
12:08get someone in the door. And this is
12:11also how you can make what I prefer to
12:12have, which is insane discounts. Not
12:14like I hate the idea of a 10 or 20%
12:16discount. There's no point, right? I
12:18want to have crazy discounts because I
12:19want I want a discount to be significant
12:21enough that it changes someone's
12:22behavior. And so a 90 or 80% discount
12:25that will change people's behavior. And
12:26the reason I do that is I can just pull
12:27it off on something that cost me very
12:29little so that I can then create my
12:31upsell process into my main thing. This
12:33will help you get cheaper leads.
12:37So many of you right now your offer
12:40sucks, which is why you can't get cheap
12:42leads for whatever business or market
12:44you're in. You don't promise anything
12:46around speed. You don't promise anything
12:48around ease. You don't do anything to
12:49reverse risk. And you don't have to do
12:51all three to be clear. just focus on one
12:53and hammer it and do it really well. And
12:56preceding your offer, you just don't
12:59have anything and you don't give people
13:00a good reason to engage in your ads and
13:02actually give you their cocktail
13:04information. So, make something that's
13:07really compelling. My personal favorite
13:08way of giving lead magnets is give
13:09something that people other people
13:11charge for. The the more real the lead
13:13magnet is, the more that it actually has
13:15true cost, the more likely it is that it
13:17will work.
13:18>> So, let's say someone's listening to
13:19this and they're thinking, "All right,
13:20cool. I know. I like I've I've read Alex
13:22Burk. He he's he's telling me I've got
13:24I've got to sell a thing. I don't I
13:26don't know what to sell. I don't know if
13:27I have any skills. I don't I don't I
13:28don't know what I could possibly offer
13:30to the world.
13:31>> How do we how do we break that down?
13:33>> Yeah, this is actually a topic that I um
13:35I cover more in the lead's book that's
13:36coming out soon uh soon relative terms,
13:39six monthsish. Um
13:42everybody knows something. All right.
13:43And so the idea is what do you have like
13:46everyone has unique depth of knowledge
13:49in certain areas because you've been
13:50alive and your eyes and ears have taken
13:52inputs period right and so I like to
13:56think of of people starting like so if
13:58you look at are you familiar with Y
13:59cominator
14:01>> why yeah so
14:02>> yeah so Y combinator is one of the most
14:04successful you know uh I don't know if
14:06they're technically VC they're you know
14:08seed capital startup um investors in
14:10Silicon Valley and they have a very
14:13standard structure and they have
14:14criteria for what they look for in
14:15companies. And one of the most important
14:17criteria that they look for is past
14:18experience. And so they're okay with
14:21somebody who's super young, etc., but
14:23they want to they want you to have
14:24experience in the industry because
14:25there's just so much ignorance debt that
14:28you have to pay down if you literally
14:30know nothing about an industry. Like
14:32there's just so much like if your dad
14:33was a mechanic, you know about cars just
14:37by osmosis of being around a mechanic
14:39for 18 years. And so I like to think
14:42past jobs you've held, you will know
14:44stuff about that industry. Um the jobs
14:47of your parents are things that you will
14:49know about that industry. And then
14:51you've got personal interests. And so I
14:53think that if I put those into three
14:54buckets, it's like parent stuff, past
14:57jobs of self, and current interests. And
15:00so it's like of those three things,
15:02which of those three buckets do you
15:04think you could help someone do a thing
15:05better? And so the idea is you want to
15:09sell the most valuable thing, right? And
15:11so the most valuable thing is what is
15:12the problem that I can help somebody
15:14else solve that I could charge the most
15:15money for or in reverse that could make
15:17them the most money. Um, and then I will
15:19be able to charge a percentage of the
15:20money that I'm able to make somebody
15:22else in this thing. Now that's in a B2B
15:24setting. In a B TOC setting, it would be
15:26how valuable do people perceive uh the
15:28problem that they have as, right?
15:30Whether it's like I can teach music.
15:32Tons of people want to be able to learn
15:33how to and if you're better, you know,
15:35because you've had a side interest in
15:36that. Awesome. Maybe you have a side
15:37interest because you're really good at
15:38editing the songs. Well, there's tons of
15:40musicians who would love who hate that
15:41part and would love to have that. So,
15:42it's like we all know how to do stuff
15:44and all we have to do is package the
15:46thing that we're doing. And I think the
15:48big problem is that people expect that
15:49they're going to have a perfect
15:50business. But if you look at the track
15:51record of all of I can't think of an
15:52entrepreneur besides Jeff Schiff Bezos
15:54who's a freak of nature whose first
15:56business becomes the most valuable
15:58business in the world. Is most people
16:00have a a graveyard of failures behind
16:02them. And so the idea is you start not
16:05with the intent of saying this is going
16:06to be the one thing I'm going to do for
16:07the rest of my life which is the fallacy
16:08that employees have uh that whatever
16:11they pick is going to be the thing
16:11they're going to do for the rest of
16:12their lives. When in reality it's I just
16:14have to do a thing that I'm good enough
16:15at that I can learn the game. And the
16:16thing is once you start taking steps the
16:19the next step becomes illuminated. You
16:21trying to think a 100 steps into the
16:23future when you have no context is is
16:25irrelevant because chaos is going to
16:26break your plan anyways. And so do what
16:29you know exchange I like service
16:32businesses to start because they are the
16:33in my opinion the lowest risk to start
16:35because you're just it's just your time,
16:37right? So service businesses meaning
16:40>> do stuff for money
16:42>> like mowing the lawn or cleaning windows
16:44or
16:45>> service clean houses like whatever like
16:46all of those are just service businesses
16:48right and they're fine and a lot of
16:49people think they need to have some
16:50novel idea to start a business when I
16:53mean the best in my opinion if you're if
16:55you're getting into it the best way to
16:56start a business is just look at what
16:57everyone else is doing and just try and
16:59do it better like that I mean and
17:02there's obvious holes like if you've if
17:04you've gone to if you've gotten your dry
17:05cleaning it's like can I do this in half
17:07the as this guy. If I do the lawn care,
17:09what are the things people hate about
17:10lawn care? Ah, they leave the the the
17:12trimmings are around the edges. They're
17:13all all shitty. The person doesn't speak
17:15English that well. Like, well, cool.
17:16Then I've got advantages, right? So,
17:18it's like, what are things that I
17:20already know how to do or I have past
17:21experience in? What things because I
17:23have past experience, I know that other
17:24people struggle with that sucks about
17:26this thing. And then I will solve that
17:27specific problem. And it could also be a
17:28problem that other people solve, too.
17:29You just try and do a little bit better.
17:31Like, it's it's just not rocket science.
17:33You know what I mean? And then you
17:34exchange you start selling your time for
17:36money. So yes, you're still trading time
17:38for dollars. You don't need to re read
17:39Rich Dad Poor Dad just yet, right?
17:40You're still trading time for dollars,
17:42right? But the point is that you're
17:43you're you're trading that time for
17:46money in order to learn, not to earn.
17:48You need to earn in order to pay your
17:50pay your rent, eat, etc. But the the
17:52major thing you're doing is you're
17:53paying down ignorance debt. So the vast
17:55majority of your income is coming in the
17:57terms of in in the form okay a deep dive
17:59into how much to charge uh increase how
18:02much percentage and when. If currently
18:04priced at commodity pricing a formula
18:06which we can use all right um following
18:08topic will be later I'm going to start
18:10I'm going to stop at the first one so so
18:11pricing wise there
18:18the reason that pricing can be somewhat
18:19amorphous is that in some ways it's like
18:24pricing is speculative
18:27for many people and many businesses.
18:29Meaning if you have a house in the
18:31middle of nowhere and there's no
18:32comparables,
18:34what that house is worth is directly
18:36proportional to what someone else is
18:38willing to pay. And that can have huge
18:40variety. If there's a billionaire who
18:42decides that that house is the house
18:43that he has set his eyes on, the the
18:45value of that house could be tremendous.
18:47Now, there are some hard costs that can
18:48be related to that, which is like how
18:49much would it be for him to buy, you
18:51know, the adjacent part of the mountain
18:53and build the house themselves? That
18:55would be kind of like the baseline. And
18:56then the the value on top of it is just
18:58how much time you're going to save that
18:59person for not having to do that, right?
19:01And so from a pricing perspective, there
19:03are very formal ways. There's entire
19:05books on pricing. Um, but I would say
19:07that the back of the napkin way of
19:10coming up with pricing is typically the
19:12one that I use most often. And so I'll
19:14give you two different ways of thinking
19:15about pricing. Um, and then I'll give
19:16you a bunch of wrong ways. So wrong way
19:18number one of thinking about pricing is
19:20look what everyone else is charging and
19:21then take the average. That's number
19:22one. That is how you guarantee that you
19:24are a commodity in a commoditized
19:25marketplace. Number two, do that and
19:28then do a little bit more for a little
19:29bit less. That's even worse. Number
19:31three, cost plus pricing. This is far
19:33more common. It cost me $10. I have a
19:36fixed 50% markup. So $15 is what I
19:39charge for everything and that's what it
19:40is. 50% markup. That is at least better
19:43in that you have some you've at least
19:45thought of your margin. Um but worse in
19:47that it's all about you. But it's not
19:49about you. It's about the customer. It's
19:51about what they're willing to pay, not
19:52what you're willing to charge. All
19:53right? So, the perfect price is one that
19:58a customer will buy. That is the maximum
20:00that they're able to spend. The
20:02difficulty is that this changes within a
20:05customer's purchasing history in the
20:08moment and between customers. So, for
20:10example, if I've had a long day of
20:13skiing and I go to the lodge at the top
20:16of the, you know, the hill in the
20:17mountain and I want a beer, the value of
20:20the first beer is significantly higher
20:22than the value of the second beer. And
20:24the value of the second is is higher
20:25than the value of the third. And at some
20:27point, they couldn't pay me to have
20:29another beer.
20:31And so, value diminishes. And this
20:34happens all the time within existing
20:36products. And so, how do you figure out
20:38if the if the beer is worth, you know,
20:41$7 for the first beer and then $3 for
20:44the second beer and $1 for the third
20:45beer? On the fourth beer, they don't
20:47want it anymore. Okay. Well, how much
20:49more is that first beer worth? And how
20:51many average beers do people buy? And
20:53so, we do some math until eventually
20:54say, I think the average person will buy
20:55three beers if the average price is uh
20:59let's say $1. If it's $1, they're going
21:00to buy one, two, three, and on the third
21:02beer, we get $3 total. We got three
21:04beers sold. Now, I said before the
21:06second beer was $3. So, if I price it at
21:08$3, I'm gonna get three and then three.
21:10So, I'm g have $6. So, I had three at
21:12$1. I have $6 at $2. Sorry, uh $6 at a
21:16$3 price point. And then if I said the
21:17first beer was worth worth seven, then I
21:19should price my beer at seven and know
21:21I'm only going to sell one beer cuz six
21:23seven is higher than six.
21:26That is how pricing can change within an
21:28existing customer's experience, which
21:29for many of you guys who sell recurring
21:31stuff, this is very real. And this is
21:33why I'm such a big advocate of not
21:34having uh linear pricing when you can
21:37when you can afford to do it. Meaning, I
21:38like having onboarding fees. I like
21:40having upfront charges because in the
21:42beginning is when the person typically
21:44has the most pain. They're the most
21:45deprived of uh the service or or you
21:48know, whatever promise that you're
21:49delivering for them. Um
21:51and this is also really common with
21:53service businesses that you actually
21:54have to frontload a lot of the work. And
21:55so it makes sense to have the customer
21:57pay for that additional onboarding
21:58because it can help you offset the cost
21:59of getting a customer. um while also
22:03matching to their level of deprivation.
22:04And so the big breakthrough that I had
22:05in the gym industry, which is what I
22:06mean fundamentally changed the large
22:07group train large group training space
22:09was that when people came in when I got
22:12into the gym business, people would try
22:13and sell them a trial. And I thought
22:14that was really interesting because it's
22:15like I paid all this money to get this
22:16person in the door and the thing that
22:18I'm trying to give them is free is a
22:21taste. But today is the day they're the
22:24most motivated they're going to be.
22:25They're in the most pain today. They're
22:27the most out of shape. they haven't done
22:29anything for themselves and they've
22:30decided to get their butt in the car and
22:32drive to the gym. This moment is the
22:34maximum moment where I can charge. And
22:36so I flipped the model and I started
22:38charging for 500, 2,000, 5,000 on those
22:41first transactions and then having a
22:42much cheaper price after the fact
22:44because the value that was conferred
22:46through a community of the gym was
22:48valuable but less so than losing weight.
22:51And so what also happens with any kind
22:53of service, especially if it's
22:54recurring, is the nature of the
22:55deliverable will also change. The reason
22:57people buy is not always the reason
22:58people stay. And so we have to price
23:01based on the on the relative value of
23:03that specific moment. And so someone
23:06might come to lose weight but then stay
23:07for friends. Losing weight is more
23:10valuable than making friends. And I'm
23:11only saying this based on what people
23:12are willing to pay for it. Not whether
23:13that actually is true for your life. But
23:15by willingness to pay, people are
23:16willing to pay more. And so it would
23:20make sense that I should have something
23:21that is my weight loss price and my
23:22community price and then have those
23:24things reconcile. Now, the third element
23:28of this is between customers. So, rich
23:32guy, poor guy both get pitched the same
23:34thing. For me, if $2,000 comes out of my
23:36account and I'm rich guy, I might not
23:38even notice it. In fact, 2,000 might
23:40might be too cheap for me to even care.
23:42If I'm poor guy, $2,000 might be all the
23:44money in the entire world. And so, in
23:46which case, I'm not the right fit for
23:47this, even though the actual service is
23:48the same. And we still might both still
23:50need the the core deliverable. And so,
23:53all of this comes down to what's the
23:54sweet spot on pricing. How do we sell
23:56the most number of units with the
23:58maximum number of gross margin? And so
24:01this is the this is the math. So if you
24:02want the formula, it's number of units
24:04sold times gross margin. That gives you
24:08the highest absolute amount of money
24:10that you make in a given marketplace.
24:12typically. And just so you get a little
24:14bit of uh you know uh you don't stress
24:16yourself out about this, it's a curve.
24:18Meaning there's two points on either
24:20side where you will make the same amount
24:22of money selling a lot more units and
24:24selling fewer units at a higher price.
24:26The question is what type of business
24:28you want. And so for most service
24:30businesses that include humans, I make a
24:32very strong argument for being a premium
24:33price leader. Because if you make the
24:35same money serving 10 customers as 100
24:37customers, wouldn't it be nicer to scale
24:38the 10 customer business? Because once
24:40you sell 100 once you're servicing 100
24:42customers, you have the operational
24:43infrastructure being able to deliver
24:45those to that 100 customer base. You're
24:46already 10 times as big in terms of
24:48absolute profit and your ability to
24:49advertise those people. Those people are
24:50willing to pay, etc., etc., down the
24:53road, right? And so you can make the
24:55same amount of money on either side. And
24:56so if you get stressed about this,
24:58remember that these these decisions,
25:00it's a zone, not a correct answer. And
25:02it's going to change. The market
25:05changes. And so you will never have a
25:07perfect price unless you have a pure
25:08marketplace function like Uber does in
25:10the moment for people at this at this
25:13minute in this micro locality. The ban
25:15just came out. There's surge pricing.
25:17Unless you have a perfectly efficient
25:18marketplace like that based into how you
25:20charge, you're going to always have
25:21inefficient pricing. And so the solve to
25:24this is having tiers of service that
25:26attract or clearly articulate or signal
25:30to a specific type of customer um that
25:34this [clears throat] is for them. said
25:35differently. My favorite video that I
25:37made this whole year uh was I think
25:39called like the 511 rule. You can look
25:42it up on my channel. Um but basically
25:43it's about the fractal nature of
25:45customers. And so where this is really
25:47interesting is that if you were to
25:48spread out $100 on a 100 circles that
25:51represent America, um the bottom 50% of
25:54those circles in terms of absolute
25:56wealth have something like $2.70
25:58of the $100 that's available of total
26:00wealth. How crazy that is? The bottom
26:0350, half the people, all of them. Now
26:05the reason this is so difficult is that
26:06if you are poor and you only know poor
26:08people, you will look at all the people
26:10you know and assume that is how the
26:11world is that no one has money and that
26:13is not true. It's just that no one you
26:14know has money. So if we look at the top
26:1750% the next 40 so from 50 to 90% that
26:22next 40 has somewhere in the
26:23neighborhood of like 30-ish dollars of
26:24that total 100. the next 9%. So from
26:28from 90 to 99 all percentile
26:32the next 9% has I think another like
26:36mid30s dollars and the top 1% has 30ome
26:41dollars. And so that means in a very
26:43real way the top 1% has
26:4711 12 13 whatever the math is there
26:49times the money of the bottom 50.
26:53And so it makes sense logically, not
26:56because you're you're some person who
26:57doesn't want to help poor people, but
26:58because that's where the money is. And
27:00so you go where the money is and service
27:02those customers because they will give
27:04some of it to you.
27:07And so having tiers of service that that
27:09appeal to different fractals of
27:11customers allows you to maximize the
27:13revenue you generate from an existing
27:15audience. And so for example, and
27:17typically and I would say the big
27:18mistake with a lot of pricing and hey,
27:20he asked for pricing. I could talk about
27:21pricing all day. All right. The big
27:23mistake a lot of people make with
27:24pricing is that they do not go high
27:25enough and they do not go low enough. So
27:27what I mean is let's say you've got a B
27:29C D tier. All right. For prices,
27:32whenever there's a tier increase, what
27:34most people do is like I saw this in the
27:36gym space all the time. I've got a I've
27:37got a uh you know 129 a month for my A
27:40and then I've got 149 a month for my B.
27:43Well, the thing is is that that's the
27:44exact same buyer. And so this is that's
27:47the person who's the the the gym owner
27:49thinking of selling from their own
27:50wallet. They're thinking about the cost
27:52basis of coming more times or whatever
27:54other doodads they added, but they're
27:56not thinking about the customer they're
27:57selling to. And so when I'm designing a
28:00pricing schema or offer schema for an
28:02audience, I have to think, how valuable
28:04is solving this problem for this person?
28:06And I start with the price and then I
28:08work backwards. And so we know there's a
28:11buyer for a $9 a month product. And then
28:14the next tier of buyer for school, for
28:15example, might be $99. That's 11 times
28:19more expensive. Right? Now, let's do
28:21again do the math on this.
28:24If I have 20% of customers buy something
28:27that's five times as expensive, me
28:30adding that 5x price point above my my
28:32core offer doubles my revenue. And so
28:35for me, I typically like to make sure
28:37that every offer tier doubles my revenue
28:39overall of my core. And the only way you
28:42can do that is with basic assumptions of
28:43what the uptake rates are going to be
28:45for um for a given population. And so
28:49most upsells of customers, you're
28:51probably going to be in the 20 to 30%
28:53range most times. And so if that's the
28:55range, then I want to make it worth it,
28:57which means I'm going to 5x the price
28:58relative to the base. And then think,
29:00what could I possibly deliver? Many
29:02people still have terrible offers andor
29:04terrible lead magnets. So, I'm going to
29:07cover kind of like the common
29:08troubleshooting that I go into with
29:10people who have bad offers, bad lead
29:13magnets, or both. All right. So, let's
29:15just focus on the offer side. I forgot
29:18to put the little thing so that it uh
29:19comes one at a time. So, I apologize.
29:22So, these are these are all popping up
29:23at once. Okay. So, let's imagine
29:27that and this is actually probably the
29:29most common thing. Like this is
29:31especially true with home services, but
29:33if you are in an industry where it's
29:34very difficult for other people to
29:36compare your offer or very easy for
29:37people to compare your offer to someone
29:38else's, you need to win on one of these
29:40three vectors. You need to either be
29:42faster than somebody else, you need to
29:44be less risky than somebody else, or you
29:45need to be easier or multiple. But you
29:48have to from a strategy perspective, you
29:50want to focus on at least one of those
29:51three things. And so whether you're
29:53doing kitchen remodeling, you're doing
29:54roofing, you're doing concrete, it
29:56doesn't matter. There's always a way to
29:58be faster. There's always a reason to be
30:00to less to be less risky. There's always
30:02a way to make it easier for the
30:03customer. I promise you there's always a
30:05way. Now then you might think, "Oh, but
30:07I can't afford to do that." No [ __ ]
30:10That's why you raise your prices to
30:11reflect this premium because you're no
30:13longer commoditized product. And guess
30:15what? People will pay for it.
30:19So, what I would encourage you to think
30:21about your offer is, what would it take
30:24for me to get this outcome for a
30:26customer in one-third the time?
30:30Like, actually answer that question.
30:32This is why it's good to do this with
30:33your teams. Like, what would it really
30:35take? So, rather than saying we can't do
30:36it or we can't afford to do it, answer
30:39the damn question. What would it take?
30:42Now, if it would take paying contractors
30:4550% more to get them to do same day,
30:48next day responses for you, fine. Then
30:51the next question is, can we sell that
30:53to customers? Now, if the answer is yes,
30:56then ding ding ding, we have a winner.
30:58Now, if the answer is no, then we just
31:00go up market to rich people who
31:01absolutely value speed, risk, and ease.
31:05So, if you need to improve the offer,
31:08one of the first places I look is speed,
31:10right? What would it, you know, what
31:12would what would it take for us to get
31:13to get it all done in one third of the
31:15time? So, I know we're getting X-rated.
31:18Did I talk about this? This is this is
31:19going to be my launch of only Alex. I
31:21didn't I didn't I didn't tell you guys
31:22that. The next one is is risk, right?
31:27So, can we ensure the biggest fear or
31:31can we guarantee against it? So, you can
31:33think about this from a warranties
31:34perspective. You can think about it from
31:35a guarantees perspective or one of my
31:37personal favorites because this is
31:38something that I've implemented with
31:39plenty of businesses is you actually
31:41just get an insurance policy on whatever
31:44their biggest fear is and you say don't
31:46worry we cover damages up to X
31:50because we already have insurance for it
31:53and you include that into your cost
31:56which typically is not nearly as
31:57expensive as you think as you think it
31:59would be. So, that's the second vector
32:02that you can consider from a from a from
32:03an offer angle.
32:05And yes, I'll be here all night and I
32:07I've got even less underneath. Calm
32:09down. Uh,
32:12so the third uh is ease. And so the way
32:15to think about ease is how much can we
32:17kind of prepare the way for the customer
32:19ahead of time? Like how can we prepare
32:21for them? Is there anything we can do in
32:23the intake? Is there anything we do in
32:24the onboarding? Can we do any kind of
32:25this prep ahead of time so we can do
32:27pre-work for them so we can make their
32:29experience that much more seamless? And
32:30what's crazy is that so few businesses
32:32think this way or do it that customers
32:35almost always appreciate and recognize
32:37it when you do in your business, right?
32:39like this is this is a this is a a soft
32:41toss. But for those of you who have been
32:42out to L1 um or L3 or L2 for for in
32:47person, many of you can probably tell
32:49like we take a huge amount of care in
32:51making this an exceptional experience
32:52for everyone and try to bring in as many
32:54of these tiny little details as we
32:55possibly can. Um so like when people
32:57know your name when you walk in, they
32:58know about your business, like all that
33:00stuff takes work on our side so we can
33:02make it a delightful experience for you.
33:06And so when we're thinking about the
33:08offer like I think about these value
33:09vectors because these are the things
33:10that are really going to drive the
33:12business. And right now if you're like
33:13I'm suffering because I'm a commodity.
33:15This is how you solve it. Now the fourth
33:18one here is now introduced because we
33:19have money models book out. But you can
33:22always just wrap what you currently have
33:23in giveaways. When your money back decoy
33:25pay less now pay more later or buy free.
33:28So you can immediately take whatever it
33:29is that you're selling and you're like,
33:30"Man, if I could just get cheaper leads,
33:33then do one of the attraction offer
33:34mechanisms, do a giveaway, do a kitchen
33:37remodel giveaway, and I promise you,
33:39guess what? You call everybody else uh
33:41who's in second place uh who who who
33:43didn't win the grand prize and offer
33:45them a second place prize. Offer them a
33:46participation trophy. Hey, here second
33:49place, by the way, is $2,000 discount on
33:51your kitchen. You won. Congrats." Right?
33:55And if something that's more service
33:56based where they have to do stuff, win
33:57your money back works awesome. If you
33:59have a more transactional style
34:00business, decoy works great. Uh, buy X
34:03get Y free works in so many different
34:04versions of this. The key with BX get
34:06free by the way guys, is you want to
34:08give away more free than someone pays
34:10for and you just adjust the price
34:12accordingly. So let's say instead of uh
34:14let's say it's $100 a month for 12
34:15months, it'll be 1,200 bucks. What you
34:17do is you do like buy six get six or buy
34:20four get eight. That's like a crazy
34:22deal, but you just make the four $300
34:25each.
34:26Just big tip. Um, and you know, check
34:30with the legal people in your area, all
34:32that stuff. Okay, great. Advertising
34:34laws differ by by county and region. And
34:36so, check with your attorney to make
34:38sure that things are advertising
34:39compliant. But these are the things that
34:41I would do up front to improve my offer.
34:44Now, this one is super common, and let
34:47me see if I include this in my examples.
34:49Yeah. Well, before I do, okay,
34:54we have a relatively large brand, right?
34:57And you might think, oh, uh, if I
35:01if I had Alex's brand, then I would be
35:03able to just say like, hey, just give me
35:04money. Doesn't really work that way. And
35:07so, you might find this interesting. Uh,
35:09we run ads for our workshops, right,
35:11that we have here in Vegas. And we also
35:14run ads to the scaling road map, which
35:16is a lead magnet that I made. Now,
35:18here's what's really interesting.
35:21The direct to workshop ads have higher
35:24rorowaz upfront, which sounds kind of
35:28obvious. Oh, when people come say, "Yes,
35:31I would like to buy a workshop." And
35:32then we offer them a workshop, more of
35:33them buy it. Duh. But what's more
35:36interesting to me is that the scaling
35:38road map has higher rorowes overall.
35:41ah when you expand out the time horizon
35:46and and this is the part that people
35:47miss and it scales better. So workshop
35:53is a very direct call to action and if I
35:56if I if I made my whole business about
35:58saying hey come to a workshop it would
36:00be tough because I'm only going to be
36:01offering the people who are the absolute
36:02warmest of my audience right and so you
36:06guys if you hopefully you went through
36:07the hooks and uh hooks playbook and the
36:09goated ads playbook and if you didn't
36:10shame on you because you should but we
36:12talked about this was this uh the the
36:15pill the the advertising the stages of
36:18awareness excuse me
36:20if I'm just saying, "Hey, buy a
36:22workshop." I'm really only hitting these
36:24two segments of the market, which are
36:25not that big. But if I'm if I'm going
36:28scaling roadmap, I'm going to be able to
36:30get way more people up here than all of
36:33this put together, right? And so, if I
36:36have higher rorowes here and I can reach
36:38more customers, it's by far better front
36:40end, which is why I still, it's so funny
36:43because I hear people be like, "Lead
36:44magnets don't work." It's just like,
36:46it's small businesses who say this,
36:49right? And small is relative. Maybe
36:50maybe the person you listen to is making
36:52$5 million a year, whatever. But like
36:55everything's relative here. And so it's
36:57not right or wrong. If you only are
37:00trying to make a smaller amount of
37:01money, you for sure will get higher rows
37:02if you just say, "Hey, go buy my stuff."
37:04Like there's no question about that. But
37:06if you want to get into huge higher
37:08realms, you have to soften the ask and
37:11make it more attractive for people to
37:12take action and then create the
37:14conversion process around that. if you
37:17have a better dream outcome match. So,
37:19right now it's like my lead magnet is
37:21just not First off, many of you don't
37:23have these. You just straight up,
37:24especially you home services guys, you
37:26guys do this all the time, right? Like
37:28you're like, I'm just running Google ads
37:30to my website. I'm like, well, what's on
37:31your website? They're like, well, just
37:32my website. I'm like, and then you look
37:34on it, it says request quote. For the
37:35love of God, no one wants to request a
37:37quote. All right, so give them something
37:39in exchange for their contact
37:40information. And how do we make it even
37:42more enticing? Give them something they
37:44actually want. Give them a better dream
37:46outcome. Describe it in their own
37:48language of what they want. Right? 11
37:50frameworks we use to build wildly
37:51profitable gyms. Helpful. Now, there's
37:54three types of lead magnets. You can
37:56reveal a problem, you can do a trial of
37:58the solution, or you can do a one step
38:01of multistep. All right, this is a
38:02splinter offer. So, reveal a problem.
38:04Seven mistakes homeowners make when
38:06fixing their HVAC. Very simple, right?
38:10Trial solution. Hey, so I actually had a
38:12really cool company come out for an L3
38:14uh last week. Um, basically they had
38:17figured out how to get any local
38:19business onto number one, two, or three
38:21in local maps. That was all they do.
38:24They just get people on one, two, or
38:25three. When someone searches like, you
38:27know, gym near me, one, two, or three
38:29local maps. That's what they're they're
38:30able to do. And so their their whole
38:33lead magnet is we'll just get you one,
38:35two, or three for free, and then we'll
38:36call you in seven days and ask if you
38:38still want it.
38:40It works great. [laughter]
38:42They're crushing it. All right? Like if
38:44you can give a trial of the solution,
38:46one of the most valuable ways to do it.
38:48Super easy. You will get a ton of leads
38:49for it. Now, the third is the one step
38:51of multi-step. This is a splinter offer.
38:54All right? So, I had a cash episode
38:55where I had a lady named Ashley who did
38:57fashion consulting. And so, she had a
39:00request a quote type thing like just
39:01book a call with me for an assessment.
39:04It's okay. It's just like I' I'd rather
39:07have some sort of incentive to do it,
39:09right? And so we came up with she's
39:11going to figure out my my color palette,
39:13right? Like what are the what are the
39:14colors I should be wearing with my skin
39:16tone, with my personality, with my
39:17whatever, with my zodiac sign. Who
39:19cares? All right, but the point is I'm
39:21going to get some some sort of value
39:23from this exchange. So then I asked,
39:24"Okay, how quickly can you automate it?"
39:25And she's like, "Yeah, I can automate
39:26proof quickly." It's like, great. So
39:27that's what we can do. And when you do a
39:29one step and multi-step, everyone like
39:31my push back that I almost always get is
39:35everything I do comes together.
39:37No, it doesn't. There are always pieces
39:40that you do in a process. Well, I I'm
39:43not going to fix someone's door. It's
39:44like, well, you can fix part of it. You
39:46can put a coat of paint on. You can put
39:47a sealant on before you before. There's
39:49always you can just measure it like you
39:51there's always some piece that you can
39:53pull out and say, I'll do this for free
39:55or for a significant discount. And so,
39:58let's think about it like this. Let's
40:00say that you have an offer. All right,
40:02let's see if my drawing is going to be
40:05up to up to snuff here.
40:12F. Messed that one up. All right, there
40:14we go. Let's Oh, I almost had it. I just
40:17messed it up. Okay, so we've got this
40:19this this offer that has A, B, C, D. We
40:22got four components to our offer, right?
40:24And let's say you currently sell this
40:26for $2,000.
40:30It's often more powerful for you to have
40:33just take this guy,
40:36move it over here, and have
40:44B over here.
40:46That's gone. And then give this away for
40:4990% off
40:54or free.
41:01And then once someone has this, they
41:03then want to buy ACD.
41:06That's how that works. And so there's
41:09almost always a version of this that can
41:11get someone in the door. And this is
41:13also how you can make what I prefer to
41:14have, which is insane discounts. Not
41:17like I hate the idea of a 10 or 20%
41:18discount. There's no point, right? I
41:20want to have crazy discounts because I
41:21want I want a discount to be significant
41:23enough that it changes someone's
41:24behavior. And so a 90 or 80% discount
41:27that will change people's behavior. And
41:28the reason I do that is I can just pull
41:29it off on something that cost me very
41:31little so that I can then create my
41:33upsell process into my main thing. This
41:35will help you get cheaper leads.
41:39So many of you right now your offer
41:42sucks, which is why you can't get cheap
41:44leads for whatever business or market
41:46you're in. You don't promise anything
41:48around speed. You don't promise anything
41:50around ease. You don't do anything to
41:51reverse risk. And you don't have to do
41:53all three to be clear. just focus on one
41:55and hammer it and do it really well. And
41:58preceding your offer, you just don't
42:01have anything and you don't give people
42:02a good reason to engage in your ads and
42:05actually give you their cocktail
42:06information. So, make something that's
42:09really compelling. My personal favorite
42:10way of giving lead magnets is give
42:12something that people other people
42:13charge for. The the more real the lead
42:15magnet is, the more that it actually has
42:17true cost, the more likely it is that it
42:19will work.
42:20>> Um, I do about $12 million a year.
42:22>> Amazing. I coach real estate agents. Um,
42:25I teach them social media marketing and
42:27sales. And my biggest constraint, well,
42:29I'm at the 12 minute I want to get to
42:31like 36. Um, and I think it could easily
42:34be done, but not so sure with my avatar.
42:36>> Okay.
42:36>> Um, I think my biggest constraint is I'm
42:38kind of like at a point where I'm ready
42:40to sort of venture past just real estate
42:42agents
42:43>> and but I'm not exactly sure, you know,
42:46what I should be doing and who I should
42:47be going after. Um, I love high ticket
42:51sales. So, we do our we average about a
42:53million dollars a month through selling
42:54high ticket through a three-day virtual
42:56event. I've done it five years in a row
42:58every single month. Um, and so I don't I
43:01just kind of more of a counseling
43:03session right now with me.
43:03>> I mean, right. Every month she does an
43:05event and she still makes money. Isn't
43:06that wild?
43:08>> She's making a million a month in
43:09virtual events.
43:13[laughter]
43:14>> Yeah. Brazilian dollars, you know, but u
43:18um Okay. So, you want to do more. Um, my
43:24wager is that like you could absolutely
43:26have a hundred million dollar plus
43:28business in real estate. The issue is
43:30that there's no revenue retention.
43:32That's the like you know how to market
43:33and sell. No question. You're great at
43:35it. Great on camera. You can pitch. You
43:37can do events. Like you have all the
43:38promotion skills. You just don't have a
43:40thing that's that keeps people. And so
43:43like if you think about how many people
43:44you've sold over the last five years,
43:47like if you had half of those people
43:49still paying you $2,000 a year, the
43:51business would be $40 million a year
43:53right now. Right. Somewhere in that
43:54neighborhood.
43:54>> Totally. Yeah.
43:55>> Right. And so the issue is like if I
43:57could go back in time and redo Gym
43:59Launch, I would have focused 100% on
44:01revenue retention and just basically
44:03disregarded everything else until I
44:04solved that. Because the thing is is
44:06kind of like we were talking about
44:07earlier with the um the leverage for
44:08monetization. Your ability to blow
44:10something up will always be there.
44:12you're always you're like you have
44:13enough skills, you have enough network,
44:14you have enough money that you will be
44:15able to even if things change, you'll
44:17figure it out. I'm not worried about
44:18that. And so like the one like the
44:20deficiency for skills that you have
44:21right now is around finding a service
44:25and or product that people don't cancel
44:26from. And if you can just do that,
44:29that's the thing that will get you to 50
44:31100 plus. Like that's it.
44:34>> So what is it? Well, the thing in real
44:35estate is that like I'm surprised that
44:37you never did like your own brokerage
44:39because your ability to
44:41>> Well, no, I do. I have EXP and I'm like
44:42I'm like top 1% with EXP, you know, but
44:45>> Well, doesn't that keep compounding?
44:48>> Yeah. Yeah. I mean, all it's doing
44:49really well.
44:49>> No, but like every year does Well, when
44:51did you start doing it?
44:52>> Uh about five years ago or so.
44:54>> Okay. So, you started five years ago.
44:55Then what payouts are you getting from
44:57EX or X whatever it is? Uh compared to
44:59>> 20 grand a month, but it's like passive.
45:00I don't do any like I zero zero time on
45:03it. Well,
45:05>> it used to be about 50, but with the
45:06real estate market changing, it's like
45:08>> Yeah. Um, no, I meant like I mean they
45:12have the Rure model kind of,
45:14>> you know. I don't love like I think the
45:15thing is is like I feel like I'm over
45:17real estate, you know? They're just a I
45:19love them. So, if this is on camera,
45:21don't tell anybody, but I love realtors.
45:23They're amazing and I always want to
45:24help them and I can because I
45:25>> Yeah. forever and always because they're
45:26great. They're amazing.
45:27>> But I mean, I do the
45:28>> I came up from real estate and like
45:30always grateful.
45:30>> It's kind of like when you were at gym
45:31lunch, right? It's like now too I can my
45:33virtual events I'm not even there. So
45:35they run five months and I'm not even in
45:37them. It's recorded. You can't even you
45:39know you won't wouldn't know it. But so
45:40I can I can actually do something
45:42different and and have the time and
45:44energy you know. I just
45:46>> How many hours a week are you spending
45:47on the business?
45:48>> Um I'm kind of a workaholic but I love
45:49it. Like I'm [snorts] you know I just
45:51but I only because I want to because I
45:52really enjoy it. So
45:54>> can I give you a challenge?
45:55>> Yes. I stop work at five every day.
45:57>> Okay. Can you stop work at 9:00 a.m.?
46:00>> No. I wouldn't want to. Yeah.
46:02>> Well, I want to challenge you to do it
46:03because I think that you are you have so
46:05much activity level. Like you have high
46:07activity. Like everyone here would
46:08probably say that you have high activity
46:09just from like hearing you talk. Um no,
46:12it's a compliment. Um
46:15you probably do so much in your business
46:17that you're not even aware of.
46:20And so I think that like the challenge
46:22for you is like it's very easy to say
46:25that'll just run and it'll be fine. I
46:26want to start this other thing. But it
46:29it'll it's the same conversation we had
46:30earlier. Like it won't be fine because
46:32there's so many tiny things that you do
46:33because you have so you're so fast in
46:35your activity that like you don't even
46:36notice it. You're like, "Oh yeah, quick
46:38decision there, quick decision there."
46:39It's like it wasn't even a thing. Like
46:40you don't even realize the work that
46:41you're doing. And so I would I'm like
46:44gung-ho. I'm totally fine on Christoph
46:46Make sure open, you know, starting the
46:47Christian More brand and doing whatever
46:49you want to do on that side. If you want
46:50to go mass market because that's like
46:52where your heart's pulling you, fine.
46:54But the challenge would still be like
46:58this thing has to truly run without you.
47:00And so the test is like can you spend a
47:02month not doing anything and have it
47:04still keep making money and you're doing
47:06one event a month. So it's like maybe
47:08you have to do like three or four months
47:10to prove out that it actually works.
47:11Like my preference is six which I think
47:13you'll like pull your hair out and
47:14you're like I like my hair and you know
47:16it'll be a whole thing, right? Um, but I
47:18think like find a hobby that you can do
47:20for six months and you will find all the
47:22holes in the existing business that
47:23could potentially enable you to do the
47:25other thing if you so chose. Otherwise,
47:27like this business will eventually decay
47:29because you the star power won't be
47:31there. Um, and the new thing will start
47:34paying for the old thing and then it'll
47:36be this big mess of like this team is
47:37being used over here too. I'm splitting
47:39resources because I don't want to start
47:41hiring all these other people because
47:42it's pre-revenue blah blah blah blah
47:43blah. I guess I just want something I
47:45love more, you know, like I my you know,
47:47you hate the word mindset, but I love
47:48the word mindset and it's like I I just
47:50more motivation and inspiration, that
47:52kind of thing, but you know, that's not
47:53where the money is because you have to
47:55give them what they want and sell them
47:56what they need kind of a thing, right?
47:57So, I sort of get to do that through
47:59real estate, but I'm I'm capped
48:01>> and I just like I want to do bigger.
48:03>> You're capped with money or you're
48:04capped?
48:04>> Not with not with money. I mean, I could
48:06quit right now. Not like
48:07>> No, no. I'm saying the business is
48:08capped moneywise.
48:10>> Uh, no. We could still I mean, we're not
48:11as profitable as we were. Well, you said
48:13you want to get to 30 something.
48:14>> Yeah,
48:15>> you could do that within your existing
48:16opportunity.
48:19>> Realers for sure.
48:21>> There's a million.
48:21>> It's saying how broke they were. Like
48:22the first thing you said earlier, I was
48:23like, "Yeah,
48:24>> they are broke." Totally. But they're
48:25still billion dollar plus companies in
48:27real estate.
48:28>> Yeah.
48:29>> Tons. So, when I said brokerage, I
48:30didn't mean you affiliating someone
48:32else's brokerage and having a rev. I
48:33just meant you owning a brokerage.
48:36>> I'm not going to do that.
48:37>> Okay, that's fine. But I'm so like
48:38that's where like the machine that
48:40you're so good at is attracting
48:41realtors. And so like what machine best
48:43monetizes the attraction of realtors and
48:46so that's where it's like I own escrow,
48:48I have a title company and then you
48:50build the vertical stack.
48:52>> Yeah.
48:53>> That's if you want to build the big
48:54thing and you might not want to do that.
48:55The thing is is like you want to do this
48:57motivation etc stuff. It's like what
48:59stops you from doing that now and not
49:00monetizing it?
49:03>> I I don't know. No, I think that's the,
49:05you know, one one of my coaches said to
49:06me that he thinks that part of the
49:08reason why I'm like not scaling even
49:10more is because I do have this calling
49:11and it's like the calling is keeping me
49:13from scaling more because I should be
49:14going after that, you know? So, yeah, I
49:18told her I needed a counseling session
49:19today. That's what that's what it was
49:20about. I'm like, what does Krista want
49:21to do when she grows up? I kind of feel
49:22like that's where I'm at right now, you
49:24know, just not knowing
49:25>> the whole like, you know, holding you
49:27back because your heart's calling you.
49:29I'm like, whatever. There's stuff that
49:30you're not doing that you could be
49:31doing.
49:32>> Yeah. And so either you do it or you
49:35don't do it. Whether it's your heart
49:37calling you, I don't know what that
49:38means. Um,
49:43you've been in this situation for a long
49:44time because it's been five years and
49:46you've been more or less at the same
49:47revenue level, I think, is somewhere in
49:49there.
49:49>> No, down. I mean, we were we were doing
49:5118 million a year. We were So, it's gone
49:53down.
49:53>> Yeah. But over five years, you've been
49:54in the million a monthish range for a
49:56while.
49:57>> Yeah. We just hit 70 million.
49:58>> Yeah. Okay. So, 70 divided by five.
50:01Okay. like [laughter]
50:04um you've been in that range for a
50:05while, right? And so um
50:10this is one I want like if I wanted you
50:12to leave and leave a 10 out of 10 score,
50:14I'd be like you should chase your
50:15dreams, Christa. I think that you can
50:17make the you can dazzle the world and I
50:20think that your voice is going to change
50:23millions of people's lives and I think
50:24that you're playing small by sticking to
50:26realtors and you like relinquish that
50:27identity because of what you've
50:29achieved. That's what I would say if I
50:30wanted to get get a 10 out of 10 from
50:31you. Um, if I wanted to give you
50:34business advice, I would say like you
50:36are constrained because you don't know
50:37how to grow this business more
50:39>> and the next business will
50:40>> Well, I don't even have a sales team. I
50:41have one sales person. Like we have
50:43>> you don't know how to grow this business
50:44more. Yeah.
50:44>> Because you haven't.
50:46>> Yeah.
50:46>> So, like
50:47>> I wouldn't mind making it $und00 million
50:48a year business. I'd be cool with that.
50:50>> Right.
50:50>> That might make me not want to go after
50:51my dreams. Probably.
50:52>> Right. [laughter]
50:53>> Well, this is my point. like you were at
50:55like the the whole shiny object just
50:57gets sexier at every level.
50:59>> The better you are, the better the
51:01opportunities you have to say no to.
51:02>> And so like this is why like I make all
51:04the content, but like the work it's like
51:06the work we're avoiding. And I do think
51:08that you being in limbo of like ah
51:10there's this other thing over here. I'll
51:13give you a different analogy. So let's
51:14say that you have a relationship, it's
51:17stable, you've been married for a while,
51:18right? And there's this you're a tennis
51:21coach that is, you know, super
51:23attractive, whatever, and you have this
51:24fiery dynamic, whatever. And the thing
51:26is is that like some of your attention
51:28imagines what that life would be like.
51:30And so, as a result, you don't pay as
51:32much attention to your marriage. Is
51:34there anything inherently wrong with the
51:36marriage? No. But you're not allocating
51:38the attention because this is stealing
51:40your attention. Your shower time, your
51:41your your driving time is like just
51:44living in this hypothetical world that
51:45only has upside and not downside.
51:48Because usually our fantasies just
51:50forget the cost of achieving the
51:51fantasy. There will be just as much [ __ ]
51:53in that business or worse than your
51:55current one.
51:57And so like fundamentally I think that's
51:59what regret comes down to is people just
52:01imagine the upside of a path they didn't
52:03take and don't know the downside.
52:06And so right now you have some regrets
52:08theoretically about this path that you
52:10haven't pursued but not the cost
52:11associated with pursuing it.
52:14And so, like I said, if I wanted to like
52:16get you all raw rot, I would say like
52:17screw this business. You're meant for
52:19the you're meant for the stars. You can
52:20you can do all these amazing things. And
52:22I think that's true. Um, but I still
52:24think that you will run into the exact
52:25same revenue plateau that you're
52:26currently at because you'll still have
52:28to deal with the skill deficiency that
52:30you have and you'll recreate this
52:32business, the new one, faster than the
52:34other one. And then you will still hit
52:36the same plateau. The only thing is
52:37you'll be more stressed because now you
52:38have two businesses to take care of and
52:39you'll probably split the team. This one
52:41will go down. That'll stress you out.
52:42you worry about reputation and then
52:44you'll feel like a fraud over here.
52:46>> Everything you said is super spot on.
52:47Can I just ask one more question that
52:49aligns with it?
52:49>> Sure. I know that this applies to like
52:5110 other people here. So, you're fine.
52:52>> Yeah. I mean, this was everything you
52:53said. It's like it's resonating big
52:55time. So, what we teach I know can help
52:58like local businesses like we've already
53:00tested it. So, I had a beta group and I
53:02taught an attorney, a dentist, a solar
53:05coach, like everyone. They were like,
53:07"Oh, I love this."
53:08>> And so, the next thing is we were like
53:10we're ready to launch actually next
53:11month. So it's it's not different. It's
53:13the same exact thing we teach. I mean
53:15everything's the same except we're not
53:17teaching you how to do a listing
53:17presentation. We're teaching you how to
53:18do a video sales letter,
53:20>> right? And so we we're ready to go mass
53:23market.
53:23>> But that's different than the benefit
53:25motivation.
53:26>> So this is something that that's like my
53:27dream. This is that something that we
53:29already have kind of going, but we're I
53:31I told you it was going to be a
53:32counseling session. So So basically it's
53:35like but then we're thinking how do I go
53:37speak to the masses, right? It's like
53:39because when every time you speak to
53:40one, you speak to no one. The more you
53:41speak to them, the more you Right. So,
53:43it's like that's the the thing. We're
53:45we're we're doing it because but it's
53:47it's I know there's going to be
53:48difficulty there.
53:49>> Yeah.
53:50>> But then when I look at like you and I
53:52know I'm not you, but like you you look
53:54at these different people, Russell,
53:55these different ones. They're speaking
53:56to the masses like entrepreneurs,
53:57experts, you know. So, it's like if they
53:59can do it and there's not very like it's
54:01a little sausage festival here. There's
54:03hardly any women that are that are doing
54:05this.
54:05>> If Lea had an event, it would be chicks.
54:07It's fine,
54:07>> you know. But you know what I'm saying?
54:08Like there's not a lot. So I feel like
54:09there's room for a woman leader to come
54:11in and teach this to
54:13>> I agree.
54:14>> You know,
54:14>> I agree.
54:15>> So is there a huge risk with that too?
54:17>> No, I think there's significantly less
54:18risk with that than you going after just
54:21pure personal development with no
54:22business model. just a matter of
54:24figuring out how to get
54:25>> if you want to just take like how to
54:26make viral content and post it on a
54:28consistent basis plus having a video
54:29sales letter as your kind of method for
54:31getting people to turn organic leads
54:32into paying customers and just go from
54:34this worked in this vertical. Here's 10
54:36of the proof cases and you can go mass
54:38market. I think that'll work.
54:39>> Okay. Okay. Thank you.
54:41>> Yeah, [laughter]
54:43>> we should have started there.
54:46[applause]
54:47>> All right. So, quick question. How would
54:49you go about selling to a burntout
54:51market? So for context, we work
54:53>> define burnt out.
54:54>> So we own a marketing agency. We go
54:56after Chyros and every mom, every person
54:59in their mother has started a Cairo
55:01agency. And
55:01>> why are they burnt out?
55:03>> Well, it really comes down to we
55:06offer this crazy guarantee and never
55:09>> I want to redefine what you said, which
55:11is that there are competitors in the
55:12space that you compete in.
55:14>> Yes.
55:14>> Okay.
55:15>> So how would you go about making
55:17yourself different?
55:18>> Okay. So that's a better Yeah. Forget
55:20the burnout thing. doesn't do anything.
55:21>> Um maybe this is like just for everybody
55:24like you're seeing kind of a common
55:25theme of like the reason I asked define
55:27the term is here.
55:29>> So if you're I'll answer your question
55:30but it was a short one so I'm going to
55:32have to I'm going to beef it up a little
55:33bit. Um
55:35so three big questions that I try to ask
55:37to better understand understand excuse
55:39me. Um is uh shoot is it what does this
55:44mean?
55:49What does it mean?
56:00How do you know that? You've noticed
56:02that one. How do you know
56:07that?
56:13Who cares?
56:18which is just a fancy way of saying
56:20logic or this is logic excuse me
56:24uh sorry logic
56:26evidence
56:30utility.
56:34So, if you tackle a problem that you're
56:35trying to understand, right, with what
56:38you were saying or, you know, there's a
56:40handful of you guys, it's like, okay,
56:42well, what does that mean when we say
56:44they? What does it mean when you say
56:45burnt out? What does it mean by, you
56:47know, it's tough right now? What does it
56:49mean? Okay, got it. How do you know that
56:51they're burnt out? How do you know what
56:54they think? If you would answer that,
56:55which you didn't, but if so, as you
56:57because sometimes you'll just bust it on
56:58the first one, but if it's like, okay,
57:00this is what I mean by burnt out. I mean
57:02that people have a lower likelihood of
57:04clicking on my ads. Okay, great. We
57:06haven't defined that. How do you know
57:07that? And they're like, I don't know
57:09that. I'm like, okay, great. So, maybe
57:10we don't have a problem. But let's say
57:12you did somehow know that you had a
57:13magic way of knowing that this market,
57:16chiropractors, has a lower likelihood of
57:18clicking on my ads. And I know that
57:19because of this data, right? Now, why do
57:21I care?
57:24Why is this important?
57:25>> Because we want to make money.
57:27>> Not for that reason, but in terms of
57:28what it changes about your behavior.
57:31So will you stop marketing as a result
57:33of the first two things? No. So then a
57:36lot of data that we take in every day is
57:37irrelevant.
57:39And so I think this is why most people
57:41walk around confused is that they fill
57:44with fear, right? But it means what does
57:47that mean?
57:49>> Okay, it means that you actually have
57:50you just have to click post. Okay, how
57:53do you like and again we pop it on the
57:54first one for for most people is like I
57:56want to be more motivated. Define
57:57motivation. Don't know it. Okay, well
57:59then what are you asking? And so we ask
58:01these questions so we can't even define
58:02the terms we're asking for. And so it
58:04really just means like this is me being
58:05really crude. I'm going to make face
58:07noise at you and I want you to make face
58:09noise back at me that makes me feel
58:10good.
58:12But [snorts] it's not going to change
58:13anything about my behavior. And so
58:15fundamentally the reason that I find
58:16these terms like intelligence is of
58:17learning. What's learning? New
58:19condition, same behavior. Other way
58:21around same condition, new behavior,
58:22right? I change what someone does. If
58:24you change what you do, you learn
58:25something. And so hopefully when you
58:26leave here, you change what you do. If
58:28we did that, then it means we taught
58:29something or more specifically, you
58:31learned, we did stuff.
58:33>> And so to go back to your question of
58:36how do you market and to a burntout
58:38avatar? Um, which we rephrased as how do
58:42I stand out, which I will then rephrase
58:44as how do I increase the likely people
58:45click on my ads? Much more solvable,
58:48right? And so the reason we reframe that
58:50is because now we can actually do
58:50something about it. Like how do I get
58:52more people to come to my hair salon? If
58:54that was the question you started with,
58:56sometimes just asking the right question
58:57makes it way easier to solve. It's like,
58:59shit's really tough right now. Should I
59:01start this retail product? When it's
59:02really, how do I reliably recruit
59:04stylists?
59:06Great. We can answer that, right? Very,
59:08very easy to understand. And so with
59:11your particular issue, um I will give
59:14you a a little tipsky that I just
59:16learned
59:18um reviewing 2,000 plus ads over the
59:20weekend. Um,
59:23how many clients do you have?
59:25>> Seven.
59:25>> Seven. How many clients have you helped
59:27for free?
59:28>> Two.
59:29>> Okay. So, I'll tell you right now, um,
59:34you need more proof. The reason you
59:36don't stand out in the marketplace is
59:37because everyone else also doesn't have
59:39proof. Like, I have 5,000. Actually, I
59:43probably do have 5,000 testimonials
59:44because I have multiple testimonials
59:45from from same gym owners. But when I
59:48counted like several years ago, we were
59:51over 2,000 testimonials.
59:53And so I had an ad that was just tell me
59:55when and I just scrolled. Just tell me
59:58when. And so right right now it's not a
1:00:01branding thing. It's it's not a new
1:00:04offer thing. You just need more proof
1:00:07that you're good. And so you can either
1:00:10do that by selling more aggressively,
1:00:12but that's kind of chicken egg problem.
1:00:13Like they don't believe me because I
1:00:14don't have proof, but I need them to
1:00:15believe me so that I can have proof. But
1:00:17there's a way around that which I cover
1:00:18in the leads book which is work for 10
1:00:20people for free. Get 10 insane
1:00:22testimonials, get better at the craft.
1:00:25You'll quickly, guess what? Be able to
1:00:26convert those people into more customers
1:00:28from the reviews, more customers from
1:00:29the referrals. And some of those people
1:00:30will just stay and pay. And if they
1:00:32don't stay in pay, then you have to fix
1:00:33the thing so you get good at it.
1:00:35Fundamentally, that's it. Like you're
1:00:37not going to get around being really
1:00:38good. If you are really good, you won't
1:00:40have any you don't it won't matter
1:00:42because you'll be really good. So you
1:00:43won't fail. So solve for being really
1:00:46good and then the rest of it will be
1:00:47really easy. Got it.
1:00:49>> Make sense?
1:00:49>> Yeah, absolutely. So quick question to
1:00:51go back to the free. So we do have I
1:00:53mean all of our seven clients are paying
1:00:55us obviously. How do we then now go back
1:00:57and say running this for free?
1:00:59>> Just say it's a beta program for
1:01:00something new you're testing.
1:01:01>> Okay.
1:01:02>> They don't need to know that it's the
1:01:03exact same thing you're currently doing.
1:01:04>> Got it.
1:01:05>> Change one thing so ethically you feel
1:01:06okay about. Got it.
1:01:08>> Cool.
1:01:08>> Yep. Awesome. Thank you.
1:01:09>> Yeah. Just go reach out to all your past
1:01:10customers and say, "Hey, um, I didn't
1:01:12give you enough proof. I wouldn't
1:01:13believe me either. Like, let me just
1:01:15prove it to you. You don't even have to
1:01:17put a card down. I mean, you need to put
1:01:18a card on Facebook, but you don't need
1:01:20to pay me. Okay.
1:01:21>> If that's how you're doing it, I don't
1:01:23got it.
1:01:23>> I sell white label media services.
1:01:26>> Yes.
1:01:26>> To PR firms. We do about Well, we've
1:01:29been stuck at 1.5 million for 5 years.
1:01:32I'd like to be at around 5 million in
1:01:34about three years.
1:01:35>> A nice comfortable number.
1:01:36>> Yeah. Just sounds good. I believe what's
1:01:39stopping me is finding more PR firms.
1:01:43So, clients,
1:01:44>> we've we've tried all the ads. Um, spent
1:01:46tons of money.
1:01:48>> Horrible return.
1:01:49>> Yeah. Well, ads obviously don't work.
1:01:51[laughter]
1:01:52>> I think I'm the problem.
1:01:55>> Yeah, probably. Um,
1:01:58so
1:02:01you've been doing one and a half million
1:02:02for five years.
1:02:05What's the average ticket size?
1:02:08>> About a thousand bucks a month.
1:02:09>> A month. Okay. Are you selling to SMBs?
1:02:11>> Yes. Okay. So, this will be a super
1:02:14valuable one for everyone. So, everyone
1:02:16who sells to SMBs,
1:02:18um, and do you sell any element of kind
1:02:21of like this could help you get some
1:02:22leads and get some anything around that
1:02:24with this PR?
1:02:25>> So, we mainly our high like highest LTV
1:02:28is other PR firms essentially who then
1:02:30resell.
1:02:30>> Oh, you white label your their stuff.
1:02:32Correct.
1:02:32>> Okay. Got it. So, you sell it to them
1:02:33for a thousand, they upsell it, they
1:02:34sell it. That's exactly right. So then I
1:02:37guess the followup question is like why
1:02:38are those agencies not white labeling
1:02:41your stuff?
1:02:44>> I think because they don't know about
1:02:45us.
1:02:45>> No, but you but like you have all the
1:02:47what percentage are coming from other
1:02:49agencies versus you selling direct?
1:02:51>> They So all of our lead generation's
1:02:53organic so they just come directly to
1:02:55us.
1:02:57>> The agencies,
1:02:58>> correct? Yep.
1:02:58>> But they
1:03:01agencies come to you.
1:03:02>> Yeah. They then white label your
1:03:04services and sell your stuff to other
1:03:05people.
1:03:05>> That's exactly right.
1:03:06>> Okay. So, do you have the same number of
1:03:08agencies that are selling your stuff
1:03:09last year as this year and the year
1:03:11before that and the year before that?
1:03:12>> No, it's the it's pretty high churn for
1:03:15the most part.
1:03:15>> So, the agencies no longer So, this is
1:03:17literally 100% relevant to what we were
1:03:18just talking about. It's just instead of
1:03:20experiential marketing, it's PR, but
1:03:22literally the same exact thing. Um,
1:03:25I'm guessing that you do not treat them
1:03:27like a customer and that there is not a
1:03:30customer journey for them.
1:03:31>> Correct. in terms of what does it look
1:03:33like? Like first is have you read the
1:03:36affiliates chapter in leads?
1:03:38>> Um no I have not read it yet.
1:03:39>> You should read that. It's 29 bucks. Um
1:03:43and so and so in the affiliates chapter
1:03:46um there's a two-prong strategy that I
1:03:48use when I have when I'm building a
1:03:49layer of distribution. And so we did
1:03:51this with Prestige Labs for the sub
1:03:52company. We did this for Allen the
1:03:54software company. We did this like with
1:03:55school. Like I am I'm super accustomed
1:03:57to building through distribution layers.
1:04:00There's a launch, which is what you'll
1:04:02have to do to immediately get the win
1:04:04because you won't have time to value for
1:04:05the affiliate, for the distributor,
1:04:07right? So, they come in. Do you charge
1:04:08them anything to white label?
1:04:10>> No. No, it's just a thousand bucks a
1:04:12month.
1:04:14>> Hold on. So, you charge them $1,000 a
1:04:16month and then they can white label as
1:04:19much of your services as they want.
1:04:20>> That would be like 10 articles a month.
1:04:22>> Okay.
1:04:22>> In the past, we would do like unlimited
1:04:24articles for like 2500 bucks a month.
1:04:26Uh-huh.
1:04:27>> Probably don't love that idea, but we
1:04:29made a lot more money when we did it.
1:04:32>> So, maybe we go back. But the problem
1:04:35with that is you'd have an agency that
1:04:36publish 900 articles a month, and then
1:04:39you'd have an agency that would publish
1:04:4010.
1:04:41>> Yeah.
1:04:41>> So, it's like, well, maybe we can make
1:04:43more on those that are publishing 900.
1:04:45But overall,
1:04:46>> tiers.
1:04:47>> We we do have tiers where it's like, you
1:04:49know, thousand bucks a month for 10 or
1:04:51you could do, you know, more for more
1:04:52essentially.
1:04:54I'm guessing the reason that they churn
1:04:56is because they're not using like
1:04:57basically I want to figure out are they
1:04:59are they churning because they're not
1:04:59using the articles or because the
1:05:00articles are not good
1:05:02>> because they're not using it.
1:05:03>> Okay. Yeah.
1:05:04>> So, it probably makes sense. You
1:05:06probably need a lower tier for them uh
1:05:08that has some sort of usage component
1:05:10added on. So, it might be something like
1:05:12$1.99 a month plus 100 per article or
1:05:15something like that.
1:05:16>> Got it. Got it.
1:05:17>> Because then it's like basically you
1:05:18want to be low enough with SMBs, which
1:05:19is who you're serving right now. Like
1:05:21you want to be low enough that they
1:05:22don't churn on their bad months
1:05:26>> because their volatility is translating
1:05:28into your volatility.
1:05:29>> Yeah.
1:05:30>> Volatility of their customer.
1:05:31>> That's right.
1:05:31>> Is translating to volatility for you.
1:05:33>> Yeah. Makes sense.
1:05:34>> So it's like what's the core like it's
1:05:36been five years, right? And so there's a
1:05:37core assumption that's been wrong about
1:05:39how to build the business. And so when
1:05:41you serve SMBs in any kind of like
1:05:43marketing or agency capacity, who here
1:05:44does this because this will can I get
1:05:46hands? Okay, then I'll be quick. It's
1:05:48like five people. um the
1:05:53those businesses suck at being at being
1:05:55businesses. And so what you have the
1:05:57desire to do is start doing more and
1:05:59more of their work for them because
1:06:00they're like, "Well, I have I'll get
1:06:01them leads for my chiropractors or my
1:06:03roofers or whatever it is." And then but
1:06:05they don't work the leads and then but
1:06:07uh then I work the leads for them. I set
1:06:08them for them, but then they don't know
1:06:09how to sell. So maybe I was thinking
1:06:10about I'll do the sales for them. It's
1:06:11like no, you just miss the boat. It's
1:06:12like they suck as customers
1:06:14>> and you just either have to price so low
1:06:17that they will not cancel or you have to
1:06:19go high enough that they can't afford
1:06:20you because you're selling a different
1:06:21customer
1:06:22>> fundamentally. And the reason the whole
1:06:23SMMA space exists is because no one
1:06:25knows this. And you can make a million
1:06:28dollars a year, $2 million a year, $3
1:06:29million a year revenue, not profit doing
1:06:32this. And it's just like you can just
1:06:33grind, but it doesn't stack. And so we
1:06:36have to figure out something that
1:06:37creates some sort of retention either at
1:06:39the uh distributor level or at the SMB
1:06:42level. I'm guessing the SMB level is
1:06:43probably is super unrealistic for your
1:06:45current business. Yeah. But at least
1:06:46[snorts] at the agency level like the
1:06:48only problem like what's the what's the
1:06:50one constraint of the business
1:06:52>> is
1:06:53>> the the problem to solve is we have to
1:06:54get 80% of these agencies next year to
1:06:57still refer you business every month. If
1:06:59you do that, next year you'll be at
1:07:01three. The year after that you'll be at
1:07:024.5. The year after that you'll be at at
1:07:04six. it'll it'll stack and that's the
1:07:06problem. And then with the extra cash,
1:07:08you can get more aggressive, you can get
1:07:09better agency, blah blah blah blah,
1:07:10right?
1:07:10>> Yeah, that makes sense.
1:07:11>> And so that's the fundamental issue. I
1:07:12think that you're priced too high for
1:07:15the majority of your customers and too
1:07:17low for the ones that you're going to
1:07:18maximize profit with.
1:07:20>> Yep. Makes sense. Perfect.
1:07:23>> Happy to help.
1:07:23>> I sell coaching to Christians who want
1:07:25to be authors, speakers, and coaches.
1:07:27We're at 4 million. Sweet.
1:07:28>> We'd like to be at 12 million. Sweet.
1:07:30>> Uh what's stopping me is kind of two
1:07:32things. One is we've been making this
1:07:33pivot to offering a degree program
1:07:35getting it wanting to kind of category
1:07:37shift from the coaching space to the
1:07:38higher education space.
1:07:39>> So you're going to get accredited.
1:07:41>> Uh we have a partner that's accredited.
1:07:43So we are able to offer accredited year
1:07:46degree program
1:07:47>> and we've got a a pretty good setup with
1:07:49them moneywise. Um, so you know, we're
1:07:53we're having a problem making that
1:07:54category shift, selling a new product at
1:07:56the same time of like our old product
1:07:57would have been like an $8,000 a year
1:07:59coaching program, LTV to CAC on that
1:08:02used to be 10x. Now it's closer to 2x.
1:08:05So we just, you know, our our whole
1:08:08funnel is not working like it used to.
1:08:10>> Okay.
1:08:12>> Problems.
1:08:13>> So what's that?
1:08:14>> That sounds like two issues.
1:08:15>> Yeah, exactly. So I I'm kind of in
1:08:17between like do I double down on you
1:08:20know the coaching model and how we've
1:08:22sold coaching and just you know apply
1:08:24the internet marketing stuff at a you
1:08:26know greater velocity
1:08:28>> or do I go all in on this education
1:08:31model because I think it's a better
1:08:33upside. [sighs]
1:08:36>> Do you own the other entity?
1:08:38>> So you said you have a partner. How does
1:08:40that work?
1:08:40>> Yeah. Yeah. Yeah. So we have a a master
1:08:42services agreement with them. So we're
1:08:44providing a whole list of services,
1:08:47marketing, branding
1:08:48>> to sell their product basically.
1:08:50>> Uh yes. Yeah.
1:08:51>> So basically it's like a JV like you
1:08:53market and sell it, they deliver it and
1:08:54you get a split on the revenue.
1:08:56>> Yes.
1:08:56>> Is it a new entity?
1:08:57>> No. They've been around for
1:08:58>> So it's just a No. So like
1:09:00>> your existing codes can stay the same.
1:09:03There isn't a third code that get
1:09:04created that like half you each own half
1:09:05of.
1:09:06>> Correct.
1:09:07>> The first one. So just two separate
1:09:08codes. Okay. Got it.
1:09:10>> So basically it's a Yeah. Master. So
1:09:12basically it's like a master affiliate
1:09:13grant. Yeah. Yeah. It's just just a
1:09:15partnership agreement. Two two different
1:09:17entities.
1:09:17>> Well, have you done have you done any
1:09:19marketing and sales for that thing
1:09:20before?
1:09:20>> Yeah, we've we've sold it. We've been
1:09:21selling it all year.
1:09:22>> What's the LTV to CAC on that?
1:09:24>> What's the
1:09:24>> What's LTV to CAC on that?
1:09:26>> Um CAC is around 3 to 4,000.
1:09:30>> Okay.
1:09:30>> And LTV is 10 to 12,000.
1:09:33>> Okay. And then what's your split on the
1:09:3512?
1:09:36>> 80%. We
1:09:37>> Okay. So, you make the majority of it.
1:09:38Yeah.
1:09:38>> Okay. So you have your old model, your
1:09:41old product has a 2 to1 LTV CAC and your
1:09:44new one has a 3 to1 LTV to CAC.
1:09:47>> Yeah, we've been selling it really in
1:09:48like the same exact way. We've just kind
1:09:50of repackaged like a coaching program to
1:09:52a degree [clears throat] program. So
1:09:53we're selling it the same way to the
1:09:55same people. I feel like just the
1:09:57problem is that
1:09:58>> we've gone from a 10 to1 LTV to CAC to
1:10:02now a like two to four LTV to CAC just
1:10:04because the the marketing funnel is not
1:10:05working this.
1:10:06>> Yeah. Well, there there's there's two
1:10:08components. So this is like a very
1:10:09classic problem. So I'm sure like more
1:10:12than just you is dealing with this in
1:10:14the room. And so um
1:10:18[sighs] so basically it's like there's
1:10:19an order of magnitude problem on the
1:10:21back which is
1:10:24the cost to acquire customers gone up
1:10:26and so the only apparent solution is to
1:10:28decrease cost per customer or sell
1:10:30something different right but most of
1:10:32the times it's like you just have to
1:10:33solve the big hairy problem that's in
1:10:34front of you which is like I need to fix
1:10:35this right like fundamentally like are
1:10:37there people who want the education that
1:10:38you have?
1:10:39>> Yes.
1:10:39>> Yeah. Okay. And the market's probably
1:10:40bigger than $4 million a year.
1:10:42>> Yes.
1:10:42>> Right. And so it's like okay so we have
1:10:44we have a marketing problem on the front
1:10:45end which is probably a creative issue
1:10:48and whatever the word of mouth is about
1:10:50the product and so typically if your
1:10:53cost to acquire a customer raises faster
1:10:54than CPMs do then it means that you are
1:10:58um basically you have you're you're
1:11:00trying to outpace negative or neutral
1:11:02word of mouth.
1:11:03>> And so that's that that's obviously a
1:11:05big compounding problem. Just like you
1:11:06can have viral word of mouth in a good
1:11:07way. No one seems to think that you can
1:11:08have viral word of mouth in a bad way
1:11:10except the the ratio of bad word of
1:11:12mouth to good word of mouth is like 15
1:11:14to one. And no one wants to talk about
1:11:15having bad word of mouth go viral. Um
1:11:18and it's much more sensitive. And so
1:11:20this by the way is the reason why many
1:11:21people in the coaching this isn't me
1:11:22decrying you but um this is why many
1:11:25people in the coaching space basically
1:11:26have to keep launching new offers is
1:11:28because they're ne their first thing was
1:11:29never that good and so they have to keep
1:11:31coming up with new things over and over
1:11:33again. Um be like this time it's
1:11:34different. [laughter]
1:11:36Um, and so, okay, so if I'm you, uh,
1:11:40basically you can you can you can spend
1:11:43the amount that you're spending right
1:11:44now to get customers because $300 or
1:11:45$4,000 is actually fairly like benchmark
1:11:48in terms of CAC. If you had one that
1:11:51price before and you were acquiring
1:11:52customers at like $800 or $900, I would
1:11:54say that you had probably a moment where
1:11:56media was mispriced or whatever
1:11:58arbitrage opportunity had some new
1:12:00method um of acquiring customers. I'm
1:12:02guessing is that
1:12:03>> Yeah, that's that resonates, right?
1:12:05Yeah. like 2020 to 2022. Yeah, we got
1:12:08$800 cash for sure. Now it's the same
1:12:10thing but $4,000 cash,
1:12:11>> right? And so the market kept like
1:12:13basically the market caught up. The
1:12:14method that you had um isn't as novel as
1:12:17it once was in terms of acquiring
1:12:19customers. And so the arms race of
1:12:22business is LTV, not CAC. And I think
1:12:24this is what most people mess up is like
1:12:26>> CAC across industries typically is
1:12:28fairly comparable. Like I look at so
1:12:29many different businesses in the same
1:12:31space and it's like
1:12:32>> like you saying 3 or 4,000 like that
1:12:34sounds about right. That's that's not
1:12:35really off. The issue is LTV is off.
1:12:37>> Like LTV needs to be closer to like 20
1:12:39or 30K
1:12:40>> and then all of this works just fine. So
1:12:42then the question is, okay, you sell
1:12:44this thing that's $12,000. How can we
1:12:46get 50% of those people to buy a $30,000
1:12:48thing and then that 15 rolls into the 12
1:12:50and now you're at 27 and it all works.
1:12:53And so this is why I say like I tend to
1:12:55fix businesses back to front rather than
1:12:56front to back. It's very difficult to
1:12:58have a business rely exclusively on
1:13:00having arbitrarily low CAC relative to
1:13:04market. It's much easier to have a very
1:13:06sustainable business because by building
1:13:08a better mousetrap so that you can
1:13:10always outspend your competition
1:13:11independent of how new the media
1:13:13platform that you're advertising on is.
1:13:14And then when something new happens up,
1:13:16you just print money. And then once it
1:13:18stabilizes because all the the small
1:13:19dogs who didn't have a backend and
1:13:21didn't have higher LTV, they get priced
1:13:23out, which is kind of the issue that
1:13:24you're dealing with right now because
1:13:25people are still selling to your market,
1:13:26right? There are other businesses that
1:13:28sell to your market.
1:13:28>> Yeah. Yeah.
1:13:29>> Right. So it's like the fact that they
1:13:31can still [clears throat] breathe right
1:13:32now should bother you.
1:13:33>> And so it's like, okay, well, how can
1:13:35they breathe than I can? So either
1:13:36they're better at advertising or they
1:13:37have bigger LTV. It's one of the two. It
1:13:39might be a combination. But I think if I
1:13:41were you, I would solve back to front.
1:13:43um in terms of how do I get now you
1:13:45probably have more control over your own
1:13:46product than the other person's the JV
1:13:48thing they were talking about.
1:13:49>> Yeah, we've got we've got a lot of
1:13:50control.
1:13:50>> You have more control there.
1:13:51>> Yeah, we've got a ton of control.
1:13:52>> And so the second version you had was
1:13:54like you're getting two and a half to
1:13:56one or three one and your current one's
1:13:57doing two to one. So I would give up a 3
1:13:59to one where I don't have the control to
1:14:01have two to one where I do because you
1:14:02can instantly double that, triple that
1:14:03just because you can add a back end. And
1:14:05so I would probably go back to front,
1:14:06build the back end, and then I would
1:14:08look at what the other people in the
1:14:09space right now are doing in terms of
1:14:10what methods they're using because that
1:14:12stuff changes all the time. Yeah.
1:14:13>> Uh what methods they're using to get
1:14:15lower costs.
1:14:16>> Yeah. So prioritize getting doubling LTV
1:14:18rather than cutting CAC in half.
1:14:21>> Yeah.
1:14:21>> Okay.
1:14:22>> The LTV is the sustainable competitive
1:14:24advantage. CAC is ephemeral.
1:14:26>> Okay. Cool.
1:14:27If you like this video and you're a
1:14:28business owner who wants to break
1:14:29through your current revenue ceiling, I
1:14:31distilled every lesson from scaling 10
1:14:32businesses past 10 million and three
1:14:34businesses past 100 million into a
1:14:36completely free scaling road map that
1:14:38I've used to go from 0 to 1, 0 to 10,
1:14:40and 0 to 100 plus. And so you can click
1:14:42here and you can check it out. Again,
1:14:43absolutely free. And since you're a
1:14:45business owner, appreciate you. And uh
1:14:46enjoy.

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