How to Make More Money by Adding Friction to Sales — Transcript

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1. 0:00you're not making enough sales and so
2. 0:02what you think to do is you want to
3. 0:03decrease friction. So you say I'm going
4. 0:05to remove steps from my process of sales
5. 0:07so that I can make more. Ah but here's
6. 0:11what's counterintuitive and this is
7. 0:12something that I found. So you guys
8. 0:13could take this from the the you know
9. 0:15the the the holy book of marketing you
10. 0:17know whatever you want to say whatever
11. 0:19like it's if I had hormone laws this
12. 0:20would be one of them is that the more
13. 0:23friction that you add to a sales process
14. 0:26the more money you typically make and I
15. 0:28know this sounds crazy and it's because
16. 0:29now you could say well if you put all
17. 0:31the friction in the world then no one
18. 0:32would ever get through and that's true
19. 0:33but the thing is is that most people's
20. 0:35in intuition is to add too little and so
21. 0:38if you try to add more you'll probably
22. 0:40find the sweet spot rather than go too
23. 0:41far All right. And so let me give you an
24. 0:43example. So in the launch for uh money
25. 0:49models, we had two campaigns that were
26. 0:51running. One that was a leadbased
27. 0:52campaign. So it optimizes earlier in the
28. 0:54funnel. Uh meaning we get a conversion
29. 0:56event when someone opts in. And then we
30. 0:57had a second campaign that was for
31. 1:00pre-orders. So it optimized only for
32. 1:02people who are going to do pre-orders.
33. 1:03Now what's interesting about this is
34. 1:04that what do you think the LTV to CAC
35. 1:07was on each of these campaigns? Well,
36. 1:08I'll tell you. So the leadsbased
37. 1:11campaign, our leads cost us about $4 or
38. 1:13$45 and the value per lead from the
39. 1:16leads generated campaign was about 20.
40. 1:18So we got four or five to one uh on the
41. 1:20leadsbased campaigns. Now how much do
42. 1:23you think it cost us to get leads even
43. 1:25though we weren't optimizing for leads
44. 1:26on our pre-order driven campaign?
45. 1:3117 bucks.
46. 1:34What? Yes. $17. So, you're saying
47. 1:38there's a $4 or5 campaign that was worth
48. 1:4120 and then there's another campaign
49. 1:43that's getting you $17 leads. Okay. So,
50. 1:46the question is, what were the $17 leads
51. 1:49worth? The answer was $189.
52. 1:56And so, the question is, are you trying
53. 1:58to get the cheapest leads or you trying
54. 1:59to make most money? It's
55. 2:01counterintuitive because we think, ah,
56. 2:02cheaper leads, therefore we should make
57. 2:04more money. But again, most of the
58. 2:05solutions that I've had that have been
59. 2:07breakthroughs in my business have been
60. 2:08counterintuitive. I need to spend more
61. 2:10for the lead so that I can make even
62. 2:12more money because my return was better.
63. 2:14My LTV to CAC was better. I'd rather
64. 2:16spend $1 and get 11, right? And more
65. 2:19specifically, I'd rather spend $100 and
66. 2:21make $1,100 than spend $1 to make $2.
67. 2:24Get what I'm saying? Get my drift here?
68. 2:26And so right now, many of you need to
69. 2:28add more friction to your sales process,
70. 2:30more qualifications, more specificity in
71. 2:33the targeting, more steps for someone to
72. 2:35go through so that you're only talking
73. 2:36to better quality customers. And
74. 2:38whenever you make this change, and this
75. 2:39is the big the the leap of faith here,
76. 2:41and this is why it's counterintuitive,
77. 2:42is that you have to expect for your lead
78. 2:44cost to go up. That's the thing. Your
79. 2:46lead cost will go up when you do this,
80. 2:49but your returns will also go up. All
81. 2:51right. All right. One of the best
82. 2:52campaigns I ever ran at gym launch was a
83. 2:55campaign called the one year later
84. 2:56campaign. And so the whole thing that I
85. 2:57was trying to anchor against was there
86. 2:59was a lot of, you know, onesie twoosy. I
87. 3:00call it method people who they've got
88. 3:02they're a one-trick pony. They they've
89. 3:03got one little thing they figured out
90. 3:04one little trick, one little hack, one
91. 3:05little tactic. And I was like, we're not
92. 3:07method people. We're model people. I
93. 3:09will fix the model of the gym and then
94. 3:10you can use as many methods as you want.
95. 3:12And the methods come and go with the
96. 3:13times. But the model is the thing that
97. 3:14persists, right? And so I was like,
98. 3:16where are these guys testimonials from
99. 3:18one year later, from two years later? I
100. 3:20still got people working with me. They
101. 3:21don't because they taught the one trick
102. 3:22and then they're gone or the trick only
103. 3:24works for six weeks and then it doesn't
104. 3:25work anymore. And so the one year later
105. 3:27campaign, this is what was interesting.
106. 3:28The one year later campaign
107. 3:30automatically selected for business
108. 3:32owners who were more mature, who thought
109. 3:34over a longer time horizon, who were
110. 3:36looking at much bigger before and afters
111. 3:38in terms of the the numbers, but the
112. 3:40expectation was a year, two years. And
113. 3:42so here was the crazy part and the
114. 3:44reason that I remember this so vividly
115. 3:46is that we almost turned the campaign
116. 3:48off because the cost per call was so
117. 3:51much higher than our standard uh
118. 3:54campaigns that we were running. But then
119. 3:55all of a sudden, this is why it's
120. 3:56important to have a feedback loop
121. 3:57between sales and marketing, which at
122. 3:59this point in my career, I don't think I
123. 4:00had them unified. And by the way, pro
124. 4:02tip, um, at every company probably in
125. 4:04the last five or six years that I've
126. 4:06had, marketing and sales are are unified
127. 4:08from a from a from a communication cycle
128. 4:10perspective. It's really just
129. 4:12acquisition because otherwise you get
130. 4:14this like get us more leads. The leads
131. 4:15are Why don't you close leads?
132. 4:17It's this constant battle between
133. 4:18marketing and sales when they really
134. 4:19should just be unified on like how do we
135. 4:20make the most money? And so back to the
136. 4:22story, the sales guys were like, "Hey,
137. 4:24can you get us more of these these
138. 4:26specific types of leads?" And when I
139. 4:27looked at where these leads were coming
140. 4:28from, they were all coming from the
141. 4:29one-year later campaign. They were all
142. 4:31more qualified customers. And so then,
143. 4:33and this is where I only got to look at
144. 4:35this retroactively, a year later from my
145. 4:37one-year later campaign, those customers
146. 4:40paid the most, stayed the longest,
147. 4:41upgraded the most, referred the most
148. 4:42customers, and they ultimately my CAC
149. 4:45was a little higher, but my god, the LTV
150. 4:47was gigantic, right? And so this is why
151. 4:50it is counterintuitive sometimes in
152. 4:51terms of the steps you have to take in
153. 4:52order to fix the business. All right.
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166. 5:15enjoy.