"Why Won't My Customers Stay?" — Transcript

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1. 0:00We use a term that we call nail it then
2. 0:01scale it. All right, and it's really
3. 0:03nail it in order to scale it. And the
4. 0:05problem is most people learn how to
5. 0:06advertise, they learn how to sell a
6. 0:07little bit, and then think, "Oh, I just
7. 0:09need to do more of that." But here's the
8. 0:10problem with that. Until you find out
9. 0:12what the compounding vehicle is within
10. 0:13your business, you're bound to plateau.
11. 0:15And so, I've done this example before,
12. 0:17but I think it's so powerful that it's
13. 0:18worth repeating. All right? So, let's
14. 0:20say that you have company A and company
15. 0:21B. All right? And both of them sell 100
16. 0:25people per year, okay? So, 100 new
17. 0:28customers per year. Sorry. A sells 100 B
18. 0:31sells 100 the first year, 200 the second
19. 0:33year, 300 the third year. Well, which
20. 0:35company would you rather have? At face
21. 0:37value, you'd think, "Oh, I'd rather have
22. 0:39B." But wait, there's more. Let's say
23. 0:41company B loses 100 customers every year
24. 0:44because they're not that good at what
25. 0:46they do, or they don't have a very good
26. 0:47model. And so, that means that next year
27. 0:48they lose 200, and next year they lose
28. 0:50300. Now, let's say company A keeps 100%
29. 0:53of their customers. So, year two, they
30. 0:55actually have 200 customers, and year
31. 0:57three, they have 300 customers. They
32. 0:59have the original 200 plus this 100, so
33. 1:02now it's 300 in total. So, both of these
34. 1:04look like they're 300
35. 1:06sales per year businesses. But which of
36. 1:09these would you now rather have?
37. 1:11This guy. Because the margins are going
38. 1:13to be better because you don't have to
39. 1:14pay to acquire all of these extra
40. 1:16customers. They had to pay to acquire
41. 1:17600 customers, right?
42. 1:20This one only had to pay to acquire 300.
43. 1:22All of that added cost drops straight to
44. 1:24the bottom line. But on top of that,
45. 1:26this is a business that literally
46. 1:27[snorts]
47. 1:28will always keep growing. If you think
48. 1:29about it, every year they you could sell
49. 1:31another 100 customers, and they would
50. 1:32just keep growing. This business next
51. 1:34year, if you sell another 300, the only
52. 1:36way to grow is to sell 400 customers
53. 1:38next year just to keep up with A. And I
54. 1:40can promise you, one of the laws of
55. 1:42nature is that advertising to acquire
56. 1:44customers only becomes more expensive in
57. 1:45time. Because you are going out to
58. 1:47colder and colder audiences that are
59. 1:49less and less of a fit. You're you're
60. 1:50not getting the early adopters, you're
61. 1:52actually getting the laggards and the
62. 1:53late adopters. And so, it costs you more
63. 1:55to reach them, they're harder to sell,
64. 1:57they're more price sensitive. Like it
65. 1:59has all the negative things. And so this
66. 2:00is common when companies look that are
67. 2:02bigger if they're looking to exit, the
68. 2:04acquirers, any sort of an investor is
69. 2:05going to look at this and say, "How much
70. 2:07runway is there that's left? And is
71. 2:09there a way that we want at the very
72. 2:11least can maintain the customers we
73. 2:12have, and ideally have some sort of
74. 2:14vehicle inside of it that allows those
75. 2:16customers to bring us more customers."
76. 2:18And so imagine that let's say you're at
77. 2:20here, and then you watch this video and
78. 2:22unfortunately I've had a lot of business
79. 2:23owners who watch my stuff like realize
80. 2:25this is that they're like, "Oh no, I'm
81. 2:27this business and I'm selling 300 people
82. 2:30every year and I'm losing 300 people
83. 2:31every year. Well, what do I do now?"
84. 2:33It's tough because you're in a rock and
85. 2:35a hard place scenario. And this is why
86. 2:36it's so important to nail it then scale
87. 2:38it. And so you just want to advertise
88. 2:40and sell enough so that you can figure
89. 2:42out what is required in order to keep
90. 2:43customers, keep them happy, keep them
91. 2:45referring, keep them paying. If you
92. 2:47can't figure that out, there's basically
93. 2:49no point to scaling. It's going to get
94. 2:51more and more expensive, your margins
95. 2:52are going to get thinner, and it will
96. 2:54feel more volatile because you probably
97. 2:55rely rely almost exclusively on paid
98. 2:57ads. That's tough. And so having a
99. 3:00different way to think about it, which
100. 3:02is you want to get the foundational unit
101. 3:03right. Once you get that right,
102. 3:05everything else gets much easier. You
103. 3:06know, I'm a I'm a huge consumer of
104. 3:09software startup, you know, founders.
105. 3:10And one of the things that they talk
106. 3:12about a lot is it's so much better to
107. 3:14just build your product or build your
108. 3:16service for 100 people to absolutely
109. 3:18love you than to have a million people
110. 3:19who kind of like you. I think part of
111. 3:21this is that it's very difficult to to
112. 3:23build something for the amorphous from
113. 3:25like the faceless masses, but it's much
114. 3:27easier to build something for a specific
115. 3:28person of which there happen to be many
116. 3:30and many of those people. And so I think
117. 3:32getting really crystal clear, this is
118. 3:33why having like an ICP or customer
119. 3:36avatar, whatever you want to call it, um
120. 3:38some sort and you can like name them.
121. 3:39It's like this is Jenny, this is our
122. 3:40customer. She has three kids and she,
123. 3:42you know, wants to lose weight or
124. 3:43whatever it is, right? Would Jenny like
125. 3:44this? Like what would Jenny think about
126. 3:47this, right? And some of the best
127. 3:48companies that I've seen from a product
128. 3:49and branding perspective always
129. 3:51basically have Jenny sitting at the
130. 3:52table or their customer avatar. And
131. 3:54they're like, "Well, what do you think
132. 3:55Jenny thinks about this?" Right? And
133. 3:56that's what allows them to make the best
134. 3:58long-term decisions for with the
135. 3:59customer and the brand. Like, for the
136. 4:01love of God, if the economics that you
137. 4:03have when you're small aren't amazing,
138. 4:04they're not going to get better when you
139. 4:05get bigger. And so, if you're like,
140. 4:06"Okay, that's great, Alex, but how do I
141. 4:08tactically improve my offer or like my
142. 4:10offering to the marketplace?" So, inside
143. 4:12the offer book, I talk about this, um
144. 4:14which is creating a grand slam offer
145. 4:15part one and two, which is basically the
146. 4:16problems and solutions. And so, I think
147. 4:19one of the best exercises that anyone
148. 4:21can do with their team is and if it's if
149. 4:23you're just the team then it's just you,
150. 4:25right? Is to sit down and say, "Let's
151. 4:27write down what" Here, I'll walk through
152. 4:29I'll walk I'll walk you through it. So,
153. 4:30the first thing we're going to say is,
154. 4:32"What's the dream?" Right? What does
155. 4:34Jenny want? What is What is her big
156. 4:36outcome that she wants to have happen?
157. 4:38Okay, now that we define that, we want
158. 4:39to be as crystal clear about that as we
159. 4:40possibly can. It also feeds in the
160. 4:42messaging, sales scripts, copy, etc. The
161. 4:44second thing is we're going to talk
162. 4:46about, "What are the problems? What are
163. 4:47all the things that are getting in the
164. 4:49way of her getting her dream, of
165. 4:51accomplishing what she wants to
166. 4:52accomplish?" And we want to be as again,
167. 4:54as specific as possible here. Now,
168. 4:56typically, there's really one big dream,
169. 4:58right? But there's many problems that
170. 5:00get in the way of that dream. Right?
171. 5:02It's very simple to just say, "Oh, I
172. 5:03just want a six-pack." That's a dream,
173. 5:05right? But what are all the things that
174. 5:06are preventing you from uh getting your
175. 5:08six-pack? It's probably like you don't
176. 5:09know how to cook food. You don't know
177. 5:10how to grocery shop. You don't know how
178. 5:12to weigh yourself. You don't know how to
179. 5:13count calories. You don't know how to
180. 5:15lift weights. You don't have time to go
181. 5:16to the gym. You don't have You have to
182. 5:17make different food for you as you do
183. 5:18for your spouse. Like, there's almost
184. 5:20unlimited problems that can that can
185. 5:22manifest. And all you have to do is ask
186. 5:23somebody who's give just give Listen to
187. 5:25their excuses. Those That's where the
188. 5:26problems are going to be. All right?
189. 5:27Now, once you have the problems, what I
190. 5:29want you to do, and this is a mental
191. 5:31exercise, is you list them
192. 5:35as solutions.
193. 5:37So, you take So, after you have all the
194. 5:39problems, you're then going to list them
195. 5:41as solutions. So, the solutions can have
196. 5:42two parts to it. One is you want to have
197. 5:43some sort of name around it that's like,
198. 5:45"Okay, you don't know how to cook food,
199. 5:46so we have our you don't have to cook
200. 5:49food system, All all right? Now,
201. 5:50underneath of that, we're going to have
202. 5:51every possible way that we can think of.
203. 5:53And this is probably the most creative
204. 5:55fun part, right? You're going to list
205. 5:56every possible creative way that you
206. 5:58could solve it. And I'm saying like, you
207. 6:00can't think about cost. You You have to
208. 6:02be purely brainstorm. And so, by the
209. 6:04way, fun rule for brainstorming is that
210. 6:06you never say no, you just add to
211. 6:08things. You say, "That's amazing and."
212. 6:10So, it's not It's a lot of and thinking,
213. 6:11not or thinking. Cuz a lot of good ideas
214. 6:13are on the third or fourth iteration,
215. 6:14all right? And so, for example, with
216. 6:16this meal thing, I could myself drive to
217. 6:18their house and I could cook their food
218. 6:20for them. I could do that, right? Like,
219. 6:22let's write it down. What else could we
220. 6:23do? We could hire a chef to do that.
221. 6:24Okay, cool. What else could we do? Maybe
222. 6:25we hire a chef for lots of people. Oh,
223. 6:26okay, that's kind of interesting. Oh,
224. 6:27what else could we do? We could do a
225. 6:28grocery store where we actually take
226. 6:30them shopping. Okay, what could we do? A
227. 6:31recorded version of that? We could do a
228. 6:32recorded version of that, too, right?
229. 6:33And so, all the things you think about
230. 6:34all the different ways you could solve
231. 6:35it. When you think about this, you're
232. 6:36like, "Wow, there's like 20 ways I could
233. 6:38solve this problem." Right, which then
234. 6:40leads you to
235. 6:41step four, which is I call the trim
236. 6:44and stack. And this is probably the most
237. 6:46business-oriented part of the five
238. 6:48steps, all right? Which is you have this
239. 6:50big list and you say, "Okay, if we were
240. 6:52to rate these on which of these are very
241. 6:55high value
242. 6:56and which of these are low cost?
243. 7:00We want the ones that are super high
244. 7:02value, super low cost to be our first
245. 7:04priority. Now, the second bucket, and
246. 7:05this is something that I've probably
247. 7:06changed that's that might be a little
248. 7:08different than what I have in the book.
249. 7:09This is a little bit of an update.
250. 7:11Is I am more okay with
251. 7:15What about some things that are
252. 7:16incredibly high value that have some
253. 7:18cost? Cuz a lot of people immediately go
254. 7:20to zero cost solutions because they want
255. 7:21to just have something that costs
256. 7:22nothing. The thing is is it's very
257. 7:23crowded in the zero cost solution
258. 7:25market. But, you know what's not that
259. 7:26crowded? The little bit of cost solution
260. 7:28or the medium cost solution, but very
261. 7:30high value. And so, the thing is is that
262. 7:33this process is an unconstrained
263. 7:35ideation process. And the reason for
264. 7:37that is we have yet to determine our
265. 7:39price.
266. 7:40And so, you might be like, "Well, I
267. 7:41can't drive out to their house.
268. 7:43Could you for a million dollars?
269. 7:45Probably. Well, then it's not off the
270. 7:47board yet. Right? So we just want to
271. 7:49think what is the most valuable
272. 7:51combination of these things?
273. 7:52Then we go to step five and we say, this
274. 7:55is now our valuable thing, our valuable
275. 7:58grand slam offer
276. 8:03for
277. 8:06whatever amount of money that you want
278. 8:07to charge that makes sense relative to
279. 8:09your term and stack. And this process,
280. 8:11I'm telling you, if you're like, man, my
281. 8:12customers aren't in love with my product
282. 8:14yet, then build this out.