Make Your Offer So Good They Feel Dumb Saying No | Ep 855

You want to present your offers at the point of greatest deprivation, not the point of greatest satisfaction. So if I walk into a restaurant and I'm starving and I say, I want a steak, I eat the steak, waiter comes back and they're like, how's the steak? And I'm like, oh, it was delicious. Thank you so much. They're like, great. You want another steak? I'm like, no, no, I'm good. They're like, oh, you didn't like the steak? And you're like, no, I love the steak. It was great. It just seems weird. That's where you get these weird sales conversations.

Hey, Alex, thanks for everything that you've done. I'm James. I sell custom branch railings to homeowners.

Okay.

I, we did 420 or so last year. I was, I've read 10x is greater than 2x. And so last night it was coming to me again, like, do I really just want to double or do I want to try to 10x? And so what I want to try to do is to develop a network of product specifiers, architects, designers, and contractors that can act kind of like a referral network. I want to shift away from the minnows and to focus more on whales. We had one client last year, about $50,000 worth of handrails. And if I could get 10 of those in a year, then I would double revenue just with 10 clients. So kind of what are my best strategies to go about achieving that?

So where did you source the single whale this year?

He found me. It's all inbound. It's all through search.

Okay. So SEO or PPC?

SEO.

Okay.

I just started Facebook ads about 3 or 4 weeks ago. They were going pretty good. Qualified about half of the leads so far.

So I would, so if you want to go whale hunting, then I think your, your initial thought strategy of finding the architectural firms and engineering firms and whatnot is a good one. I would probably try the outreach method as my primary way, cuz you can be hyper-targeted in terms of who you're reaching out to. And the, the key to making it work though is like, what's in it for them to refer you business?

Are you asking me that? Mm-hmm. That's an excellent question.

Okay.

So architects will typically in a plan, like if they make a set of plans, they'll specify what kind of tiles to use and what kind of windows to use, et cetera. So I've, I've, we've gotten plans in the past where it's like, it's got the pictures from the website with the CAD drawings and everything on the plants. Mm-hmm. And so it's like how to persuade them to do that kind of in absentia. And I should also note that we ship nationwide, so this is not like, you know, a hyperlocal.

Are you shipping or you, are you doing installs or no?

No, we haven't done installs.

Oh, you just, you just actually, you just ship product. Interesting. Got it. Then who are the decision makers? Well, right now it's been primarily residential is what it sounds like, right?

It's primarily homeowners. We've done some commercial work. You know, but it's primarily homeowners who are, you know, looking for something different. And so it's very, what I call intentional inbound search. It's like they're looking for something, they're deliberately searching it out. They find it, you know, we have a lead magnet kind of, which is like $250.

That's it, right?

So if that's the owner, you know, yeah.

Well, this is a fundamental change in business strategy, so you're aware of that. So with that comes risk, because like if the, obviously the, the lowest highest risk adjusted return move or lowest risk, I guess, is to probably add in PPC. Like if I were like tomorrow, what would I do? I'd probably just add PPC in right now because you already have something that's working on SEO. I would probably see how can I get way more articles written so that my SEO traffic can go up. Can I tackle more keywords? That's like the for sure will work and make you more money play. The going after whales for sure can make more money because why not add zeros to things? It'll just be a completely different sale and you'll have two levels of sales. So sale number one is going to be for the affiliates and then figuring out what's going to make it worth it for them. And then the second level is what's the, you know, what's the actual sale to the, to the whale customer. So who's the decision maker with the whales?

Like the final decision maker? Yeah.

Do we know?

It's going to be the homeowner, whoever's doing the project.

But so you just want bigger homeowners?

The, the architects have the ability to specify it and to put it in front of the client. So like we also did another one, which was about $60,000 for a guy that was doing a, a development of Airbnbs. Yeah. In Virginia, he put up like 6 yurt kind of things.

Yeah.

And you know, so I had 2 very—

so both of them were architects that sent you these?

The one was an architect and the other was a construction company.

Okay. Yeah. So you're gonna have to go B2B outreach is the pri— basically when you look at Core Four. That's going to be your, what you are going to do, and then they're going to be your affiliates. And so the million-dollar question is what's in it for them? So my proposition would be, so there's 3 ways you can do affiliates, at least in the world of Alex. So you have, they sell your shit for you and they get a commission. That's option 1. That's typically my least favorite option, but it is an option. Option 2 is that you give them some morsel of something that you sell, that they can sell for 100% markup. They could keep all the money, but you get the introduction. This is my favorite way of doing it. The third way is that you basically allow them to just bundle in your free thing with their services. Now with architecture firms, it's not like they're going to bundle in a railing for their service, but just for everybody else. Like those are the 3 things. So it's like they bundle your, your basically your lead magnet in. For free with their thing they sell. So it makes, it enhances the value of their overall package. You give them the thing so they can upsell your lead magnet for an amount of money that they can keep 100% of, or they just sell your stuff and they get a kickback. Is there a version for this where they can just upcharge? Like you can do a small portion of this that they get 100% of?

100%? Like, I don't think so. Like maybe some kind of contractors or architect discount.

We wanted them to be stupid to say no. Yeah, because like the generic, like you get 20% kickback, it's just like everyone does it. Like who here does 20% kickbacks for anybody who refers you business? You can raise your hand. I'm not going to be upset. Okay. And so the point is, is that, and you probably, no one here has referred anyone else business and it's because no one cares. That's, that's kind of the point. And so it has to be an irresistible offer. And so if we give away the lead magnet or something, think about it as like my CAC. For a $50,000 customer is the cost of the lead magnet. And if I close 1 out of 3 introductions, then it's 3x the cost of lead magnet is my cost to acquire a customer, which is usually pretty darn good. But it sounds like an irresistible offer to the architecture firm because they're like, we can just sell this and keep 100%. You're like, yep, just make the introduction and I'll deliver that. And then when you talk to the customer, you're like, yeah, I'll deliver that. Here's one rail, but you need 10 more. And then you make the sale. Does that make sense?

I'm not entirely sure. Like people would order the entire project.

Okay.

So it's not like you can just, like, I can't just ship you a sample and be like, hey, look, here's a—

Yeah. Then you're going to have to do the commission-based structure, which is not my favorite, but that's probably the way you're going to have to do it. So either you can do the discount. I mean, I would say, guys, I have 20% that I can play with here. So you can take all 20 and give them no discount. You can take a 10% discount and then they get, and then you get 10% kickback. Like, this is what I got. I'll make it work whatever way you want, but this is my bare bottom price. Okay. And I think that's what, like, that's the outbound strategy.

So should I then in turn raise prices for direct-to-consumer?

Yeah, I love that.

Okay.

Thank you. Yeah.

Right.

Love that for you.

My name's Cody. I sell roofs to people. We did $140 million last year, trying to do $250 million this year. Shout out. Trying to figure out how to follow the principle of giving away more and, you know, guarantees and bonuses when I have such high hard cost. Yeah. And such a high-ticket item.

Yeah. What are gross margins right now?

40%.

Gross. What's net?

10 to 15%.

Okay. Got it. Do you want to sell it or do you just want to keep it forever or?

Well, I actually just sold my roofing business and now we're part of a PE firm that, that now I'm directing that, that entire—

So are you the platform? Yes.

Okay.

So you're the platform and how many tuck-ins have they done?

8.

Got it. How long has it been since they started?

About 3, 4 years. I just got acquired 30 days or we just closed 30 days ago and now they're trying to roll everything into my brand and I'm— Yeah.

Yeah.

Got it. Okay. So sorry. Go back to the original question. If you don't have like better context on this, whatever.

So how do I give a, you know, follow the principle of, of give away more value, make the, you know, offer so good. It's, it's, you know, you gotta feel dumb saying no when I have such high hard costs. I, you know, I can't really do a money back guarantee. I can't really give away more than a, you know, a roof.

Well, the question is, what is it? Is that the constraint? Like, is that the thing that's limiting the growth of the business?

In, in my theory, yes, because if I create a good enough offer, then I could roll that offer out to the other 8, 8 other brands and that would be the biggest amount of leverage that I could deliver, you know, in the shortest amount of time.

And is everyone insurance-based?

Well, that's why they acquired us, cuz we're retail.

And so, so you're the only guy selling just new roofs. Everyone else is doing storm chasing and damage repair and shit like that.

Correct. And what they want us to do is bring the retail model to the other brands. And to add another layer is we sell everything 100% virtually. So no in-home appointments. It's, it's all, you know, digital. And so that's what they, That's the vision is taking that, you know, nationwide.

Centralized sales virtually. So you want an irresistible roof offer. I'm going to blow the roof off. I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change. Basically, I wouldn't— I would take the model that I already know works is what was your revenue before you did the— before you were acquired? Okay. You're doing 20. So I would like in terms of introducing levels of change. So this is actually pretty good for everybody. Like I, I will typically not try and change like 5 things at once. And so you centralizing all sales is gonna get cost efficiency improvements and you're gonna be able to have higher sales utilization. So you probably cut off the bottom third of the sales force that's low performing. That alone might give you a 25% lift in general because the best sales guys will take more of the sales and you'll have centralized all the costs. Like we have centralized all the costs, right? And so you'll have an increase in revenue and a decrease in cost that's paired. That would probably be my first step. The—

for part of the acquisition deal. That's the only way I did the acquisition is if they were going to give me full control and centralize all the sales.

So, but like, I wouldn't, I mean, I know the question was about roofing, but like, that's what I would do first. And that will probably take you 6 months or more realistically. In terms of, in terms of the offer to roofs, an offer that's worked really well in home services is instead of being a money-back guarantee, I position it as a profit guarantee. So it's like, listen, you want your thing to be on time and on budget probably. And so I guarantee that I will deliver it on time and on budget, or I'll give you my profit, which is 20%, whatever. And that way it's like you're not underwater and you still have 40% gross margin, so you're not really losing on the deal. But then people are like, okay, so he's got skin in the game. And so that's a way of closing significantly more deals because the two biggest obstacles that, well, you would know this, but in most home services it's on time, on budget, and probably for roofs it's like, and how much am I going to be displaced? How much is it going to interrupt my life? And so So I would put my guarantee around those items and then just have a marginal amount that's back. But it's really just because all they don't— so the big thing that just with guarantees is that people don't want their money back. They want the roof. And so they just want to know that you care enough to make sure the roof gets delivered. And so that's really the solve for the guarantee is it just pays down risk of them not getting what they want. And so as long as that gets accomplished, you don't have to do it with money back. You can just do it with some money back that gets them to say yes. Does that help?

That's mega perfect.

Hey Alex.

Hello.

Thank you for the content you create. My name is Mohammed Fattah. I'm the founder of Alfand.

What?

I'm the founder of Alfand. So Alfand?

Yeah.

Okay.

So basically we sell tools to creators, help them make more money. And we also simplify how brands collaborate with creators.

Okay. Basically tools like software?

So software and agency tools. So we have a music label, a creator agency for big creators, and then a platform as well.

Got it.

So I'm coming to that just in a bit. I know the focus topic. We made around $4.3 million last year. And basically my goal is try to get to $100 million.

All right.

Now the issue here is—

What's the split between the three in terms of revenue?

$1 million for the creator agency.

Okay.

$1.3 million for the music label. And then the rest is on the brand side.

And the brand side is you basically being an agent to do part of it. Exactly.

Connecting it both. But basically what I've been doing is that I realized the disruption of AI that's kind of coming in.

Okay.

I also saw the scalability of what we were doing, because I've been in the YouTube space for a while. So a lot of these services aren't going to be scaling as much. So in the past 2 years, I've been taking that profit and putting it into a tech platform. Basically, it's like a creator store where you can sell your services, digital products, but also items that you love. So the skincare that you use, the hair cream, the shoes, and you'll earn a commission. And we use all of that data to make it easier for brands to know what creators to work with. Because right now in influencer marketing, it's like a spray method, right? I'm gonna pay, I have no idea how much conversion they're gonna actually get me, but our integration shows you for 1,000 clicks, they get you these number of visitors and then they end up buying.

Mm-hmm.

My challenge here right now is that I'm trying to scale that business, right? But my business model is we make money when you make money. So on the brand side, we get a 15% commission or a margin on all the spend.

Mm-hmm.

And on the creator side, we get around 8%. From whatever they make with their fans by selling these digital products and courses or affiliate links.

Okay.

My issue here is I got 40,000 creators, but only 1,000 are making money.

Mm-hmm.

Right? And I've been kind of struggling between going on a SaaS model to be able to scale, because when I do any social marketing, we get a creator that comes on board, but they don't make money right away.

Uh-huh.

So it's not like you, you know, and the longer it takes you to recoup your ad spend is not usually a good metric for scalability. So I'm kind of pivoting. Should I go into a SaaS model where right up, whatever I make from the creator, I'll just be like, hey, like just pay me that price and I take 0% from you. And then I just charge the brands the commission to collaborate with those creators. This way I can scale the business in a much faster—

Say the last part again.

So instead of me making percentages from creators, I provide them the same tools that allow them to make money and I keep 0%.

Okay.

But then let's say they have to pay like $20 a month.

Sure.

But then I still make my money on the upside, on the brand side by connecting them with these creators.

Okay. So switch to a subscription.

Switch to the subscription.

Yeah. Okay.

Because right now, like, I have 40,000 creators who signed up, but I'm really making money off 1,000.

Right. And it's free to sign up and you only get paid if they get paid. Yeah. So you're in a prosumer audience. So if you look at like Shopify, for example, it's super— it's— if you look at the amount of people who've tried to build marketplaces, almost all of them fail. And it's my opinion that the best marketplaces do run as SaaS. And then once they get to scale, they can, they can kind of push more marketplace. So like Shopify, for example, like it's $29 a month or whatever it is because they know that the vast majority, like they make more money charging $29 a month than getting 4% on zero for the vast majority of stores. But people continue to pay for the hope that someday they will make money. And so I think the idea of switching to SaaS is not a bad one. I am concerned about the 4 businesses that you have. So, 'cause in order to win at SaaS, you have to be like all in on software. And so the alternative to that would be instead of letting creators go on for free, you would charge them to come on, which you could do. It has like a one-time setup fee and then maybe increase the likelihood that they win. Either path would work, but if the ultimate goal is that you want to build a network of creators, then you wanna have the lowest barrier possible on the creator side.

So I'm still thinking of a free tier and a paid tier.

Mm-hmm.

With some minor benefits, but then if you really wanna make money, you gotta end up paying a subscription. Exactly.

Yeah. Yeah. You'll have to play with the feature set 'cause that's always a, a bitch.

But just path of least resistance to getting to 100 mil.

Yeah. So I think, I think adding the subscription for the base and then still maintaining the revenue that you get from the, The sponsors make sense. I would maybe push back slightly on the hypothesis that they can't convert anything because it dramatically decreases the value of the network from the sponsor side. What do you mean? Because some people will pay for impressions.

Yeah.

And so those guys can for sure deliver those. And so maybe there's like two tiers that you can sell. You have another product on the ad side or the media side. That's just something to consider.

Perfect. Thank you. That's all. You just validated my thoughts.

So, oh, good.

I just wanna make sure I'm thinking the right way.

No, I think it makes sense. Yeah. Either have to, basically you have to position as higher ticket and do premium awake level onboarding and then select only for the really good creators. And that would be like you charge $5,000 or $10,000 and you really get them set up. Or you basically flip the other way, go freemium. And then it's all based on like basically media arbitrage where you're just running tons and tons of ads to get people onto the platform and you just know what your average revenue per platform user is.

Perfect.

Thank you.

Hi, I am Mauricio. I sell corporate training focused on soft skills to large companies through—

Who on soft skills?

What?

You help who do soft skills?

Which I train companies in soft skills.

Okay, got it.

Leadership and coaching, et cetera. We do $1.3 million in revenue on a project-based model. I would like to be at $100 million subscription-based model, and what's stopping me is project-based model is more lucrative. So I feel like stuck with these whales.

Okay.

That doesn't want the subscription model.

So project-based isn't bad. You just need to demonstrate. So this is the concept of recurring versus reoccurring, right? And so if you go project to project, there's nothing wrong with that as long as you can demonstrate that you have a high renewal rate between those things. And so I'm in general, I do like having kind of project-based stuff because typically you can price 2 to 3 times higher than you can for a subscription. And so you have usually way better cash flow because people are willing to commit to a certain amount for this period of time versus, you know, this forever, which is what a subscription feels like, even though realistically we know that it's not that, that, that case. So you want to get to $100 million subscription business. You have a $1.3 million non-subscription business. I would say, I don't think the limiter to your business is that. So we'd have to dive a level deeper and say like, what's stopping you from getting to $10 million with your current model? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all 8 functions of the business. So you've got marketing, you've got sales, you've got product, you got customer success, you've got IT, you've got recruiting, HR, you've got finance, and we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. Um, and so if that's at all interesting, you can go to acquisition.com/roadmap. Roadmap. R-O-A-D map. Roadmap.

Yes, we are now aiming to, to smaller companies on the subscription base.

Yeah.

And the whales are staying the same, basically. So that's our strategy to like this year we're aiming for a 40% of subscription, subscription base model from all the revenue.

40%.

40%.

Yes.

Is subscription already, or that's the goal?

No, it's the aim of this.

Okay. Got it. And you said you have whales.

Yes.

And you have small companies. Smaller. Yes. What percentage of companies are in either bucket revenue-wise?

Nowadays it's like, uh, 80-20. So the whales have, are almost everyone, every, every—

So just do more whales. Okay. I'm serious. So how do you get whales?

We have an outbound sales team.

Okay.

And we are pretty good at it. So we, we get into a well and then sell it through more, more departments.

Yeah, of course. So what stops, so what's the limiter on your outbound team? Ah, people. Okay.

Yeah.

HR, HR is that word.

So recruiting.

Yeah.

Okay. Got it. So if you had twice the outbound team you have now with equal skill, would your business double?

Yes.

Great. So what stops you from doing that? You don't have a recruiter?

Yes, but it doesn't work.

Okay. So you have a bad recruiter?

Yes.

Okay.

So hopefully this like line of reasoning was fun for everyone, but that's what we have to work on. Like, you don't even, like the rest of the stuff that we talked about is basically irrelevant and you need to go get another recruiter who's good and can get you outbound guys basically. And you will continue, like my advice is to continue increasing the outbound team. Until you can't handle the sales anymore. That's it. And whales, and whales fundamentally, like it's not uncommon for them to be working on projects for just extend the terms. So if you, if you sign, you know, they're currently doing 6-month engagements, try to go for 12 or 18-month engagements. Okay. Does that make sense? Yes. Yeah. And that's, that, that's just as valuable. Like if you have like a 5-year contract with a Fortune 500, it's recurring as far as like an investor would be concerned. It's the same thing. Makes sense?

Yes.

All right. Hopefully it's simpler. Hey, my name's Joshua.

I'm actually a chiropractor as well, like Chris.

I have a great product that I would love to tell you about. Self-cracking.

Yeah, yeah, yeah.

That's funny.

Yeah.

So me and my wife, we run a family chiropractic center in the UK.

Cool.

And our current revenue is around 750. We'd like to get it to 2.3, perfect the model, and then scale.

Okay.

This is what is currently my predicament. So we averaged 48 new clients per month last year consistently from two main, two main channels, referral and Facebook Meta.

Okay. What was this split?

So it's 35% referrals, 65% ads.

Got it. Yeah.

And excuse me. Sorry, I'm a bit nervous.

Thanks. So you're 35-65 referral versus Meta. You did 48 customers per month. Yeah. The issue that you have 750, you want to get to 2.3. Yeah.

So my question, and I think what's stopping me is determining where I should be focusing because we get great results for clients, like they get, but you know, even if they have an amazing result, like a lot of those clients leave, which is fine.

And then I mean, they need us.

It's terrible. Yeah. And I'd love to have more clients to stay with us longer term from like a membership perspective. And when I looked at our churn retention rates, our gross retention rate is 47%. And then our Our net retention rate is 74%. So once we've done expansions, upsells, and everything else, it brings it up, but we still lose a lot of, we leave a lot of money on the table on the, because we're losing.

You lose half your customers, but you keep a little bit more revenue. So you're talking revenue retention versus low.

Yeah. So I'm like, which one do I focus on? Do we expand the marketing and just keep pumping the machine? Cause I literally feel like you, I've got to a stage in my business where I'm still in the clinic, still serving patients. I love my clients.

Yeah.

But like, you know, even if they've had an amazing change in their life, like it's like you with the weight loss, like I've got to the point now where I'm like, man, like this doesn't excite me anymore. Like, I know I can help serve more people if I can just become more of the owner rather than the operator. I've stepped my shifts down from, you know, 5 days a week to like 2 now.

And if you made more money, you'd definitely be happier. So not necessarily. I'm, that was a joke. Okay, so you have a location, you're doing 750. What does it cost to open a location?

We own the building.

Well, outside of real estate, what's the cost to outfit the location?

Oh, outfit it. So we, so we are pretty lean. Like we outfitted, outfitted our current one. That was $100,000.

Okay, got it. What's profit?

We kind of keep it, we've kept it low the last few years, but we, yeah, it's like, it's like 13%.

Okay.

750. Yeah. So you need to fix that.

Yeah.

Okay.

So it sounds like there's a lot of like raw, you know, owner's earnings and stuff.

Well, what's SDE? So seller discretionary earnings. So what do you make plus the profit of the business?

So me and my wife, we draw $100K.

Uh-huh.

Each?

No, total. Yeah. And you have 13% on 75, so another $100K. So $200K on, on 750.

Yeah.

Okay. Got it. So whatever that's 20, 30, 30%-ish margins. Okay. So you want to get to 2.3, why 2.3?

Because this is what we worked out for our build, like our practice. We could, if we were at capacity, this is what we—

Okay. So that location can do 2.3 million. Okay. So the issue is we have to solve retaining customers. Now, if you keep 50% of customers, like if, if let's say you lose half your customers year one, but then after that they stay forever, that's fine. We just have, it's like in next year you'll double. If that isn't the case, then, and you lose half of those customers the next year and then half of those the next year kind of thing, I would see what we could do to improve that. That being said, you're in a business that traditionally is marketing heavy. It's kind of like weight loss because like people get fixed and then they're like, deuces. So the strategy that I've seen that has worked really well in the chiro space is basically going significantly higher ticket, number one, and number two, niching down in terms of the different problems you solve. So this is like neuropathy, diab— you know, diabetes stuff, those types of like kind of segments. Nice.

Yeah.

And having more targeted advertising for those avatars and selling significantly higher price packages. And that's typically how those, uh, businesses will get to like a few hundred thousand dollars a month just with one like very small store. And so typically that, that model is a, you run ads for some sort of free workshop, free dinners, free whatever.

That's pretty much how we did, uh, we built our business.

So, okay. Like, 'cause we realized, so then what's the ticket price that you're charging?

Uh, it's different based on the—

well, you're selling 50 customers a month and you're doing $60K.

So the, the average is around, like, it depends because every plan's different for the client. So we don't just give like a, here's your plan.

Like, no, I know. But if I just did simple math, I'd say $60,000 a month, 50 new customers, average customer is $1,200. Yeah. Okay. So it's not the same model because I'm talking $10,000. Right. Does that make sense?

Yeah.

More. Yeah. So I think you have to get niched down in terms of, so like if you're doing all those things, I think you probably need to add a zero to your price tag.

We're already the most premium in our like area.

Like, well then it won't change. You'll still be the most premium.

Okay.

And which one would you focus on then? Would you just focus on like just filling the front end or would you try and fix that? Because you talked about like fix the chair and like get it to less than 3, like, or would you double down on both?

Like, would that be the— Well, if you keep half your customers, you're pretty close to 3.

Say again?

You're pretty close to 3 if you keep half your customers. Right.

When we track it, it varies between 3 and 7 on the, depending on the month.

I mean, are there things that you could do to improve it? Sure. I think you have more of a model issue. Okay. Like you obviously can acquire customers and you're doing a decent enough job keeping them. If we need to improve how much money this thing makes, it's either a pricing thing. Basically it's an offer and pricing thing is that you need to charge more so that you can make more money. And then once you have the cash flow, then the expansion becomes pretty straightforward. That goes for basically everyone. Like a lot of times it's like, you know, we're doing 20% and you have what I would consider is like a normal business. It makes money, we work hard, but there's no, like, you never feel like you really can like get ahead. It's usually because there's some significant hole in the business and you are decent at both sides. And I think that the issue is that you just, you need to be making way more money. Okay. Which is, I think you need to add more. Do you sell physical products and consumables? Not really. Do you sell like braces and orthotics?

Are you saying in a care plan it will be based on like, yeah, we do adjustments, massage. It might be like traction, whatever.

Yeah. So the, the key is there's two, two models that have worked really well. One is where you basically upsell them some sort of machine that they can take home. Yeah. And do other work. And there's a big markup on that. And the other is supplements because you can sell a year's worth of supplements or 6 months worth of supplements upfront, make a really good fit there and it doesn't increase your operational drag at all. 'Cause you just make the sale, give them the product. Okay. Does that make sense? Yeah. That's what I would add in to justify the higher price so that you could make more money per customer, which will then make you more money overall, which then fixes the model, which then allows you to scale. Gotcha. That make sense? Okay. Yeah.

Cool.

Thank you. Rock and roll. All right. Thank you.

Hey, Alex.

How's it going?

My name is Nacho and we sell surf coaching to intermediate and advanced surfers.

Okay.

We do 700 a year and we would like to be 5 million.

Okay.

And what's stopping us right now, it's basically our lifetime value to CAC, it's 3 to 1, but that's because we changed our program, our online program, we changed it from 2 months to yearly.

Okay, so we can raise the price.

Yeah, exactly. And also have a longer time window, so hopefully—

exactly.

Yeah. So my question is, how would you go about the, the Ascension process once they finish the year, or even do it before they end the year?

Yeah, well, it's definitely not at the end of the year. So you have 4— so there's 4 places that you can do Ascension upsells. I'll walk through these. Okay. So these are kind of the spaces that you can, that you can do the upsells. And this is the order for your business. If you already sell something expensive upfront, which I'm guessing is now the annual, then you can ignore, well, I mean, honestly, no, I'm going to say it. So you can immediately upsell people. Hey, now that you bought this thing, do you want to get something else? That's if you want fries with your Coke. So that's that type of upsell. Now, if that's not the nature of the upsell that you have, then this is where you'd begin offering it. So you can ignore the first one and the other 4 will apply. Okay. So 24 to 48 hours, that's probably when you have some sort of onboarding call, right? Boarding. Ah, there you go. And so the best upsell that you can tag with this is more help with that thing you just bought. And so either that more help or better help. So that would be like a higher qualified coach. This is a master's level 3 coach. He only, coaches, people who are whatever. And so if you want, it sounds like you might be a good fit for that. Do you want me to set you up with a call there? Right? So you can immediately ascend people who just bought. Number one, that'll also help you offset CAC, bring up cash forward. The next one is when you have some sort of milestone. So they get up on their board for the first time or they do their first flip or whatever, you know, whatever big milestone that somebody might have, you know, within the first 30 or 60 days of being inside of your thing. Right? At that point you say, hey, we'd love to hop on a call. Let's see what else we can do to help you. Like, You know, capitalize on the momentum. And that's when you say, cool, let's take this next level. So milestone, you know, it's a milestone for them. You're saying, let's capitalize on the momentum. Like to keep the party going. The halfway point is what we position as a feedback meeting, which is like, hey, we want to check in. We want to make sure that things are going all right. And the nice thing with the feedback meeting is that you have one of two options. So they're unhappy or they're happy. Here's the cool part. If you're unhappy, then it probably means that you need more help from us. So you should buy our other thing that has more help than the thing that you have. If you're happy, then if you like that, you're going to love this. Seriously. And then finally here, what's this last chance? So this is going to be the smallest percentage of sales. And so for many of you right now, this is where you try to do your ascensions. And the reason that you're not getting as many as you want is because you're waiting till here. You have to, like, that is literally the last chance. You've already lost most people. So you want to, you want, so there's these, these buying windows that occur for a customer and you want to present your offers at the point of greatest deprivation, not value. I'll say it again. You want to present your offers at the point of greatest deprivation, not the point of greatest satisfaction. So if I walk into a restaurant and I'm starving and I say, I want a steak, I eat the steak. Waiter comes back and they're like, how's the steak? And I'm like, oh, it was delicious. Thank you so much. They're like, great. You want another steak? I'm like, no, no, I'm good. They're like, oh, you didn't like the steak? And you're like, no, I love the steak. It was great. And they're like, why don't you another steak? And you're like, I'm, I'm good. I'm satisfied. It's, I'm fine. And they're like, well then why don't you, you don't like my restaurant? What's wrong with you? Right. And all of a sudden it just seems weird. That's where you get these weird sales conversations. But if I wanted to sell 2 steaks, when the person walks in the door, I'm like, are you starving? They're like, dude, I'm famished. I'm like, cool. You want 2 steaks? That's when you sell 2 steaks. Now, once I have a steak, I'm satisfied with my steak, but I have some deprivation around sweets. And so I might be like, ah, how was the steak? It was delicious. Oh, you know what pairs really great with that? Our lovely flambé, right? Or I don't know what dessert name, ice cream and brownie. That, that, that's what goes well with this, right? You want one of those? Sure. You know what? I'll take 2. So we wanna make sure that we sell, and this is a huge misconception in the sales world. Is that they're like, sell at the point of greatest value. Sometimes the point of greatest value creates deprivation for the next goal. So if I solve your leads problem, I'm going to create your lead nurture problem. And so it makes sense to then sell the next thing at that point. If the next thing I sell is lead nurture, not more leads. Does that make sense?

Yeah, sure.

Okay.

Yeah.

So for you right now, it's going to probably be an Ascension where you can have the quality upsell that you can immediately do. And then you basically make the ask at these different occasions and it's open-handed. So it's like, hey, long-term, where do you see yourself? Cool. It sounds like you're ambitious. I think you might be a good fit. Can I set you up with— he's amazing. He's helped 17 people who look just like you accomplish what you want. You'll love him.

Yeah. And you will have the closer to jump on that call or because the thing is that—

you set it, you set it for the closer.

Okay. The thing is that they only see the closer when they buy and the second time they're going to buy. So they are not in contact with with them.

So I've tried to skin this a hundred ways to Sunday and no, I have, I've tried every permutation of this and I've had everything work. So you just have different problems. You can have your kind of team of people who are doing the education get trained on kind of the upsell. They're going to benefit from the fact they have more rapport, more trust, and they're going to talk to them more times where it's not a sales conversation. So that's one option. Second option, and this is the, this is my favorite of the options, but requires somebody with more talent, is that you have one backend sales guy and that guy's positioned as the master coach or whatever, the master educator, the level 17. And so when they see that guy, he's so well positioned that he's like, hey, I'm checking in on the team. I want to make sure that they're doing a good job. How's everything going? Great. And then that guy has the positioning to just close everybody. And it doesn't feel weird.

Okay.

I have done the front-end sales guy talks to you again, and I also still had that work, but it's a little bit more sales heavy. And so I would, I would, I would prefer if I, if I were you, I would probably find, if you have one guy who's like the best guy, what happens is you've got all these leads that funnel to front-end closers and then the people who do the delivery then funnel them to one guy. And so you only need like one given the fact that they're not working leads, they're working customers. So they're the— for you to actually book out somebody who's one guy, you're gonna be doing $20 million a year. Does that make sense?

Yeah, that makes a lot of sense. Only one question about the milestone, because like what we do is basically like a fitness program where you want to get to a huge goal and they accomplish the first milestone. But what we offer is kind of the same thing, you know, but at that point when they reach the first milestone, that you will only go and Trying to upgrade in something like more quality, but the same.

Yeah. Yeah.

Okay. Yeah.

More quality. Perfect.

Thank you, Alex.

Yeah, you bet.

Hi, I'm Jacqueline. I know we talked—

Dentist. Yes. $3 million, 5% profit margins. You have 5 different ones. 3 are part-time.

Perfect.

Wow.

Great memory.

Yeah. You're in Dallas. This 30-year-old business inherited from your father.

Yes.

Yep.

And my Social Security number is—

no, just kidding.

I can pull it up.

So I know we talked, yes, last night, which you obviously remember, and a couple other people from your team, we talked about this issue that my number one constraint probably isn't our cancellation rate, but it is something that I'm like really perplexed about and want to at least go back with a little bit of something to share with my team about.

Sure.

So our show rate or our cancellation rate is a little over 30%. And this past year we've lost like a million dollars because people made appointments, confirmed them, and they didn't show up. So if you have any insight on what we could do to start improving that, I would be really help— grateful.

Yes. I don't think it's the constraint of your business. So number one is you are going to want to make sure that the, uh, obviously like that, that time is the right time for them. And okay. We ask questions like, is there anything that will possibly get in the way of you showing up for your meeting? And so we call this an integrity tie-down. And so after you get a time slot, you want to ask that right afterwards because it like gets, like shakes them out of their like mind for whatever reason it works. So I could come up with some narrative for it, but it works. Number 2 is, I think I mentioned this yesterday, but I think it might be worth considering pulling up appointments, like to basically, can we bring them up sooner so that we have increased show up rates? The next one is Let's see here. You want to make sure that you have automated reminders, which you probably do, but then you want to have manual reminders on top of that. So if you have, I would have an office iPhone and you want to send manual texts at 3 times. So you want to send the manual text at 24 hours. So basically think night before. Second text is going to be morning of, and then the third text is going to be 60 to 90 minutes prior, basically when they have to like get your shit together, get in the car and reply within 24 hours. And those are manual. So you want those to be blue iPhone messages if possible.

Okay.

Now, ideally we like to have some sort of, um, selection that they pick that we've like some cost we have incurred. So this works exceptionally well for brick and mortar, which is why I'm sharing it with you. And so in the gym space, obviously, like we would say, hey, Sharon, I've got this shirt. Tell me what size you're at and I'll put it, pull it aside for you. And so when you come here, I'll give it to you. Or it's like, do you want red or do you want blue? Like, just do some sort of A/B ask for them. And so it could be as simple as like, you're going to, you're going to pull— I mean, because it's a dentist office, right? And so you're like, okay, what can I give them? Well, I always get free shit when I go to the dentist's office. And so just like have them pick the free stuff that you put in their goodie bag and just— and then I would send them a picture with their name on it so that they're like, oh man, they incurred this cost just for me. I have to show up now. Right. So that's another one. The— okay, we got that. Because you were having the issue because someone books and like 6 months later is their cleaning or whatever, right? That's the problem here.

Yeah. Well, we call and confirm their appointment a week in advance and then we call and remind them again 3 days in advance and then we call them and text them again a day before and they'll say, yeah, I'm going to be there. And then 2 o'clock comes and they don't show up.

You're, you're reminding too far out.

Okay.

Like if, if, if I schedule an appointment on Saturday, Monday morning is a different universe for me.

Yeah.

No, I'm just being like super real. And so I think, I think a lot of people are that way. And so all of the manual reminders are like, if you want to, like, I use the automated ones for the far out, like, hey, you're 7 days away. Hey, you're 3 days away.

Okay.

But I would have the ones that you're putting the real effort in 24 morning and right before.

Okay.

And then have the incentive, have the personalization. Um, and I will bet you dollars to donuts that that on its own would work.

Okay, awesome. Thank you so much.

I really appreciate it.

No, you bet.

Hi, thank you so much for all your content you make. My name is Laurianne and I sell personal finance courses and coaching to women. We do 30 for women. Pardon?

For women.

For women. Ah, with a plus sign at the end.

Screw the guys. They don't need to save money.

You know, they can learn from someone else.

I'm messing with you.

So we do $30 million in revenue. Badass. And thank you. I would like to be at, I don't know, revenue, which comes to my question.

That's right.

And what is stopping me is our CAC to LTV ratio.

All right.

So both CAC is too high. Got the team working on volume right now. LTV is too low.

Okay.

And AOV is too low on our front end. So I think it's actually a cash flow constraint potentially, but I'm a little confused on where exactly to go to work.

Okay.

How do you acquire customers right now?

Primarily Meta.

So it's all paid ads?

Yeah.

Okay. So all paid ads and you're running to what?

Webinar, 2K webinar.

Okay. Are you, are you have a low ticket offer before the webinar? Before. Are you charging something as a self-liquidating offer on the front end?

Free webinar. No, never done a self-liquidating offer.

Okay. So free webinar on the front end. You have a $2,000 offer. Okay.

Yeah.

Then what?

$2,000 or 12-month payment plan for $200 a month, which is why our AOV is like $900.

Got it.

And then acquisition costs like $1,500 on the client. And then we have a backend that's $10K, has a 7% upgrade rate. Yeah, it's low outsourced sales team right now. And so LTV is like $2,400.

Yeah, that's a problem. Yes.

That's why I'm here.

You're essentially, yeah, no, your ascension rate's too low. You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to, to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the $2,000 thing, you have your onboarding call, the onboarding call, the finish of the onboarding call is they set their goal setting call with what would become a setter. And then that setter sets for a closer. So they actually get 3 calls. So they have webinar, buy, they have an actual onboarding call. Cause you want them like, you wanna make sure you deliver one-on-one or that's a group one-on-one. You can do, well, you can start with, uh, uh, group. You can start with group and then you will make more money if you go to one-on-one. It is more ops, but like we actually did this and I have a video that breaks down everything that you need to know. Yeah.

I've seen.

Okay.

Yeah.

Yeah.

And so one-on-one is better, but if you're gonna start, start with the, the group. And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call. So that way you have 100% through, through line to the next. Now they're customers, they're going to show up. The goal setting call basically sifts for who he like, what's your goal? Cool. What's that? Basically just do another sales call again and then you push people into the ones who can afford it. That makes sense into a closed call. With basically an invitation to join something that has more help or work associated. Yes.

Okay, great.

You'll probably need to get third-party financing in place. Oh yeah. On front end.

Oh, for the, for the sales calls.

Yeah. And, and front end, like you should definitely have some BNPL options. So buy now, pay later. You should probably have a few.

Okay. We have them on the back end. We don't have them on the front end right now. Yeah.

Also with the webinar, I would recommend split testing the first 5 minutes. So retest 2 or 3 different intros and look at LTV. That will make you money. But the biggest issue is that you're, you're upselling 7%. Like you need to be at, you want to be at at least 25, uh, and you should shoot for 50.

Okay.

Okay. And so just one more question as, that's like a longer term solution, right? That's gonna take time.

You mean bring in a sales team in-house?

To bring a sales team in-house and really optimize that process.

Yeah. Why does it have to be long term?

Just the time it'll take to find a sales leader and recruit and like shift leads from the—

You need to hire one person, really good sales director, and then you hire 6 recruiting firms that do sales and say, I need 10 guys from each of you, and you can add a 60-person team in 4, like, 2 weeks.

Okay.

Okay.

We just added 40 guys in 2 weeks to one of our companies. You just paid a bunch of recruit— like, if we're doing that kind of volume, we're just going to go to somebody who has a big network of people. They're— that's their full-time business, recruiting sales guys. So it's like, great. These are requirements. Go get 'em.

Yeah.

And I'm willing to pay for the speed. Yeah. So if it's, and you can also negotiate if you're doing multiple, like the same of multiple. So it's like, hey, normally it, you know, it's 10 grand per, per head, but I'm gonna buy 20 from you, so I'll do it for 5.

Okay.

So you pay 100 grand and all of a sudden you have a department.

Okay, cool. So action on that immediately. And then while we're doing the recruiting and getting that person up to speed, just keep spending basically as much as we can afford to spend on the front end to keep like lead flow coming into the back end.

Realistically, if you spend less, you will typically ROAS will increase. Typically. YouTube's not that way though. Kind of random. The more you spend, the more profitable it gets. It's wild. Yeah, it's the shit. Anyways, but all that to say, I like, if you have a cash flow issue right now, or like, you know, it's like, it's self-inflicted. Like you can just spend less. And improve the, improve the returns, but your CAC is appropriate. $1,500 to our customer in that base.

I'm not gonna get that much lower.

Yeah. It's like, you're not gonna, like, you're, you're not gonna get below $1,000. Yeah. And so this is a backend issue. Like you just have to increase the ascension rate and that's it.

Okay.

Thank you.

You bet. Awesome. Okay.