Your Best Leverage Is Knowing Your Customer | Ep 900

You knowing who your customer is is going to be data that you absolutely have to have no matter what. And so why would we delay something that's going to give us so much leverage on our messaging, our offer, our channels? Like, like picking the customer is the first and most important thing that you can do in the business. And then your offer comes from the customer. Next caller is Anne. Okay, so you're on Hermosi Hotline. Let's rock and roll. So you got $200,000 per month in revenue.

Yes.

All right. Ad spend zero. Industry is medical. Men's sexual function. Ooh, this might be spicy indeed. Men's sexual function. Okay. And then your offer is lifestyle stem cells. Okay. So you're doing like, yeah, you're doing full like injections and all sorts of stuff. Okay, cool. And then we've got constraint is needs more qualified leads. Okay. Are you a doctor?

Yes, I'm a medical doctor and we have a medical clinic that focuses mainly on sexual restoration. And yeah, we do stem stem cells and also shockwave therapy and multiple medical treatment along with hormone replacement therapy and peptide therapy.

Dope. Okay. So is this brick and mortar? I'm guessing.

Yeah.

Okay. Got it. Where are you out of?

Virginia. It's right outside of DC.

Fredericksburg. Okay, cool. So, okay. So talk to me. So what's the, what's the issue? You want more leads?

Yeah. So we have all my leads come from my YouTube channel and also word of mouth. And we have 150,000 subscribers on YouTube channel and we have an application funnel through there, but we're, we're getting leads, but we're, when we're, and our team converts at 65%, uh, but we're not getting the quantity of high, of, uh, qualified leads that can afford our services ranging from $15,000 to $25,000, uh, dollars because I mean, they get result within 5 days. You know, we have a great offer. We're doing everything we do.

We do everything one day. The nice thing is they can tell very clearly whether it works or not.

Yeah, exactly.

Do you do before and after pictures?

We want to get more qualified. Say that again?

I said, do you do before and after pictures? I'm joking. Oh, it's so hard to do before and after for sexual function. I'm kidding. Okay.

Well, we have testimonials.

Yeah, I'm sure. Man, look at that thing. Just triumphant. Okay. Got it. So you need to get more leads. YouTube's the primary channel and people who are coming in who are pop— like, do people fly to you?

Yes, we have people coming in, actually international. We're having somebody from Hong Kong, somebody from the UK.

What percentage are local versus international?

Oh, I mean, US, it's probably like 90%.

Oh no, I would like— if you're saying US, I'm gonna say most people that are traveling to you, like, if— I mean, most people are traveling to you.

Yeah, I would say probably that would be 70%. Yeah.

Done. Good enough for me. Okay. Got it. So how many pieces of YouTube content are you putting out per week?

I only do 2 long-form videos.

Yeah.

And so my— my team cut off the long-form video into shorts. Okay. Which we post daily. Yeah, that's it.

Got it. Do you have the 5 CTAs that I mentioned earlier of like those 5 places that you can do calls to action? Because that's like an immediate thing you can do that can just generate more leads. So one-third of the way through videos.

We've been doing that.

Okay.

Yeah, we've been doing that.

Okay. Got it. So, but you're doing all 5?

Yeah. As of yesterday, we were doing 4, but now we're doing 5.

Okay. Got it. There we go. Hey, I'll take it. I'll take it. A little 20% improvement or 25%.

Okay.

So, I mean, you kind of have, you're in a, you basically have 2 paths, right? So path 1 is how can we, like, I don't think you necessarily need to make more content. Like you could, But I would rather you, like, how much time do you spend prepping the packaging and the thumbnails and the headlines for the content that you make?

Oh, I don't do that. My video editor does that. And I think he probably spent maybe like 8 to, maybe 8 to 16 hours. 'Cause he does, he does do 2 a week. So I would just say maybe 2 days.

Well, on the prep or on the post?

Prep and post. So I produce like 4 at a time and he does, he just publishes like, you know.

Yeah. So every other week you do 4 videos.

Yeah.

Got it.

Okay.

So I'll tell you this, like you're a more experienced YouTuber. It's likely that the biggest improvements that you're going to get are on, on better rather than more for where you're currently at. And it's going to come down to like, I mean, some of the tools I said yesterday, like oneof10.com is a good tool for looking at packaging and saying like, how can we look at other outlier, similar outlier packaging for videos that are either in the space or adjacent to it? And then how can we match our thumbnail headline and introduction? Do you script out your introductions?

Yeah.

You are scripting your introductions?

Yeah.

Yes.

Yeah. I actually use like AI to help me with the hooks and the intro, but most of it is really my content that I put out. And the one of the thing about our channel is that it's grown because I would talk in generalized, like, ED, and I give everything away. So now I really— I, the last 3 videos, I've been making more for entrepreneurs and executives because I wanted to target more of, uh, high, high-ticket, uh, clients. And our views, like, absolutely plummeted down to, like, hundreds instead of thousands. Um, so that, that was one of the things I wanted to ask you. Is that something we should be worried about since we kind of target the message more for, you know, high-ticket clientele?

So I'll tell you how I would make an adjustment or a test like this. So I never wanna threaten my core business. And so if I have 2 videos of a certain style and packaging that are working, I don't wanna break that 'cause like all of a sudden your revenue could cut in half and that would be not fun, right? So I would prefer you keep your 2 videos a week that are your, you know, kind of standard wider, et cetera thing. And then do an additional video that's gonna be the new thing. Because in that way you can guarantee that you're gonna make more. And that way you can test it and not feel like you're risking your, risking the whole business to make this test. 'Cause like that's, it's the primary way of getting leads for you. And so I would really not wanna risk the entirety of my business for a test. That's a big test.

Right. I love that. I can definitely do that because I was thinking about, doing more, but you said do better.

I do think that you can do better, but I think that if you're gonna run this test on trying to attract higher level customers, I think that I would just add that in addition to the, the 2 videos you're doing. So then they'll bump you to 3 and you're gonna probably get benefits from both more, more volume. And I still think, and maybe your video editor can watch the, the replay of this, but like I would strongly recommend scripting out both verbally, and this is the part that people miss visually because you, you have a very physical profession obviously. Like you can't show certain things on your YouTube channel. But like you in a, you know, a smock or not smock, whatever the white lab coat, right? You got the coat and you've got some tools and some machines and you've got some of those props that look like body parts behind you. I think all of those things kind of set the frame and proof, promise, plan. I don't know if you are using that as the setup for the introduction, but proof, promise, plan. And if you want, you can introduce pain in there as well as kind of our 4-step way that we introduce all videos. And so I'd make sure that I have a sentence for each of those Ps. And if you have a picture, which kind of gives you a visual roadmap of what they're going to get, I think that that will also likely further aid in retention. So those are kind of like the quote, better things. And you could do that for all 3 of the videos you're gonna make. But number 1 is you're gonna go from 2 to 3. The 3rd one's gonna be experimental. You're gonna tighten up and script the introductions and the packages should be picked from outliers rather than just like something you find interesting. Like we already know that this packaging, this, the way that this image and the headline work, are likely going to, to convert.

Yeah, I love that. That's, uh, that's really good. I, um, what, what do you think about advertising on like private jets and so forth? I was advised to do that, uh, to attract the clientele that we want.

I mean, you can try it again. I would just put that in my experimental bucket.

Okay.

Yeah.

I mean, if you fly private as is, then yeah, just on your next private, you know, on your next flight, just record.

Okay. Yeah, no, I, I, I love that. So make more content, but make better content.

Yeah. And add the third one.

We have a funnel. Can I ask you one more question about the funnel? Now, the funnel that we had, I was listening to you talking to another lady, and our funnel is actually an application funnel to book a call with our sales team. But if we are looking at more, uh, attracting more, uh, premium buyers, should we still continue doing that funnel, or should we open up more on the higher part of the funnel?

I think you should drive more into like, just put more in. This is why we're gonna do it. Like, I don't think you should, like, you're converting 65% of your leads. Your conversion process is not the constraint of this. So maybe there's things you can improve, but I, that's not where my focus would go. My focus would 100% be on making more and better content on YouTube. I do think that, like, I would say like, do this experiment, improve the pack, the packaging and the hooks upfront. The next thing would be running ads, but I just feel like the nature of this business is so like trust driven. That I think organic, I mean, I think you've, I mean, you've already gotten the success you have because I think you, you started with the right strategy. I really just wanna see like, how do you get to a million views or sorry, a million, a million subscribers on your channel? Like that would be like my mission. How do we get, how many views a month you're getting?

Yeah. How many views? Well, it depends if we put out a pretty good one, it's probably about 10,000. Uh, that was our usual.

Yeah.

Uh, depending on the video, but the last 3 on, I talk about executive and the intersection with Sexual health, we got like hundreds. Yeah.

Yeah. I, I, I, I think that you have a ton of room if you're getting $10,000 per video. I think you have a ton of room for improvement, like especially based on the nature of what you have. Like, like you, like you could for sure be at $100,000, $250,000 per video for sure. No question.

Well, thank you. Yeah. We have about 10 videos that are almost a million.

Yeah.

Right now. So, um, yeah. So we may lean in more on those topics. Okay.

Rock and roll. Love it. Yeah. Just repeat your winners.

All right.

Thank you.

Thank you.

All right. Talk soon.

Appreciate it.

Yep.

Bye-bye.

Okay. Okay. So Mike, 16, I do AI automation, helping business save time, et cetera. I currently get leads through Facebook, Instagram, and email outreach. Advice on scale, volume only. Thanks. Yeah, dude, you're doing too much. You're doing like, pick one of those channels to start out with and just do more on that one channel. So I think you're probably spread too thin if you're like trying to sell, trying to market, trying to deliver to customers, and you're also on 3 different channels. I would say do more but on one of those you can get better. Cool. Sweet. Rock and roll. Uh, what acquisition system would you, if you would sell ClickUp project management systems for marketing agencies currently doing $15,000 a month? I'm guessing you have a pricing issue cuz someone who's gonna be implementing a CRM is likely already doing like, if they have so much work, they have to have like a project management system. You probably need to be charging way more. And so either you're going after the wrong customers, but it doesn't make sense cuz if, if you're actually implementing this stuff into their business, then like, they're probably bigger customers. So I think you're probably mispriced, number one. I would imagine Upwork is also probably not the best place to find customers because it's like people who are like absolutely the cheapest. So I think you are, I'll bet you that your mindset is super skewed to like Upwork leads who are like cheap as hell. I would be doubling down on cold email and be looking at like $6,000 plus, you know, per month retainers and probably selling projects that are in like the, We did one implementation like this. Well, how much did ours cost? Didn't we implement some sort of project management system inside of media? 40. So ours was 40. So to give you an idea, so that was like just for one project and they had more than one customer. All right. So you probably are just like wildly undercharging and I think cold email would be the best way to double down on. Hopefully that helps, Max. All right, McKinsey, you are on Hormozy Hotline. Okay. Monthly revenue is $100,000. Rock and roll. Good. You got cold outreach. Got it. You're doing your custom apparel. Okay. Custom apparel. Interesting. Offer is apparel for colleges and college organizations. So like fraternities and stuff. Yep. All right. All right. Colleges. Okay. And then the constraint is cold outbound works economically, but too many unqualified leads. Okay. So does that mean that where, how are you getting your leads right now?

Just scraping. So basically we're just trying to find contacts for these organizations, primarily through like Instagram, and then we just reach out to all of them cold.

Okay, what's the model as far as like how do we make our money?

So basically we handle the design side for all the apparel and then we outsource the manufacturing, and so we're just kind of act as a middleman and mark that up. And so on all of our orders, we average about 35% gross margins.

Yeah, so is that $100,000 a month Your slice, or is that— that's top line. Okay, got it. So you got 35-ish of gross margin left over. Yeah, 100%. Okay.

And so what's happening when we reach out to these different organizations is basically it's very hard to segment between who we think is going to end up being a big customer with like a high lifetime value. We have some customers who are going to spend, you know, $30,000 a year with us versus others that are going to spend $1,500 a year. And it's just really hard for us to identify like What are the markers that make a customer in which group, you know?

Yeah. So yeah. And you've, and you, is there a reason that, I mean, you focus on colleges just because they were easy to reach out to decision makers?

Yeah. So that was kind of, that was going to be the second part. Basically what I found so far is like we're reaching out to the colleges. We've got the process really dialed in. So we have like a pretty good conversion rate. Like it's easy for us to acquire customers, but what I actually noticed is that's what we focus our outbound on. But the AOV for the colleges is maybe like $1,200, $1,500. We have other customer segments that are spending way more per order and per year.

So let's talk about those.

We just haven't really figured out the acquisition as much.

Okay, so what are those segments?

Construction is a big one and also summer camps. But the thing with those, I kind of run into the same issue because, you know, I might reach out to 2 construction companies, One of them, they don't order like any apparel and then another one orders like, you know, $50,000 a year. So I'm still just trying to figure out how to know.

I just want to reframe it a little bit for you. So if you know that like, okay, well, construction seems like on average they're worth like 25 times more or something like that. That sound close to right?

Yeah.

Okay. So if you have some like duds and some good ones, but they're worth 25 times more than I'd rather just do the duds and good ones play with in general people that are worth 25 times more.

Yeah, because I mean, I'm running into the same issue either way. So it's just basically targeting higher value customers.

I'll say it differently. Like this is a feature, not a bug. Like this is just part of what you have to do with outreach and like list segmentation and list enrichment is like part of what makes outreach effective.

Yeah. So do you think like basically on the last livestream, you know, I kind of went through the 5 Ms and I realized it is data that's holding us back from being able to scale. So I've already started, you know, having my devs like build out different stuff to help us practice data better. And I'm kind of wondering, like, should I be focusing a ton of my time on trying to figure out, like, and identify the segments? Yeah. You know, more specifically, like, what makes this construction company spend more money? Or should I be focusing on volume?

No, get the data right. Like, if you take a longer perspective on the business, right, you knowing who your customer is is going to be data that you absolutely have to have no matter what. And so why would we delay something that's gonna give us so much leverage on our messaging, our offer, our channels? Like, like picking the customer is the first and most important thing that you can do in a business. And then your offer comes from the customer. Like the one regret that I have in the Offers book is that I would've added in Your First Customer, which is one, I think the first chapter in Lost Chapters. I would've added that as the first chapter of the Offers book because so many people just like, you have to start with the customer and then from the customer we reverse engineer the offer.

Yeah. And that's like one of the reasons why we target like fraternities and sororities is because on a per unit basis, like they spend more per shirt, but that, you know, they order 50 shirts at a time versus 5,000.

Yeah. So we just have to look at absolute profit per order. And then I would just like, that's, that should be like North Star. So what is it? So if we have, you know, 50 shirts with, you know, 50% margins versus 5,000 shirts with, with 20% margins, we'd still rather have 5,000 trips because you're a middleman anyways.

Yeah.

It doesn't take any more work.

Right. So like, yeah.

Right.

So like, let's go sell the bigger people and expect that we're going to have some that are smaller. But if we're shooting for 5,000 orders, your, your small ones all of a sudden are going to be 500 orders instead of 50.

Yeah. Yeah. That makes sense. And I, you know, honestly, like, even though we don't have the data yet, that's kind of after the last couple of calls, like I realize that is the direction we need to go in. Yeah. And I'm trying to figure out how we should make that transition because, you know, it's like you always say like more than better than different. Yeah. And I feel like I, I'm just, I could be doing more and better, but I'm choosing to do different because it's just a better model.

Yeah. Well, you're, I mean, you're reaching out to me, so I mean, I, I, I make these rules, I can break them. Um, so you are in an instance where like, unless you had a way that it was like, I'll say it differently. Like you could for sure double outreach and the business would probably double and It's just like, I think there's just so much more meat in these other industries. 'Cause like, I think you'll, I don't wanna say you'll cap this out, 'cause like you could for sure become like, oh, maybe I'll, maybe I'll think about like this. These are the conditions under which I would stick with what you're currently doing, right? I would stick with what you're currently doing if you knew that those college customers would become lifetime customers. If you knew that every single one of those college organizations would just always order, you know, $1,500 a year worth of gross profit, and you just knew that you were keeping 80 to 90% per year. Then this business would just continue to stack. And then over time you build this kind of like monopoly within the colleges of like the default t-shirt guy, right? That would be the condition under which I would, I would continue to pursue the colleges. And maybe you could just say like, okay, well, how do we retain revenue better? How do we get these people to reorder? Can we reach out to them more regularly so that they're buying 4 times a year instead of 2, et cetera, et cetera. Like that would be that path. But you were—

I would say that we're kind of in that situation.

Okay.

I mean, we, we've been doing this for a few years now. We don't have, like really any churn, like our churn level is like extremely low and we're very proactive, like you said, trying to get people to order more. Like we're trying to bring up the order frequency, bring up the AOV. But at the end of the day, it's like I could, I could probably just leave this running, like leave my operator just continuing that side of the business.

Yeah.

And then maybe shift my time towards focusing on these other, you know, targets.

Yeah.

Building up that acquisition system.

I hear you. I would do the other thing that's bigger. I'll be honest, I would do that. And that's normally not the advice that I would give because like the for sure bet, like if I had to say How do I guarantee that you go from $100K a month to, you know, $250K a month? I would say, dude, just triple what you're currently doing. That would be for sure my bet. Cuz you're keeping the customers, you have pro, you know, gross profit that's there and it'll just continue to stack. That would be my, like, if we had to bet, but if you're like, I wanna get to, you know, $20 million a year or something like, I don't know what your, what are your goals? I should have asked that earlier. What are your goals?

That's my goal. I'm trying to get to like 10, 20.

Yeah. Then I think you just need, you're gonna, you just wanna get, you wanna make, get paid more per. And it's the same number, it's the same level of work.

You got to do more.

Yeah.

Yeah.

I mean, you like, you could do more, but then we'd be asking the question, okay, how do we go from your current outreach level volume to like, how do we truly, and I mean this truly, like how do we actually do 10 to 50 times the outreach? Like you could do that and that would be still probably less risk.

Yeah.

It, it's not feasible with this target market.

Okay. Well then if that's that, then if we go metrics and then market, which is the next M, right? Then, then I would rather go construction that's bigger whales if that's the market that you feel better with. I don't normally say that, but I think that it's probably what makes sense. And here's, here's the great part. Um, if you do it and you just fall flat on your face and you find out something that like actually makes construction suck, you could always just go back to the college and then just, and then say, okay, well my, my for sure path of, of, of growing this business is like, I will 10X my outreach. That is your for sure path. You can always go back and do that. But if you have an opportunity where you can get, literally you're talking about 50 shirt orders versus 5,000, it's 100X the leverage. Then I'm like, I really want to look at something like that.

Yeah, that makes sense. And I guess like I just need to treat it as like a test. Like I don't need to like shut down my business and start doing construction.

No, like, God, no.

You know, start building out another channel.

Yeah. I don't normally say this, but when I see a 100x difference and you're at the size you're at, I'd rather you— I'd rather you look there.

Yeah. Yeah, bro. That's like, that's what I'm thinking. Like, I've been thinking the same thing you're saying, but I'm like, oh, this goes against all the advice.

I know. I mean, that's why you call. That's why we're here.

Cool.

Feel all right.

Yeah. All right. Sweet. Yeah. That's what I'm gonna do then.

Just don't burn down the existing business. Have your operator still run it, make sure it's still good. The things that you wanna make sure that you like, what are the things you wanna validate for the new market is you wanna make sure as fast as possible that they reorder. As long as you have that, then you're gonna have revenue retention. You're good to go.

Yeah, that makes sense. I mean, okay, let me ask you this. This is when I view, um, this business, like the reason that we're able to penetrate the college market so well. Is because, you know, we target all of our marketing around that. Like, if you go to our website, that, that's the avatar we're trying to serve. Yeah. I've considered basically building out, maybe have like different websites for different niches. So like, I just replicate everything we did for college but into construction and kind of serve a whole nother avatar. I don't know if that makes sense, but like build a customer journey around them. And I just, I don't know if that's a maybe like a not the smartest way to scale is doing like more—

No, I don't want you to do like many different verticals. I definitely— no, no. I want you to commit to one of these things. And so we're like, this is a potential 100x in terms of leverage for this type of avatar, which is the only re— like, if you were like, there were 3 times as much, I'd be like, screw it, dude. Just do more of the college thing. When you said $50,000 in order versus $1,500, like that is a very big difference and it's the same level of work for you. So at that point, that's why I'm like, I'm like, it is only because of the unique characteristics of that thing. The only other thing that we'd wanna make sure is that you have revenue retention there. Once you have that, there's more than enough construction firms for you to get to $20 million a year. No question.

Yeah. 100%.

Okay. Yeah.

That makes sense.

All right.

Okay.

Rock and roll.

But don't, don't spread it out. Like focus my ass on one.

Yes.

Yeah. I don't want you to have like 100 verticals. That's not the point here.

All right.

You like, you knew colleges, like every one of these ones is gonna have different nuances, different acquisition things, different sales pro— like you have to learn all that stuff again. But like, I'm, I'm only kind of like signing off on this because of the crazy difference in value and the virtually no difference in operational effort. So it's like you don't have to relearn how to, how to be a middleman for shirt ordering, right? It's like it's the same thing. We're just targeting a different person. And then we only have to figure out one thing, which is how to acquire that customer versus the other. And once we have that, the rest of the business works the same. We make, you know, 20, 30, 40 times more. That's why I'm saying I think it makes sense.

Yeah, that's exactly right. That is the only difference. All right, cool, man.

That's perfect.

That's a game plan.

All right. Rock and roll. Appreciate you, man.