7 Ways To Get Customers for Free

Alex Hormozi breaks down seven referral strategies to grow without paid ads. Referrals convert higher, pay more, and churn less. Tactics include asking for intros at close, discounted gift cards, cash rewards post-sale, and bring-a-friend challenges.
Questions this video answers
June 18, 2024
About 30% of business coming from referrals
About 90% (or more) discount on the gift-card's face-value service
30 days
Three friends (ask for the names of three friends)
Chapters
I'm going to give you seven obscenely easy ways to get customers for free that you can implement within this week. These tactics have made me millions of dollars. They actually work. And I'll give you the real stats that I got when I use them in my business so you can use them in yours. You should be obsessed with getting referrals, and here's why. Referrals buy at higher percentages, at higher prices. They buy more often, they buy more times, and they're the most likely customer to, yes, refer you more customers. And so if you have two types of customers that you could potentially get, one that costs you a lot of money and does none of these, and one that's free that does all of those things, which would you prefer? Well, obviously this one. And independent of how big your business gets, 30% of your business coming from referrals, no matter you're at 100 million or 100,000 a year, still grows your business by 30%. And when it's that big and it's still free, that's the type of stuff that compounds a business into infinity versus having one that plateaus because not enough people tell other people about it. So the first one is, when I looked at one of our portfolio companies, we had a new sales guy who came in and crushed all of the records that had ever been done on that sales team. And it was a very experienced sales team. And I was like, what is this guy doing? Does he have higher close rates on the phone? And he didn't have higher close rates, but for some reason, he was able to get 30 to 50% more sales than everybody else. I was like, okay, so how is he getting more opportunities? And so we got on the call, we listened to all the scripts. We were like, he's not doing anything different. And so we pulled the guy up. We were like, dude, what are you doing? And he said, I don't know. After I close the customer, I just say, who else do you know who might also want this? And I usually get like one out of three people to send me one or two other people. And I just do that on every sale because I learned that in my last job. And when he said that, it was like this big obvious duh that I'm sure was in the SOP at some point for the sales team. And of course, people get lazy because they don't want to scare the sale away, but by simply saying, hey, who else? Very clear. Who. Who else do you know? Not do you know anybody? Yes. No, it's who else do you know who do you think would benefit from this, who you'd want to do this with? Right, because now you're actually asking them to solve a problem with their brain, not make a quick yes, no answer, which is what most people are just going to say, no, I don't know anybody, let's move on. And number one, this isn't going to be your grandmother's referral video on, hey, you should ask for referrals. I'm going to give you some very specific strategies on what to do, how to say it in a way that'll actually get the likely that they do it pretty high. Now, now, referrals are super valuable for a number of reasons. One is that they compound with the business. Meaning whether you're a hundred million dollar business, 30% on 100 million or 30% on 100 grand is still going to be 30%. And so it's one of the most scalable ways to grow business overall. The biggest companies in the world, the vast majority of what they get is from word of mouth. It's from people telling other people. And in today's society where people are more able to share things faster and bigger across broader audiences and networks, it matters more than ever. It's so funny because people are like, man, why are my ads, they were working, now they're not. Everybody believes in positive word of mouth, they don't believe in negative word of mout. Both word of mouth happen because that's how this works. Number two, referrals who come in are more likely to buy so they have a higher close rate, they pay more, they're more likely to buy a more premium version of what you have. And they're also more likely to refer other customers. So you get 3 spins on the money making wheel from having referrals versus a cold customer. So if you have, let's say a recurring membership business that you have 10% monthly churn, well, you can obviously always keep trying to decrease that churn. But one of the other things that will always come about it at any level. So if you have a thousand customers, you turn 10%, you need 100 new customers just to break even. One of the very smart things that business owners do is they say, okay, well if I can get 10% of my customers to refer someone every month, then I can offset that churn so that my business is stable. And so by having a consistent way to get your all your customers to refer you 10%, you can make up for the 10% churn that you have. And the ratio between your referral percentage and your churn percentage is you're going to be your stable at rest growth rate. And so if you could have even 20% referrals on 10%, then it means you're going to grow 2 to 1. And you will keep growing 2 to 1 no matter how big you get. Number one. This is called gift card play. So I use this during holiday season. So either you make up a holiday, it's like, hey, it's my birthday, it's my wife's birthday, it's the anniversary of the business, or you go with the standard holidays, it's Christmas, it's Easter, it's, it's, you know, you can make it a spring thing. It doesn't really matter. You just have to a reason why to do the gift cards. Now, what you do with the gift cards, it works especially well at Christmas, is that you say that they are gifts for other people. So you offer to your membership base and here's how it works, is that you want the amount for the gift card to be equal to one of your core unit of service. So something that you would normally give away for free. So if you were an SEO agency, you might have a $2,000 a month service. Okay, then it would be $2,000 is what the gift card would be. Now you're like, wait, $2,000 gift card? Yes. This is why it's so compelling. If you had a garage door fixing business and there's three elements to your service, you'd make it the base level. The cheapest level is what the gift card would be equivalent to. So let's say you have up to $1,000 of stuff and the lowest thing is 200 bucks. Then you make the gift card one or $200. Now that step one is what you price the value of the discount of the gift card at the second element is what you make the discount for and the discount you want to be as aggressive as possible. And so I recommend 90% or more discount on this. So if I have a $2,000 thing, 90% discount is 200 bucks. And you're like, wait, I'm not going to make money on this. Hold on. The point here is what would you already give away for free in terms of service or product in order to get a new customer? Probably a lot. Especially if you know that a referral is worth a lot of money. And this is where it gets, this is where the money, this is where it gets magical. Okay, is that what you do is you say, hey, I'm going To be giving these gift cards away only to my existing customers. And you can only give them to other people for the holiday season. Now I'm going to limit them. This is a key point. Limit two per customer, because that also gets everyone to buy two so that they refer you two customers. And so that customer now buys two 90% off coupons that they have to give to two individual people that they can't use on themselves. And when they make the purchase, you say, who you want me to make this gift card out to? And guess what happens there? By making the gift card out to somebody, you also capture the lead. And so you get two referral leads that you get paid for. This is what I'm saying. You get paid for the referral lead. Everybody else, you have to pay money to get leads here. You get paid to get leads. All right, big difference here. So whatever. If you want to get really nuanced about it, you could just make it your cost to acquire a customer. But I think it's far more compelling to make it whatever your base unit is with the assumption that you know that you're going to be able to bring this person in and then upsell for levels of service and then use that gift card against that. And so obviously we ran this in the brick and mortar gym space, which is where I started. And so we would run and say a $200 gift card, which is about a month, and you get 90% off, so that people would pay 20 bucks for a $200 gift card. And now they look like amazing family members. They're like, hey, I gave you a $200 gift card and you a $200 gift card to my gym. The person comes in with the card because you have their number, so you can text them and follow up. And then you put an expiration date on the gift card. This is very important is the expiration on the gift card needs to be 30 days because you want them to use it as fast as possible. This isn't a year long thing. You need to put urgency to get the lead in the door. So then you follow up and say, hey, Sandra gave you that gift card. Let's get you in here. And then when they come in, you have that $200 thing at the base level. You give the free month that you'd be happy to do anyways, and you get their card, right, their credit card. Or you can take that and say, hey, I think you'd be best suited for the $2,000 package. I'm going to take the 200, put it against that, and boom. Now I took my $200 gift card, put it against something that's 10 times more expensive. They got 10, really 10% off, and I still got paid 20 bucks for the lead. And, and to make the sale. And think about the math here. So, like, if you have a big customer base and you sell two per customer, and you have, call it 200 customers in your base, and you get, you know, 30 of them to buy two cards each, that's 60 cards that you give out. And you're going to convert a huge percentage of those cards. So you bring 50 of those 60 in the door, and you're going to close a big chunk of those people. And depending on the price point, multiply that by your price, take out the discount. There you go. So you don't lose money for three reasons. One, you're not paying cost to acquire the customer. Two, the amount that the thing that you're giving away as a discount is something you should be comfortable giving away that you would normally give away as a lead magnet or a free level of service just to attract a customer anyways. And so when you have a normal way to get a customer, you usually have some sort of promo, and you have a cost to display that promo to people. In terms of advertising, you pay neither of those costs. And then you make money because you're still getting paid by the customer to get the gift card. And then the third way that you could offset this is that you can still sell them into something that's far more expensive. And so at the very worst case scenario, you make a little bit of money on the discounted cash to give away a level of service that you're comfortable giving away anyways. So the second one is super tactical, and it's a very specific point in the sales process. And so when someone comes up to you and says, hey, I want to buy these services, can you give me a discount? We've all heard this. Hey, can you make it a little less? Hey, can you give me a homie hoco? Hey, I know somebody. Do you think you could blah, blah, blah, blah, right? So you say, sure, I'd love to. Just give me the name of three friends, and I'm happy to give you the discount. And so by doing that, you can immediately say, like, because what happens? They walk into a trap because they're gonna, like, lean in. As soon as you say, oh, I can totally give you that discount. Just give me the name of three friends. And then all of a sudden, they're like, oh, it's like, yeah, I will happily do that if you do something for me and be amazed at how many times that actually works. They're like, oh, so if you told me to introduce you to three friends for your service or whatever, you'll give me this discount? I say, sure, but we do that right now and you got to make the introduction. And so by doing that, you lock in three leads, they get the discount that you might have been willing to give before. I personally never discount unless there's a change in terms. And so either I change what I sell or they have to do something for me. And so this is the second way, which is they basically do some advertising on my behalf. And so in exchange, I give them the discount because I'm paying. That discount is my cost to get those leads, which I'm willing to pay for if someone's asking for a discount. I mean, again, everything's going to come down to what is your cost to acquire customer normally. And so if I figure I'm going to convert 1 out of these 3 referrals, then I would say 1/3 of CAC times 3. So 1 x CAC. Your cost to acquire customer, whatever it normally is, is what I'd be willing to give as a discount on the main thing. And as you become more experienced with this, you start to get more and more predictable metrics. And in the beginning, I just want this to work, you can start fine tuning, hey, I'll give you 100 bucks per referral or whatever. Now, the second way that you can do this is that instead of offering the discount, you can offer more service that's an equivalent amount. And the reason you do that is because, let's say I charge $200 for my thing and it actually cost me $40 to deliver. If someone says, hey, can I get a $200 discount? I say, I'll do you one better. I'll give you $400 of service for free if you send me the person. Now, the $400 of service to me only cost me 80 bucks, but the perceived value of the $400 of service actually makes it even a bigger quote discount for them to get the thing and send me the traffic. And so it's the second version, kind of 2a and 2b of that second strategy. And if you want to hear how to take the referral process I just outlined and put it on steroids, I have a course that goes with this book. It's free. Calm down. That's on my site@acquisite.com you can click the leads course, you don't even have to opt in for it and just go to the affiliates chapter. It's a 45 minute video, I think ish, that breaks down everything that you can do to get more customers by partnering with people who send you customers on a regular basis. And number three is actually a permutation of number two, but just done. Instead of on the discount, you do it on the positive. You say, hey, so you asked for $100 discount, how about I do you one better, I'll give you $200 of extra stuff. And the reason I'm willing to do that as a business owner, you don't say this, this is me explaining to you the $200 of service or stuff might cost me 40 bucks, whereas giving $200 off the price is gonna cost me hard cost $200. And so I'd rather give you $400 or of value for 40 or 80 bucks of cost. So actually reduce what my effective discount is. But I also increase the value for the prospect. And one of the nice valuable things here is that you're just encouraging a customer to use your service more or use your product more, which is always a good thing. And the fourth version of this is one that I used all the time and it crushed for me. And so what I did was as soon as the sale was over, I would say, hey, do you know how you can get this stuff for free? And every time I did this, when we'd have our sales, 3, 30% of our sales for every one of our promotions would come from people using the word of mouth. The referral strategy that I'm about to talk about, alright, so it works really well. And so at the end of the sale, you already got the card, they already signed up and you say, hey, by the way, do you know how to get this for free? Everyone leans in, they're like, yeah, of course I want to learn how to get it for free. So now we're not talking about discounts, we're talking about how do I get it free. And so what you say is, hey, if this thing's 500 bucks, you say, for every purse you bring in, I'll give you 100 bucks in cash. And it was a real hundred dollar cash check that I would give these people. And so I had so many people, I had to have nurses or teachers who had huge networks of people that they worked with on a regular basis and said, hey, you want to do this weight loss challenge with me? Or whatever it was. And so I would have one girl come refer me. 10 people make 500 bucks, and I would get 10 customers from this one person. Now, that was obviously on the sale and not on them making the introductions. That was the big difference between the first two and this one is I would say it was only after the fact, after the sale, that they'd be able to get the hundred bucks. But that slayed for me. I've tactically executed this two different ways in my career. Way number one is that underneath of my contract, I had all the names of the referrals always listed out there. And that would remind me and my sales guys to ask for that referral and also know that that person would be attributed back to that customer. Remember, I came from analog brick and mortar. I printed out contracts, okay? The second way is to just do the digital way, which is, hey, introduce me right now with your friend. Which I'll show you the real tactics on that in one of the future ones, because it's really good. Which leads me to number five, which is referral at success. And so the moment that someone has some big thing, you just finished painting their house, or you put their garage door in, or you train their dog, or you help them lose weight, there's a moment of transformation that you have. And a lot of times, that's where you capture testimonials now, for sure. Capture the testimonial. But right afterwards, they're amped. They're feeling good. They love your service. They just experienced it. When you say, hey, you're amazing. How many other amazing people like you do? You know? And usually they're like, I don't know. And then they start giggling, whatever. And you're like, awesome. Can we take a picture together to commemorate the moment? And then they say, yes. It's like, let me give your phone. So you take their phone, you do a selfie and say, hey, let's take this picture. Who do you know that we can send this to, that we can invite them in so we can do this with them? And by making that ask, and you do it from their phone, you text yourself through their phone with the picture of you, the outcome, and them. So if it's you and the dog, or you and the garage, or just you and them. Skinny, right? You text them and say, hey, this is Sandra. You should meet Alex. And I used to joke around and be like, alex is the coolest guy of all time. He's the most amazing man. You should totally. Because they knew that I was texting as them, and they would get a laugh out of it. And so mind you, this is where you have to have rapport with the customer. If you don't have rapport, then this isn't gonna work. But for me, this is why having it at the success moment, it's like you've literally demonstrated the result in front of you to someone they know. And then that person is making the introduction, being like, dude, you've got to check this place out. It's awesome. They have the best crepes. Or they totally fix my garage. And you said you were looking at fixing it. Look how nice mine looks, whatever it is. And that worked amazingly well to get referrals and at the point of success, and so you'll notice the through line here is that at each of these moments, if someone asks for a discount, boom, you can get a referral. If you want to get a referral, you can add in a bonus or you can flip the discount into a bonus. You can just ask them on a regular basis. Hey, do you want to know how to get this for free? Which slayed for me. You can do the version here. We're at the point of success, you take the picture and you do the three way introduction. All these versions work obscenely well, no matter how big your business is to get more customers in the door. Let's get the next one. If you're watching on YouTube, tell me which of the seven you're actually going to do. Not what you think would be cool or what you thought was neat. Which one can you do and implement in the next 30 days? Number six. The next one is a handwritten card strategy. So here's how it works. You pair handwritten cards with in person events or virtual events, but it works especially well for in person events. And so if you have a member appreciation event or some sort of workshop or something that you're going to be holding on a quarterly basis or whatever cadence you have. I'd recommend doing this at least quarterly if you have especially a local business. And so you invite the customers in. And it doesn't have to be high budget, it's just supposed to have some fun, have some food, it can be a pot lock, whatever. And so you invite all the customers there. And the way you do that is you write a handwritten card thanking them for their patronage and saying, this is your invitation. You're cordially invited to the quarterly or semi annual Painters R Us event, whatever, right? And so you invite them to this event for you to appreciate them. Now you say, P.S. this is key. P.S. on the letter is to say if you take a screenshot. Screenshot. If you take a picture of this letter and you text it to a friend of yours, they can use that to get into the event. They can have all the food and all the drink they want and they can come with you. And if you want, just so that I know them before they come in the door, just do a three way text with me and you can send that invite like you sending it to them. And by doing that you can collect a bunch of leads and you say, hey, it's also all people are welcome. And so they can then bring other people with them to your event. And when we would do this, you get 30 to 50% of the room with would be people who were friends and plus ones of the people who were coming to the event and then at the event all day long. Think about this. All the people who are there love you enough to show up to your event. And so they're all talking about how awesome you are at whatever the thing is. And you're providing stuff to them. You're giving them food, you're giving them drinks, you're giving them entertainment, you're walking around, you're kissing babies, shaking hands. And so you seem like mayor of the town. So you get great positioning and then all you do is as you go one on one, you say, hey, let's talk on Monday. Hey, let's get a time set up, blah blah blah, blah. And all you do is you set a shitload of appointments. Don't up, set, sell there, just set follow up appointments so that it's fun, it keeps it chill and that way you can collect a ton of leads. And after they've met you once in person, they're not going to ghost you on the next thing. And the likelihood they buy because their friends already there, they already literally consume something from you. The reciprocity law is at its highest amount and so they're really likely to buy. So two quick tactical things that I learned the hard way, don't book these too far out. Like if someone's like, hey, I can do it two weeks from now. I'm like, girl, you're here right now. I was like, get in on Monday. I was like, let's find out. Coaching starts now. Let's go. You know what I mean? Like I would like I always try to have that kind of like playful rapport so I can get people in faster because obviously interest wanes really quickly and so you have a very small period of time where motivation is super high. And so we want to capitalize on that moment. And after the event happens, and I've already booked them, I treat them like a normal lead. So I'm going to still work them, send reminders, all the normal stuff you do. Number seven is the spouse request. So this is a good one. So if you have a service that a spouse can do with them, so that could be like wine and paint night, that could be, like I said, weight loss, that could be therapy, that could be anything that somebody could do, you ask them. So basically it proacts the obstacle, so you get to be aggressive on it and say, hey, does your husband support you in this? Hey, do you think this would help your husband out or your wife out, whatever. And by doing that, you say, hey, we have an amazing spouse program and we've actually seen that people who do it with their spouse, and this is the key part of it, you, is you want to have some sort of stat that's associated with it that shows that, oh, people who do with their spouse are three times more successful. And by doing that, then it's like, well, you want to be more successful. And so I would strongly like. I don't use the word mandatory and I would even say this in the scripting. I never say the word mandatory. But unless your spouse has a reason, like their foot fell off or they're about to go to the hospital or they're crazy, unless it's one of those reasons, they should come with you. Because I think it's going to. It will be far more long lasting. Whatever the transformation is, it'll be far more effective, whatever our intervention is, and you're going to have a much better experience and you'll have support here and at home, which makes it way more likely that you'll win. And the last one is a bonus one, which is a friend of mine runs massive, massive online challenges. So this isn't just brick and mortar or just service businesses like it works for any business. And you just have to think, how can I make this work for my business? Not it won't work for my business, because I promise you that is the voice of the loser, like beating you into losership. Okay? Literally just in all messaging, he had, all he did for an entire campaign was simply remind people in every piece of content, in every piece of messaging, in every ad, every post that he did throughout the entire campaign was he just said, hey, be sure to bring a friend. It's far more likely that you'll succeed. You're gonna Love this if you do this together. And he just said it every time and at the end of his campaign. And he's getting million plus customers when he runs these campaigns. So massive, massive, massive scale. 25 to 30% of the customers that came in from the campaign were from word of mouth, were from unattributed sources. And when he didn't do this, it was almost nothing. And so he attributed that big jump to making sure that he wove in the bring a friend, the bring someone else, the you're going to be more successful, the you'd have more support, you'll get faster results if you do it together. And so I would encourage you, obviously, these tactics that I just outlined, you give you when someone asks for a discount, how to do it. If it's the holidays, you use the gift card. If someone has a great success, that's the moment. If you want to get an event, you use it to use as a referral event. All of these tools are things that you can use at specific moments. But the big overarching one is that if you know that you can generate about 30% of your leads, and this is just what I've seen across our businesses, by implementing these strategies, you get 30% more customers. By just asking and actually weaving this in and not being lazy about it. It's an obscenely easy way to get customers that are free, pay more, stay longer and refer you more customers. Everybody want to get customers, but ain't nobody want to ask for referrals.










