Secret #14: How To Increase Your Tips (And Your Profit Margins)

So the big question is this. How are entrepreneurs like us who didn't cheat and take on venture capital, were spending money from our own pockets? How do we market in a way that lets us get our products and our services and the things that we believe in out to the world and yet still remain profitable? That is the question and this podcast will give you the answers. My name is Russell Brunson and welcome to Marketing Secrets. What's up everybody? This is hey guys. Russell. And welcome to Marketing Secrets. While I'm in my car. This is the flashback from podcast earlier. Anyway, I'm doing this right now because, well, first off, hung out with Justin Williams last week and he yelled at me saying, used to podcast every single week and now they are like three, four times a week. But now you're not in your car, you're not doing it very often. So I was like crap, that's right. Anyway, I'm driving my haircut today cause it's huge. And I figured out how to mount this thing on my car so I can do it while driving so nobody yells at me. This is what actually happened. I had all a bunch of you guys. I was doing the podcast with the camera when I did marketing a car with just my phone. Nobody ever yelled at me when they saw me on video. I got yelled at by everybody. So I stopped doing it that way. But now that's mounted up, I can just drive and talk and not even pay attention to you guys. So no yelling at me, alright? That's the deal. Alright, so that said, today's a cool day for a couple reasons. Number one, it's my daughter's 10 year old birthday which is insanely cool. And so this morning I'm actually flying out today. So this morning I had a chance to go and actually take her out to breakfast. And so her, her breakfast of choice was ihop. And I was like, come on, we take you like waffle me up right? These like really cool places. And she's like no, ihop. And I was like, anyways, we're driving there, it's funny, I'm like two kinds of people, like ihop. Ellie. She's like, well who are they? I'm like grandmas and little kids. And I was like, watch me get there. How many grandmas are there? So we got in there and we counted. There was like like 13 or 14 grandmas in there and then me and her. So I was like, that's it. Anyway, it's kind of funny. So anyway, that was really fun. And then she had a Birthday party. So I went and raced and we got her bike this morning and then took me back to the birthday party. And then I'm actually gonna get my haircut because I'm about to fly out to Utah. Cause I got two cool things happening in Utah. Number one is the Harmon brothers are making our viral video and they actually started filming it today. And to be completely honest, it's kind of killing me. I wish I was there, I want to be watching it, but I couldn't today. So I'm flying down there tomorrow catching behind the scenes footage and all that kind of stuff for our Funnel Hacker TV show. So I'll be find out. And they were just gonna be really cool. And the second cool thing is I'm actually going to meeting with Timothy Ballard who is the dude who runs Operation Underground Railroad, which is, I guess it's a charity or organization. I don't know exactly what it is, but they help, they help save kids who have been abducted and put into sex slavery. And so we're gonna be helping build funnels and helping grow that whole mission. So I'm really, it's a passion project I'm really excited for. So that's what's happening on this trip. So if you're watching Funnel Hacker tv, you'll see behind the scenes of that stuff. If not, go to funnelhacker TV and go hang out with us over. There's a lot of fun stuff happening. So. Alright, my message though for you guys today, and this is something that I don't know why more people don't think about this, but it's important. So we went to IHOP today, as you know, as you now know. And my daughter ordered the pancake with the fluffies and the sprinkles. There's sprinkles on it and bacon and an egg. Right. Her cost is like three bucks or something like that. And then I ate Go and I ordered scrambled eggs, side of bacon, side of avocado because that fits in my macros for all you healthy nerds. And so our bill was like 12 bucks, you know. And I look at the server and server's running around grabbing our stuff in his and grabbing waters and grabbing a one. Because I love putting a one on eggs. If you haven't tried it yet, it's insanely good. I did it one time because I had bacon and eggs or excuse me, steak and eggs. And I put a one on the steak and some of it spilled on the eggs. I ate it that way and I was like, this is an egg topping, not for steak. So if you haven't had steak and a one on your eggs, scrambled eggs yet, like, you should totally try it. It's amazing. Anyway, I digress. So where was it going with this whole thing? Oh yeah. So the server's running down frantic. I get the bill at the end of it, I look at it and it's like, what, $12.43 or something. I was like, alright. So as someone who tips and I'm a good tipper, so I didn't tip them that much. I left a lot more money than that. But if I was to say, okay with 10% of that means he earned a buck. What, 25. $25 is what he made from me for all his efforts. Or if I do 15%, it's like what, two bucks? 30% is like three. And so that's what most people do. Especially like the grandmas that IHOP like, they have their little calculators out, they're figuring out, dude, okay, I want A$13, and they give you exactly the tip. And if you're, you know, if you're bad, they're gonna give you 5%. If you're okay, you get 10. If you're great, you get 15. But that's how it works. And I'm looking at this and the server was a young dude. I'm like, man, he's killed himself for this little thing, right? And I was just in the office before I headed to get my haircut, which sounds like in traffic. My haircut's in three minutes and I missed it. I'm gonna go crazy. Anyway, so I was just talking to them. I was like, look, if that dude, instead of getting a job at IHOP where the average ticket is like 12 bucks, if you're doing the same work but got a job at a steakhouse or sushi place where the average ticket's like 50 or 100 bucks, you do the exact same amount of work and get way more money, right? Because it's just people tip off a percentage. So if my bill is 12 bucks, you're getting $1.20. 10%, right? If it's 112 bucks, you're getting $10. Whatever. The math is on that, right? By doing the exact same amount of effort. So the moral of the story is like, if you're serving tables, go and sell more expensive stuff because you're getting paid a percentage of of the ticket price, right? So you got to sell the most expensive thing. That's why as a Mormon, like, when I go And I go to restaurants and they always try to sell you alcohol, right? Because alcohol is huge profit margins, big ticket, and they can get you to buy a lot more stuff. And so we never buy the alcohol. And so they and those other Mormons are out there know that, like, if you go to a nice restaurant and you don't order alcohol, they don't treat you as good because they're like, ah, crap. So I always tell people when they ask, like they ask you, what do you want to drink? I'm like, oh, we don't drink. But don't worry, we tip really, really good. Because I want them to know, because I don't want them to treat me like crap because I didn't drink. Because my ticket price is going to be smaller, right? Good servers understand that. And so I warn them ahead of time, like, I'm a really, really good tipper. Like, I tip 30, 40, 50%, sometimes 100%. Like, I'm a great tipper as long as you treat me good. If you treat me bad, like, I'm still a good tipper, but, like, I'm a great tipper if you treat me good, right? And so anyway, so kind of the thought is, like, if you're serving tables is like, you gotta be selling the highest ticket thing. And if I was serving tables again, which the only job I've ever had for real is serving table, really, really, really liked it, right? It's all about, like, that, like, ticket price, right? So if I was a server today, I would have people order dessert first. Because most time at the end of the end of the meal, you're not hungry anymore, right? If you're not hungry anymore, you're not gonna buy dessert. And so then my ticket price went down, so my tip just shrunk. So I'd be going ahead time. Like, look, you know, a lot of people in the meal, they're full or whatever. Like, I'm gonna give you a 10% discount if you order your dessert first. I would do that because it would increase my ticket price, right? Because everyone wants dessert when you go in, but when you're offered it, it's hard to eat it because you' full. Number two. Think about Olive Garden started doing this a little while ago and it was brilliant. After you get done eating, they say, hey, what would you like to order for tomorrow? And they had a second meal. So you order a second meal to take home and eat the next day. Like, now you just doubled your ticket price because you sold them two meals instead of one. Like, if I was serving tables today. It's the first thing I would be doing is offering dessert. Then I take their meal, and then at the end of meal, I'd be like, that was good, huh? I know you guys aren't going to come back tomorrow, but if you want, you can order off the menu right now and I'll go package up, then you can have this tomorrow as well. And I don't know what percentage would take it, but I know there's a big percentage to take the second meal. And so now I just doubled my ticket price and it tipped me based on the ticket price, not on what I ate while I was sitting there. And so I'd be thinking like, increase value, increase value. How can I increase my ticket? Right? So that's the five serving tables again. Now, obviously, I'm not serving tables, I'm serving entrepreneurs and a lot of them. But guess what? I'm thinking the same thing. It's the same stuff, right? I know I get paid based on a percentage of what growth is like as the entrepreneur in the company. The way that I make my money, I do have a salary because I think you legally have to do that, however that works. So they can do all the W2s and all that techy nerdy tax stuff, but then the rest of my payment comes from a percentage of profit share, right? So the more profit, the more I get to share. So I'm always thinking like, well, how can I increase my profit share? How can I decrease costs? How can I increase the ticket values? How can I sell more expensive stuff? How can I sell more things? And that's my mindset, is because I know that I get paid a percentage of what I get people to consume. So I need to get people to consume, right? Same way you do if you're a restaurant. And what's interesting is a lot of times speaking to you right now, probably most of us, we undervalue what we do, right? We start, we try to be like the discount leader because that's what we're used to doing. And so a lot of times we, sometimes we put our own pricing values on other people saying, oh, I wanna pay $1,000 for this. So you don't sell for a thousand. It's like, no, you don't understand, that's worth that to somebody else. Don't try to discount your prices. So a lot of times that's what we do is we try to discount our prices, we try to lower ticket. And so we're trying to go back to IHOP and Sell. Even though we know that the money that we make as entrepreneurs is based on the ticket price. So the bigger the ticket price, the bigger money you make. I've said this before, and I'll say it again. Dan Kennedy once told me this. He said, there's no strategic advantage of being the second lowest price in your market, right? So if you can't be Walmart, there's no strategic advantage of being like, hey, Walmart's the cheapest. We're number two. We're the second cheapest. Because then you're like, look like an idiot. There's no strategic advantage whatsoever. But there is a huge strategic advantage being like, I am the most expensive guy in my market, okay? So if you can't be the lowest, then be the most. Don't be the dudes in the middle. Because there's no, like, it just doesn't work that way. So I want you guys thinking about that, okay? Because you, as entrepreneurs, you're just like a server. You're serving customers, serving audiences, and you get paid based on the ticket price of what people are spending. That's why funnels are important. If I just sold people my free book and that was it, guess where I would be right now? I'd be broke. I did a Facebook live yesterday showing the three funnels we had inside of our book launch. Now, when all is said and done, when our book launch is over, we did over $3 million in collected revenue. Now, obviously, it wasn't net, that was collected gross. What's funny is. Cause I look at all these people do these big, huge product launches. Like 2, 3, $5,000 product launches. And most of them are happy to make a million to $3 million. I'm like, we did the same thing and we were giving away a free book. How? It's because I'm just like the. Like, I offered dessert first and I had upsells. I offered a second meal. I did all these kind of things because I'm trying to increase the ticket price because that's how I get fed as an entrepreneur. Plus gives me the ability to serve that audience better. Okay? The waiter that brings you lets you order dessert ahead of time so you still get it. The server lets you order food and take it home. He's serving you at a higher level. That's why he gets paid more. He knows how to increase the ticket price, but he's able to, first off, make the restaurant more revenue. But second off, he gives you a better experience. You gotta have great meal twice. Your wife doesn't have to cook tomorrow or whatever that might be. Or maybe it's you cooking, whatever. But it all comes down to that. So anyway, that's the moral of today's story. I hope that helps some of you guys. I'm sure some of you guys are like all freaking out trying to be the cheapest possible person. And it doesn't always work that way. Obviously you got to look at what the market will bear. But like I said, it's way better typically to be the most expensive than the cheapest. So there you go. All right, I'm here. I'm getting my hair cut. I'm only four minutes late. Hopefully she can cancel my appointment because I gotta get rid of this thing before I jump on the plane. I'm gonna be super embarrassed. So thanks everybody for listening. If you would like to see the video version of this, go to marketingsecrets.com and you can watch the videos there. Or if you're watching the video version, go over to itunes, subscribe to the podcast and you can get like 360 or 70 episodes now. So come hang out with us there. A lot of fun stuff happening, a lot of things you missed. I want to make sure you get. So that said, thanks everybody and we'll talk to you soon. Bye. Want more marketing secrets? If so, then go get your copies of my two best selling books. Book number one is called Expert Secrets and you can get a free copy@expertsecrets.com and book number two is called.com Secrets and you can get your free copy@dotcomsecrets.com Inside these two books you'll find my top 35 secrets that we've used to become the fastest growing non VC backed SaaS startup company in the world.