MBA2592 How to Make More Money & Scale Your Business by Going Upmarket

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What if the key to making more money isn't selling more, but selling to different customers? Today we're talking about going upmarket, pivoting to high value, high priced products and services. There's this crazy study that was done by the California Institute of Technology where they had a bunch of participants and they gave them three different bottles of wine. Each bottle of wine had a price point one at $5, one at $45 and one at $90. The participants consistently rated the $90 bottle of wine as the best tasting. But here's the kicker. The bottles look different, but it was the same wine in each bottle. That's the power of perceived value. The study demonstrated how perceived price actually affects the experience of pleasure when tasting the wine in the actual brains of the participants. Brain scans showed that higher priced wines activated greater activity in the brain's pleasure centers, even though the wines were the same. So if you're ready to elevate your business, charge more and create premium experiences, stick around. You're gonna love this episode. Welcome Back to the $100 MBA Show. I'm your host Omar Zenholm, where we deliver practical business lessons three days a week, Monday, Wednesday, Friday to help you start, grow and scale your business. Today's episode's all about how to make more money and scale your Business by going up market. What I want to do today is explore this whole concept of perceived value, why it's so key and how you can transition your products to higher price offerings and whether you can actually serve multiple markets at the same time. Let's start with the question why you should go up market. I think you should consider it because there are some serious advantages. The first one is pretty obvious and it's higher profit margins. You can sell fewer premium products or services at a higher price and be more profitable than selling high volume, low priced offerings. That means less headaches, less cost and more money in the bank for you. The second advantage is customer loyalty. Premium customers value quality service and they really believe in a strong leader in the marketplace. They want the best and they're usually a longer lasting relationship. They're not going to switch as soon as somebody else is selling something for a little bit less money. Think of Apple and their customers. Very few people I know buy an Apple product and then switch back to a different product. They stick to Apple, it's premium, they enjoy it and they become loyal to that brand. And maybe they buy a phone, but next time they need a computer, they go to Apple and buy a computer. That's kind of what happened to me 15 years ago. Third advantage. Perceived value works in your favor. Just like we talked about in the wine study. Researchers presented those three bottles of wine at $5, 45 and 90. The only thing different of the three wines, the twist. All three wines were identical. It's the same wine. The only thing different is the price. Yet participants rated the $90 wine as the best tasting. What do you think about that? Just think about that for a moment. Let that sink in. Just because it's $90 or the most expensive wine, they really believed and actually enjoyed the product more than the other wines that were cheaper. The takeaway here is when customers pay more, they actually get more value just merely by paying more. And they actually enjoy the experience more. They feel more invested. Number four, reputation boost. Higher end offerings. Position your brand as the leader in your industry. This attracts even more premium clients. This makes it easier for you to market and sell your products. Going upmarket isn't just about price. It's about creating an elevated experience that customers value and are willing to pay for. So let's be real. What are the challenges of going up market? The first one is higher expectations. Premium customers expect top notch quality service and attention to detail. You just can't get away with much. You have to make sure you are the best in class. And that your service, your product itself and the whole brand oozes premium. The second challenge is operational shifts. You need to upgrade your systems, you're going to need upgrade your team, you're going to upgrade your processes. You got to upgrade the tools you use to cater to a premium level customer. Number three. Third challenge, marketing to a new audience. Your messaging, your branding, your approach is going to need to evolve to appeal to a more sophisticated customer base. People that pay much, much more are different than those that are bargain hunters. For example, when I was running my software company, Webinar Ninja, we introduced higher tier plans for the software. Those higher tier plans were a bit different. We had to be a little bit more high touch with our customer support or onboarding experience. We gave them a personal onboarding and customer success person that made sure they set up their webinars for them. We created special features that premium customers would value. So there was some work involved to go up market. So with great pricing comes great responsibility or more things to work on because hey, if they're paying more, they're going to expect more. So this is a question a lot of people ask me, how do I pivot up market? How do I make the shift? How do I transition to high value offerings? The first thing I recommend is to take a look at your offerings and refine them. Focus on solving bigger, more expensive problems for your customers. The bigger the problem, the more people will pay for a solution, even if that solution is solving a part of the problem, not the whole problem. For example, instead of selling a $20 course, you might offer a $2,000 coaching program with tailored advice. Now it's solving the problem of accountability because it has the coaching element. But it's not going to solve the whole thing. It's not going to do the work for you, but it's addressing enough of a big problem where people need somebody to hold them accountable, where they're like, I will pay premium dollars for that coaching. Number two, enhance customer experience. You want to add perks like priority support, maybe personalized onboarding or exclusive content to justify why they're paying more. Number three, you want to raise your prices gradually. Start with a higher price tier or premium version of your current offering. This allows you to test the market and find out what's alienating existing customers. What is actually going to help customers that are looking to get more. Number four, leverage branding and storytelling. Your brand needs to reflect the value of your upmarket offerings. If you have a expensive offering and your brand and your website and your images and Everything you do in your design and your social media just looks mediocre. Customers are going to feel like there's a mismatch. This is not really premium. Customers need to feel the luxury before they actually buy the product. Our brand and our program, the 100 MBA is high value. It's really great. But our brand on our website needed some work to reflect how good this product is. So we actually did a rehaul of all our branding last year. We hired the best designer in the game and got to work with a team of incredible people to implement a new branding direction. And now the $100 MBA looks the part, doesn't only walk the walk, but talks the talk.

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Number five, show proof of value. Okay, you need testimonials, you need case studies. You need social proof. This will help customers trust that you have a premium offering that delivers results. Going upmarket is about delivering exceptional value, not just about raising prices. Yes, we heard about the wine study, but let's go above and beyond that and actually wow our customers and make them feel like this was a no brainer. This is amazing. So can you serve multiple markets at once? Can you serve low, mid and upmarket customers all at the same time? And my answer is yes. But there are some rules. Number one, segment your offerings. Clearly separate your products and services for each market. To avoid any confusion, make it clear on your website that this is the starter plan and this is like the premium plan. Number two, focus on quality over quantity. It's better for you to dominate one market than to spread yourself thin across multiple markets. What you want to do here is make sure that you're doing really well in one market first. So maybe you want to start with the up market and then have a Starter plan later on. But make sure you're serving that market really well first, then move on. So for example, the car manufacturer Tesla started out with a really, really expensive sports car called the Roadster. Only high net worth individuals could afford it. They took the money that they made from the Roadster and invested in their next model, which was the Model S. The Model S is still an upmarket luxury car. They then turned that profit into the Model X which is also an upmarket car. But then they said we want to go into the mid market. And that's when they came up with a Model 3, which is a sedan, and then the Model Y. Now if you go to the Tesla website, you'll see that they're messaging a of each type of car is different, knowing that the audience is looking for different things. The customer that's looking for more of a mid market Model Y, for example, is going to look for different things. So on the website they highlight those things like the space, the practicality, maybe the efficiency. While in the Model S, which is upmarket, they're really going to emphasize, you know, the performance and the luxury. It's possible to serve multiple markets, but only if you, you execute with precision and start with the one, nail it, do well, have some success before you move on to the next. I want to revisit that wine study one more time. What made that $90 bottle of wine better in the eyes of the participants? When customers pay more, they expect more and the expectation can enhance their experience. Just the fact that they know they are consuming something special, they feel like this product, this service is valuable. Premium customers aren't just buying a product, they're buying an experience, a transformation, a solution, a feeling. And if the study taught us anything, is that price influences perception, but it also drives satisfaction. So to wrap this up, going up market is one of the smartest ways to grow your business. It's a great way to get profitable really quick. And there are a ton of advantages, like the profit margins, like the customer loyalty, like the reputation boost. There are going to be some challenges like higher expectations, operational shifts, marketing upgrades. You're going to need to improve your branding. Yes, you can pivot up market by refining your offerings, enhance your customer experience and raising your prices strategically. But make sure you're giving exceptional value for what they're paying for. Going up market isn't just about making more money, it's about delivering more value value. The more value you give, the more money you can command. Thanks for tuning into the $100 MBA show. If you want to go deeper with me in starting, growing and scaling your business, you should Join our email newsletter. This is not a typical newsletter where I send you some sort of wrap up every week. It's a personal letter that I send to you. It's a way for me to coach you from afar and I give you three things to do every single week. I give you something to think about, something to actually do an exercise, and I give you something to learn. Just go to 100- MBA-NET and put your name and email address in any of our option boxes. Get one of our freebies and be part of our newsletter automatically. Thank you so much for listening to the Hundred Dollar MBA show. Make sure you hit subscribe or follow in your favorite podcast app or on YouTube right now if you're watching on YouTube so you get our next episode automatically. And you keep learning. You keep growing, you keep moving forward. I'll see you next time.

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