Creating Bankable Profits in Your Business | Part 1

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So now we're talking about bankable profits. And that means not just profits that you're, that you are plowing back into the business, but it also means profits that you are actually able to take home. So now let's jump in. The very first thing is we talk about the importance of sales, profits and value. So SPV is our model for success here to get to scalable impact. And a couple of important things is if you don't, you can have sales and value. And if you have that, you've got power in your market. But without also having profits, you lack the momentum to be able to move ahead because you can't continue to fund growth. And you lack the optionality of hanging onto the business because you've really got to continue to fund the business through external sources. And that means you've got value, which is good, but you're living from funding to funding. So profits are really, really important for us to have. One of the things that we talked about way back in the webinar also was how to have your best month ever. Remembering, as Tony Robbins says, successful leaves clues. So just go through. And I gave you the graphic of it before, but the steps to having your best month ever. This is an exercise we go through at all of our companies. We identify what was the best month of sales over the last 12 months. That's BMS best month sales, More acronyms for you guys. And then divide your TTM is your trailing 12 months. So the last 12 months, gross sales by 12. That will give you your average monthly sales. And then we want to subtract the average from the best to determine what is our immediate profit growth potential, or IPGP. And then we're going to multiply that by 12 to annualize it. And then I want you to go through, and this is a really enlightening process because there's so many things that you do once and it's great. And then you forget about it because you're moving so fast in the whirlwind of things, right? So I want you to deconstruct exactly what you did during, during your best month and identify what was different during that month from the average month. And then the goal is to then replicate that best month across every month. So the way it looks in numbers was if Your if your best month was $50,000 and your average month is 20, that means you've got an immediate profit growth potential of $30,000 a month. If you annualize that, that works out to about $360,000 as your annual profit growth potential. So the existing annual profit, let's say that you might have, of 240 from your average month, right? That's the average month was taken by, by taking your total trailing 12 months profit, which would be 240,000 here and dividing by 12, that's, that's how we got to 20 for average. So if we take that existing profit plus the growth potential, then you're talking about a total profit potential of $600,000, which is significantly more than you had before. If you go and identify what was your best profit month ever in the last 12 months and then deconstruct what it was that got you there, you will ultimately find that there's tremendous opportunities that you're not taking advantage of right now. A lot of low hanging fruit that maybe you did retargeting in February of the last 12 months, but then you forgot or you got busy or something else happened, or maybe you had a product that you offered or maybe you did a launch during that and you're living launch to launch and then you say okay, well how can I replicate that launch by creating webinars or going to cold traffic or finding other sources. So that's really just a very simple thing is success leaves clues. So let's find what we did right and then let's do that again. The next thing you can do is increase prices. So this is a 12 way price test that I did in one of our businesses not long ago. The original price was $150 for this product. The winning price of the price tests was $179 for product one. So that was a 19.3% increase. We actually found that we could get the same or better response with a price that was $29 higher on this product. So a 19.3% increase. And we did this across four different products. We had a 6% increase in one, a 3.2% increase in the other, and no increase in the last one. So in this price test it was pretty interesting. So 100% of the price increase is profit, by the way. So our weighted average price increase across all four of these products was 9.13%. We average about 20,000 customers a year in that business. So 20,000 customers will now pay $13.70 more, which added $274,000 in clean additional profit with no additional effort. Just because we ran a price test. So absolutely, absolutely run price tests. Okay, gently. Price test. If you want to take your top 25 customers or your top customer segments and then ask yourself if you raise the prices 3%, 6%, 9 12. I like three multiples of three increments. But if you raise prices 9%, would you lose those people? Because if you wouldn't, then you should raise prices. Right. It costs you absolutely nothing to do that. Raise the accounts that can take it, don't raise the accounts that can't. The goal is that you want every customer paying the most that they're willing to pay for your product. And just thinking about price increases, like we take over companies that haven't increased prices in five or seven or even nine years and instantly have an insane ability to increase profits, sometimes paying for the acquisition by doing that. The next thing is to extend your value ladder. A lot of the consulting clients that I get will come in and they will not be profitable or they'll be minimally profitable or just barely breaking even. And they've not really optimized their value ladder. So you want to have low, middle and high rungs on the ladder. There's a firewall product, ideally at the low end. This is a low end, low priced product. And the goal here is that you're keeping your competitors from coming in and taking your customers away. Because if they do, they're going to get a foot in the door, they've got a Trojan horse, and then they will take over the rest of your market as well. Right. You also want a top cap product. Top cap is when a ladder, step ladder is put together. That top thing is called a top cap. Right. So that's the highest end of your value ladder. This high end thing is going to give your customers either more convenience, more quality, more exclusivity, or more utility and features. Right. And features could be additional services or whatever you want. Like Elam said with the vip, right. We're saying here we've got to have a really high end product and we've got to have a really low end product and then we can infill the middle, right, with what we call step products. So bridge the gap between the ultra high end and, and your firewall products with the steps of the ladder. And this is so simple but so often missed when people come in. I had some people that came in for a consult and they were a SaaS company, real estate SaaS and their average customer value was $230 and their customer acquisition costs had gone up. And so it had gotten to the point where it was difficult for them to make money. They actually were losing money on about three and a half million dollars worth of sales. And they'd done a good job of identifying other things that they could do, like they were selling their leads and they were running affiliate products and they sold sponsorships. Like they really did a good job of diversifying, but they never created the value ladder. They never created something that was a bundle of products and services that could be sold for significantly more. So we did that and we were able to turn them around into making over a million dollars in profit simply by adding the value ladder. So big, big deal. Some examples, American Express does this. They've got a green cold green card which is their entry. Then you can go gold, platinum and black digital marketer. We have Lab, which is kind of our firewall product to get people in so they hopefully don't go to other places. And then we offer certifications, we offer Elite, we have a certified partner program and we have founders board, which a lot of you guys have gone through that, right? Barbie did this, right? Barbie has their pink edition which is, and this, this was I think two years ago that they, they implemented this. They have a pink edition which is unlimited manufacturing quantity and that's designed to get anyone introduced to the Barbie universe. Right? Then they have silver, a silver level packaging which is limited to production Quantity runs of 50,000. Then they have Gold, which is limited to Production runs of 25,000 and platinum which is limited to production runs of a thousand. So simply by controlling the production run, they are able to create scarcity and they're able to create demand. But protecting their customer base by still having a doll that everyone can afford, right? Delta Air Lines does this. They go all the way from what they call basic economy, then to main cabin economy, which just has a few more benefits that don't really cost them anything. To comfort plus, to first class, to Premium, to Delta One and then all the way to Delta Private jets. So wherever you want to be in Delta, they've got you, they've got you for basic travel at the lowest possible rate, all the way up to chartering your own private jets from them, right? Another thing to think about is as applied pricing. And one of the best companies that does this is Coca Cola. So Coca Cola has several different, different types of packaging for drinks sold in several different markets, right? And the pricing goes from about 2 cents an ounce for a 2 liter coke in a grocery store, all the way up to about 20 cents an ounce for a 20 ounce coke in the, in the chilled section at the front of the grocery store where you check out. And so Coke has been able to identify that even in a single environment like a grocery store, they're able to capture different people who want different things by packaging differently, by going for convenience, by going for product placement in location, and by increasing the price accordingly. So you have a Coke ready to drink that's cold that you get as an impulse buy at the checkout stand, and then you're going to pay about 20 cents an ounce for that or the exact same product you could buy in a six pack of cans or a two liter for significantly less. Right. Same thing with where Coca Cola is sold. Same product sold in different areas. In a restaurant, you're going to pay significantly more per ounce for Coke than you are in a grocery store. At a ballpark, you're going to pay significantly more per ounce than in a grocery store. Right. So these as applied pricing opportunities are, are probably one of the most overlooked things that I see in terms of making profit. And the idea for you to do here is to say, where can I sell my product? The exact same product or service that I've got right now for significantly more than I'm selling it for right now. That might be a different location, it might be a different application of the services or product, it might be a different geographical area, it might be different packaging like Coke does. Right. But thinking about where can I take the things that I'm already selling and sell that might be even market segmentation, right. And sell them for significantly more. Really big opportunity here. Okay. And something that would be very good to do as a sprint.

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