Grow Big or Go Home: The Smart Acquisition Playbook

Okay, so now we've seen a few different types of acquisitions categorically that. That we can find here. You can see that there's no way that you'll ever run out of potential acquisition targets when you go through an exercise like this, because there's so many kinds of companies and assets that we can acquire that you really can't possibly run out of categories. So, I mean, this is just a category that we're at. We're not even at. Under each of these categories, you could have 50 or 100 potential acquisitions. So you can end up just through this one sheet. There's one exercise, this one tool, which, by the way, is evergreen, because there's always new categories happening and there's always new companies that are coming about. So if you run through this exercise, once a quarter or once a year, you'll have so many companies that you'll be able to approach that. It's just. It's really, really been a super helpful tool. I'm very proud of it and very happy with how effective it works. So we've gone through acquiring competitors of all types for market share. We've gone through acquiring leads and media, or media for leads, and we've gone through acquiring teams and resources and systems for infrastructure. The next category of companies for acquisition targets that we'll look at is other people who are offering products or services. So when we went through the sheet, really explaining why we have each of these categories on here at all in the first place, we talked about how can we increase our lifetime customer value? So how could we basically not add a single new customer, but get more from the customers that we've already got because we're able to provide them additional value? Well, one of the easiest ways to do that is to have new products and services, or even different products or services than the ones that they've bought. A great example of why this is important, and it's a giant part of Amazon's income, is that if you buy something on Amazon, you'll see that it says people who bought this also bought that. And then under that, there'll be a section that has comparisons of how this product compares to other products. Because a lot of people that buy the one product then look and see that there's other products. I know when I'm trying to learn something new, I'll go on Amazon and I'll find how to distill water, and I'll probably buy three books on how to distill water. I might buy a book, an audio book, and a picture guide or something. Right. It's just really common for people who are buying products that there are all kinds of other things that they're going to buy at that time. So we're going to talk about those specifically in the categories that we'll go through here. So basically now we're talking about products and services that we could add. Now we can buy the company that owns these products and services, or we could just simply go to a company that owns it and say, I'd like to buy that product or I'd like to buy the division that provides that. That service. So let's think about some categories. The easiest one to me is what we call BDA Products and Services. So BDA stands for before, during and after. And what we're asking is for each product, for whatever products your customers are buying right now, your existing customers, what are they buying immediately before they buy this product? We also say what are the types of products that they're buying at the same time, during the time that they're buying this product? Within a buy cycle? Right. Within a few days or weeks. Right. What are they buying before then? What are they buying immediately during, while they're buying this? What other products would they buy? And then what do they buy after this? So maybe a good example would be someone who buys a baby walker. Somebody buys one of those little things that babies go in and they kind of hang in and they can walk around so they can bounce off of walls but not fall down. Well, we know that that person has a baby and so they're buying this baby walker. And so we can kind of guess at the age of the baby for that. And we can say, well, what are the other products that somebody who buys a baby walker will also be buying at the same time? Now, what I would do first is I'd probably go on Amazon and I'd see what are the other products that Amazon says people who buy this also buy that. Right. I just go through and look and then see the ads that are popping up and that will give you a lot of ideas. I think Amazon and Google, I would then Google baby walkers. I would see what are the types of ads and search results that come come up and that'll give you a good idea, be able to brainstorm lots and lots of things. Then you have to say, well, okay, immediately before that, what would they be buying immediately before that, like relatively close. So I don't know much about this cycle of buyer, so bear with me if I sound like I'm a little bit off, but you'll get the idea. So if I know somebody's buying a baby walker, what are they likely to buy immediately before that? And should I buy. Should I think about maybe acquiring products or services that they would be using immediately before that? Then I might say, well, when somebody gets grows out of the baby walker stage, I've got the before and the during products and services. Now, when they grow out of the baby walker or shortly after they've acquired that, what's next? What's the next logical product or service that they would acquire? And then that list of those things becomes your list of BDA products and services. So don't forget services as well. Also, what are the products that are complementary to the product that you're buying? I recently spent way too much money acquiring a computer bag. And it turns out that the computer bag has handles on it and you can carry it. And. And like I said, it was pretty expensive. But they also offered me the ability to buy a strap. So the strap was an additional part that was an additional product they had that was complementary to the product that I had. And the P S that you see on the list is product or service. So what's a complimentary product or service? The service that perhaps they could have offered would be a geolocator tag that was in there so that I could. They can, you know, can track your bag wherever it might go. If it gets lost or it gets stolen. I know you could. You can buy other products to do that as well, but that would be a complimentary product. Similarly, perhaps I'm going to buy a. Maybe I'm going to buy a. Gosh, what? Meat thermometer. So I'm going to buy a meat thermometer that works with your iPhone and allows you to set the temperature that you're going to receive a notice when the meat thermometer hits a certain temperature. Well, then all of the other products that would go around that. It could be spices and sauces that were related to the meat. It could be cookbooks about the meat, it could be other apps that would allow me to do that. Or since I've proven that I'm a kitchen gadget person, since I've got this thing, maybe other gadgets that would help me along the way, maybe different ways to cook meat. Maybe it'd be an air fryer and a June oven and other things, a grill. You know, all of those would be products that would be relatively complementary to that. And as a service, it could be an online subscription to a cooking site or a grilling site or something like that. Or it could be a service that delivered. This is a product and service combined. It could be chef service. So maybe I could have somebody that, that came and cooked my meats for me, that kind of stuff. So those are complimentary. Then you've got enabling products. So enabling is really, really cool. And particularly right now something that's hot is tech enabled. So if I acquire something, maybe I acquire a digital marketing agency and my digital marketing agency provides marketing services to what do I want to do marketing services to pet. To pet walking services. How about that? Think of something different. So I've got an agency now that I acquired that provides. Actually I'm going to pick something that tech enabled will go with better. Let's say that we provide services to Amazon sellers. So so people that are. Our marketing agency provides marketing services to people who are selling on Amazon and we will create ads for those people. We'll design pages for them and messaging about copywriting about all of the products that they've got for sale. That's what we do as a marketing agency. But we might also add in some sort of enablement that enables, that helps them to get more out of the services that we provide. So it might be an ad ranker and ad tracker that shows them they can sign up for a SaaS, a software as a service that allows them to see what ads are running that compete with theirs. It might allow them to see what is their bsr, their best seller rank. It might demonstrate and rank the ads that are performing the best for them over time. So what I'm doing is I've got my basic service that is my agency but I'm also making it more interesting to them by enabling my customers with tech. And I could also have tools within the agency that allow me to see what's working the best and things like that. And that would be an internally tech enabled product. Also related products. So what are the other products that are related? Now related might cross over with BDA before, during and after products or complimentary. But what are the products that are related to this? Maybe I buy books that are science fiction books and there are related products that are fan sites. Or maybe I buy books about Star wars and so I could sell licensed Star War products to the people that buy that. Those would be related kinds of products or other science fiction books. If I like Star wars, maybe I like Isaac Asimov books and maybe I like Star Trek books. Right? Lots and lots of opportunities there. And then as I mentioned when we were talking about price Diversity in terms of different types of competitors. What if the consumers that are buying or the businesses that are buying your products and services right now, is there a lower cost or lower quality product that a different class or that this class might buy? This class of customer, is there a low, mid or high? So if I've currently owned. If I'm currently the gap and I own this middle market, then it does make sense for me to go out and say I can buy products that are a lower quality and I can buy products that are higher quality, or I can buy whole companies like they did with Old Navy and Banana Republic. So good things to think about there and then. One thing that a lot of people don't completely understand and particularly out in the retail world, is upsells and downsells. So when you have someone who's buying a product or service from you, is there the ability to serve them better by giving them something else that they might want that is going to be more expensive? Either a better version of the product that they're buying? Like they're buying the bronze product, but there's also a silver, gold and platinum level that they can buy. And maybe Titanium American Express is a good example of that. They've got all different cards with increasing levels of service and increasing prices. So if you're a gold card holder, then you could be offered another card that was platinum for a little bit more money. The best example ever of upsells that I've heard is Perry Belcher Talked about the McDonald's, would you like fries with that? As being kind of the perfect upsell. And so a lot of people have taken that and said, you know, that's a great example. I'm going to give Perry credit for that. But that's really a great upsell. So if you buy a hamburger at a fast food restaurant and they say that's great, that hamburger costs, let's say it's a dollar and it's a loss leader. It's one of the things they own. And the margin on a hamburger, let's say, is very low because you've got meat cost and burger cost and condiments and packaging and all that stuff. If they say, would you like fries with that? That's an upsell. So they've sold another thing. So the order values increased. Now maybe the fries are $1.50. Now you've got a hamburger that was a $1 order, that's now $2.50 because we've added on the $1.50 fries. And maybe the product Cost on the fries is only 30 cents. So there's $1.20 in profit in that. But the profit on a dollar hamburger is only 10 cents because costs are so high. Right. Food costs. So in that case, not only did we increase the size of the order, but we dramatically increased the amount of profit. So that's really what upsells are about. So thinking about, what are other good examples? Automobiles. You buy a car and then you go in and they're like, okay, in the financing department usually they say, hey, would you like floor mats with that? And would you like a protective undercoat and a paint sealer and would you like a LoJack? So that if something happens and a car gets stolen, right. There's all these upsells, all these extra add ons that you can get that increase their profits and their sale. And most of the add on upsells are very, very profitable. Similarly, maybe somebody buys something or you're talking to a prospect and they want the platinum program that you've got and maybe you don't sell it that way. That's just an internal thing like I want to buy your course. Let's say, fantastic, the course is $3,000. Wow. Gosh. I really, really want it, but I just can't afford that. Well, then a downsell would be perhaps that's a course that includes a bunch of bonuses and, and 26 modules and some coaching calls. And they say, well, here's the deal. If you can't afford that, we've got another course that doesn't have all those bonuses and it doesn't have the coaching calls. It's only got 12 modules, but it's really great. And that course is only $1,000. That would be a downsell. So downsell is typically a way to capture sales that you would have otherwise lost from somebody who either can't or isn't willing to expend the capital to buy the thing that is the more expensive thing. So down sells upsells, cross sells are when you're selling something else that is related, basically. So cross selling a related sell, basically the same kind of idea there. And then last but not least, we talked with the competition about this too. What are the substitute products or services? So if you're selling a cooler, let's say that people put ice in to take camping. A substitute product might be a mini refrigerator. That would be something that's like, okay, if I can't, if I, if I want something that's going to last longer, maybe I'll get a solar or Battery operated refrigerator or even electric one if I'm going to campgrounds and things like that, if I've got a power source that would be a substitute product for that. So lots and lots of opportunities there, as you can see, to find products and services that you can acquire and either acquire the whole company or acquire the product or the service itself. And then that's gonna help you increase your lifetime customer value. If you don't already have a company, then this might be a way to start by saying, I'm gonna identify several of these products or services that my ideal customer that I have, that I think I would like to serve, but I don't yet have a business would be interested in. And then you use these methods to identify not only the initial product, but or service to acquire, but additional ones.

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