I Paid Alex Hormozi $24k To Grow My AI Agency (Here's What He Said)

I paid Alex Hormozi $24,000 to help me grow my AI marketing agency. And the advice that he gave me was actually the exact opposite of what I was expecting. In this video, I'm gonna be breaking down what his advice was and how it changed the entire trajectory of how I'm gonna grow my business. And I'm gonna reveal the number one mistake that most agency owners make, which is also the reason that Alex Hormozi was able to beat every single one of his competitors. Or with gym launch, we've got Timothy.

Shucker businesses Advanced agent marketing agency. Revenue 4.8 million profit, 25% profit margin. So 4.8 top line, 25% margins marketing agency. Hey, Tim, can you hear us?

Loud and clear. How's it going?

What's up?

Not much.

Just watching the live stream.

All right, so 4.8 top line, 1.2 million. Bottom line. What's the issue? Where do you want to go? What's the problem?

Yeah.

So the short term goal is getting to a million a month.

Okay.

So we're pressing the foot on the gas in terms of scale.

Okay.

We're at a similar revenue level. I was watching the stream yesterday you talked about at gym launch before you guys added in the back end and the continuity.

Yeah.

That you guys are around the same.

Level as we are.

And so, like, our back end and our continuity, I feel like, could use some work.

Yeah.

But really just want to kind of get an idea of what the highest leverage moves are for us in terms of where we are to. I mean, basically we're talking about tripling.

Yeah.

While also keeping the profit margin at a solid level.

Cool.

So to give you guys some quick context here, basically we have a AI marketing agency kind of slash coaching offer for financially financial professionals, specifically insurance agents. So my kind of idea vision for the business before this call was almost having like, gym launch, but for insurance agencies. Right. Where it's sort of like a licensing model. We come in, coach them, teach them how to do really basically like, build and run their entire business. So up, like, at this point, I was like. I had watched the stream before. The way they talked about. They were at like the 3:80,400 mark when they had gym launch, and then they added on their $42,000. Your mastermind.

And.

And then they just like, skyrocketed and scaled. So that's kind of like where I was coming in mentally, is expecting them to give me maybe some kind of insight on that. But ultimately, you guys will see where they. Where they went with this.

All right, you want to, you want.

To, you want to. What's your price and who do you sell to?

Yeah, so we sell to insurance agents. It's like a fifteen thousand dollar offer. Fifteen K for three months.

Okay.

And it's basically, it's like a marketing package. So essentially we help them brand themselves so that they're viewed as an expert.

Okay, heard.

Wait, so it's, it's not just, it's a branding package, not running paid ads.

It's a combo.

Right.

So like basically we put them in the ad and we put them in like a video where by the time they go through the whole process, it's like they're seeing the agent's face over and over versus just like buying leads and then cold calling people.

So are you putting content on social media for them or are you just doing like campaigns and retargeting campaigns and what is it just.

Yeah, it's mainly paid ads. Like it's. The posting on social is not part of the service delivery. It could be, but to be honest, like most of them are not going to do so.

Do you say that you like this is, this is just us, us girls talking. Do you tell them that you're building them a brand but you really just like run ads for them and generate leads?

Well, the whole idea is we call it the personal brand funnel. So they are building a brand because they're the Facebook. But it's not like we're like posting and building like an Instagram or anything.

So you're basically just getting them in ads and then running ads, but they're in them.

I have a question. Do you know what percentage of payments fail and what percentage of customers pay in full? The 15k over three months.

All right, so what you're starting to notice here is they're just taking this in a completely different direction in terms of where I thought so they're like asking like about the customers, the, you know, who we're serving, what the payment completion rate is. And honestly I'm just going to keep playing the video and I'll interject as we continue on.

We've been running the 15k offer since April. Our payment completion rate on the 15k is pretty solid.

Okay, so.

What'S, what's CAC? What's CAC?

The CAC is like 3500.

What's LTV? Fully loaded.

Yeah.

So pretty embarrassing, honestly. I just ran an LTV report like the other day because we've changed our products so much over the last few months. It's like, I didn't have the LTV ready to rock. But when I ran the numbers like.

A couple days ago, and this is factoring in when we had a product like a year ago, like, our, our company's changed so much over the last year. So that's why like the ltv, we'd really have to segment it based off of the months. But total LTV I think was like 7k. But when you look at it for just the last few months, it's like closer to like 10 to 12.

To be honest, I. I don't have like those numbers right in front of me.

What, what percent? Well, like you wanted to get to.

How many customers do you get per month and how many customers do you have active right now?

We get about 50amonth. It's scaling up currently, but currently in our group we have over 250 people.

Okay, so do you know what churn is? So after the 15k, what do they pay for?

So that's kind of like, that's kind of what we're trying to create and structure.

So.

Okay, basically what we've been doing now is my business partners just jumping on back in sales and trying to re enroll people.

But the idea would basically be to like, help them scale their agency, help them scale their brokerage.

Yeah.

And then just, you know, ideally a 5k per month retainer would be what we would shoot for. But yeah, we've had a couple of people take that. Honestly, like, the take rate on that has not been as high as we would, like, heard.

Let me just. Let me give you some. Let me give you some nugs. All right, so thing one, if he's trying to sell them on the back end, you're too late. You want to get the renewal before the end of the third month. So you want to be looking at getting the renewal at like end of month one, halfway through month two, you want to be. You want to have them still in cycle. Not like this is now a new purchasing decision. So it's more like let's keep the party going.

Yeah. So this was a huge nugget for us that we just implemented. Honestly, like, I think we were giving our client success managers or account managers, like too many people, so they just like couldn't keep up with all the clients. And so we had, we had people like slipping through the cracks where it's like, you know, they're out month three or a couple weeks past renewal, and we're trying to get them on the call to upsell them. And it's like, yeah, I mean, he's a hundred percent right here. So, like, whenever you're going to renew people in continuity, you should do it when they're midway through or even earlier the first cycle, so to speak, so that you're. It's not like you're like on your back foot at the very end trying to sell them.

Not like now, do you want to take the next step? All right, to be clear, that's number one. So from a timing perspective, number two, I think you need to have a better offer for the back end. And so what I would do is like, maybe it's a. So they bought three and you say, hey, if you basically, let's get.

You.

Let's. Let's roll this forward for another three, and we'll roll your last month into the next month. So basically, it's like you buy. You buy two, get one on the back so that it's $10,000 for three months as a continuity. And the main reason I can take that $5,000 off is because the setup that we did up front, we don't have to do it again. So I'm willing to do that. Right.

Because the thing that you're actually looking for, I'm just telling you right now. So if you're selling 50 deals a month, if you want to get to a million dollars a month, you need LTV to be 20K. And right now you're close, which means that I'm going to guess that your conversion on the back, I mean, you already said it, is pretty bad, right?

I mean, honestly, up until very recently, we had the CSMs trying to do it, and they just weren't Right.

They're not sales. No.

Hurt.

Yeah, I got you. Yeah. Also, the other piece is like an interesting option here, is that you can just like there's. There's two that come straight to mind for me. One is that you just sell the 15 for three and then you sell them again, you know, six weeks in, four weeks in, whatever, for the next deal, credit a 5K for the. For the setup that they don't have to do, and then they can pay for that. That's option one. Option two is that you just say it's 15k and then after the first three months, it continues at three grand a month or $3,500 a month, it just automatically continues. Now when you go in, you still want to sell them on it, but you don't need to actually have them do anything transaction wise. So it's like they just say yes, and you Say awesome. Well, you're already squared away. We shouldn't make sure tell you what the next steps are looking like. And this is where we're going from here.

Got it.

Makes sense.

So, like, I think you call it, like, so fire.

Yeah. I mean, you can tell this dude's just done this like, a million freaking times. They had a whole software specifically selling to agencies, so it's about to get pretty wild. Honestly, this is like, this part's good, but it gets, like, 10 times better in a couple minutes. And that's not a retention hack. Just trust me.

Yeah. Big head, long tail.

Yeah, yeah, I got it. Okay, what are your thoughts on doing, like, red chairs or app splits or contracting the agents directly?

Everything that.

Yeah. Layla's face right here.

Wild is like 100 to play.

Oh, well, then, yeah, the brokerage is the player. I mean, like, if you get. If anybody who's listening to this, like, in general, if you have a legal way to actually split revenue with a business that is, like any. Mind you, if you're good at what you do, which, if you listen to my stuff, please be good at what you do, that is always going to be the best way to. Because performance is always the most lucrative for winners.

I think there's a huge caveat on that one.

Yeah. Then put your huge caveat on it.

Well, I would just say, like, what are the results? We're getting people on the front end because, like, even if your offer is shitty in your sales.

That was my caveat. You got to be good.

I'm asking.

Okay.

Like, that's what I'm curious. I was like, what are the results?

I was like.

I'm trying to say, like, I didn't.

I was like. I said this, and I know, but I'm just. I know you said it as a caveat, but I'm asking specifically right now because, I mean, we've seen.

Just sitting here on the phone while they're, like, having their.

Their married conversation in our businesses and our portfolio companies, which is, if you're good enough on the front end, you can have a shitty sales team, a shitty CSS team, a shitty offer, and people just keep wanting to pay you.

Because you're good at sales and market.

You'Re really good on the front end for getting them the results. So I'm just trying to understand if. Is it an expectations issue or a procedural issue?

Are you asking if we're getting people results just so I'm clearing the question.

Yes.

Yeah.

What's the average result?

Yeah. Correct.

Well, obviously, to like, to be clear, I have a hard time getting people to report the results back to us. That's been like a big bottleneck for us, I would say, on that.

But the clients are all, throw this in, guys. Like, whenever you're serving super small business owners, like, a good portion of our clients are like independent insurance agents. And the problem with that industry.

At least a lot of it, there's pros and cons, right? Like, the pro is there's always new people coming into it. So there's constantly like, new agents, new agents, new agents. The con is there's constantly new agents coming into it, and a lot of times they fail, right? Like, it's a very high turnover industry. The insurance industry is. And so, like a lot of the people that we're selling to, at least like previous clients, you know, they don't treat this like a business, so they don't track their numbers. So like, I hate, I hate, like the way that this call looks where it's like, what is this number? What is that number? What is this number? What is that number? Like, I don't have any of them. But average result, that's been something we've really struggled with.

Is just like getting people to actually report their numbers back to us. So you guys will see how I answer this.

But the clients who are crushing it are like really crushing it. Like, we had one girl who just came in on her first appointment, she found someone who was gonna roll over like $4 million in annuities. We get people that close, like six figure insurance policies all the time.

So let me, let me tell you what Layla, the first thing that Layla wrote down when you said the name of your business or what you do, she wrote down price and then she wrote down avatar. And so right now there's two elements that you need to control, right? So what I hear from you right now is that you have volatility in your results. You have some that are super good and some that are nothing, right? And from the perspective that all outcomes flow from you, which you should take that ownership on life, then you need to pick either better customers or number two, you need to train them better, or a combination of both. And so maybe there's a client that you're getting that is a certain type of avatar of insurance agent that this thing is worth $50,000 for, and those people all succeed rather, boom, right there.

That was like where the light bulb went off for me. So basically what he's saying is that within our client base, we have a percentage of People that the exact service that we're doing is worth 10 times as much per month. Right. For example, than every single other person. And so if we just optimize everything around serving those people and cut everyone else out, we'll have a better business. Less complexity, more profit, better reputation. Like, everything is better. Right. And to be clear, we have, like, all five star reviews. So it's like. Like, it's not like we have a bad reputation now to be 100% transparent, but when you're selling to people that, like, come in and, you know, a good percentage of them don't even know to sell, we literally have a person at our company that, like, closes deals for people. Like, that's the level that we've gone to to get these people results. And so you'll kind of see here, just like this is where the light bulb is really going off for me.

Rather than trying to find the blended average of zeros and 100. Does that make sense? Yes.

You're saying, like, maybe decreasing units and just selling to the top percent.

Yes, yes, yes. So I'll tell you a story. I'll tell you a story that'll reinforce this. So you gave the analogy with Jim Lodge. So I just want to make sure that you remember this one point before I say that, which is that you need. You need LTV to be over. If you really, like, you want to hit a million dollars a month, you need LTV be at 20 or 25,000 minimum in order to get there. All right? That's what gets you there. So anybody who's watching, it's sales velocity times lifetime value equals hypothetical max. So if you're curious, like, how that works, it's SV times.

Hmax.

And so this equals your hypothetical max. You're like, hey, so if you want to reverse engineer a goal, you say, what's the revenue goal I want to hit? You say, cool. Well, I'm doing this many deals a month, which means this is how much I have to have every deal be worth over the lifetime in order to get this revenue eventually. Okay, back to you. So. So Layla is suggesting that you do 25k for three months instead of 15.

We've seen. We've tested this in multiple businesses where essentially it's literally the exact price increase, actually, which is you go from 15 to 25k. There's barely a difference in terms of conversion. As long as we're just. We're qualifying a little bit more on the front end, so maybe you lose. I think it's like the average business we've lost like 2 or 3%, barely any on conversion but we've increased the price by $10,000. And so like I actually think you get the 25k on the front end if you just qualify your clients more heavily.

There we go. So I mean like this is the thing that I've realized and I'm starting to make more videos talking about this just like, like passing this lesson to you guys because for me personally this has probably been like the most frustrating, painful lesson to learn is just like the quality of your business is literally just determined by the quality of your customers. More often not especially with an agency, it 1000% is. And so just like, like breaking the frame, breaking the belief of like hey, if you just sell to people that are making a lot of money, you can charge a lot per month especially if you're good at what you do. So you know, you literally, you can increase the price $10,000 and the, the conversion rate doesn't even move. Was just a massive unlock. So we, we went and raised our prices after this. But it keeps going guys and just.

Be okay with Cat going up. So if cat goes from 3500 to $5k who cares? Because the thing is is that those people are going to stick and that's ultimately going to make your business way more valuable.

The biggest issue that we see with agencies because we, we not only built a software for agencies, we've, there's tons that come through the door is just they're so scarcity minded that they will not dial in the avatar and it seems contra, like contradictive to what you're trying to do. But it will absolutely result in you get two things from that. Right. One, you're going to get better talent because you have better clients. Yeah, huge better clients that you have the better talent you're going to get. And that's one of the hardest things for an agency to scale is that a lot of people don't want to work for an agency. It's a commodity. There's so many agencies out there and so what makes yours different? And the worst thing for good talent is shitty clients. You know, when I was hiring for example for acquisition.com in the beginning I asked every single person I brought on for the portfolio what's your biggest fear and what would make you quit. And every single one of them said if we bring on shitty partners it's the same. And so in order for you to have to reach the revenue goals that you want, I really feel confident that if you raised Your price, you had better clients, you're going to be able to get better talent. They're not going to leave and it's going to make the business. In the short term, it might feel like, oh, gosh, we have some re figuring out to do. But I think in the long term you'll make way more money and it'll be a better business to own. You're going to like it more.

So let me tell you, one of the breakthroughs that we had with Gym Launch in the very beginning, Layla just.

Spent like so much game there.

This is honestly, it's not something that we've really experienced is like churn on the talent side for a marketing agency. But I mean, I know that will that like it. It would eventually happen if we continue down the path of, you know, not increasing our client quality. So just massive value. And then check out this part here. Coming up with Alex on the, on what he talks about with Gym Launch and we'll break this down together.

Obviously, like a personal trainer could conceivably use what Gym launch taught, right? And what Jim launch licensed. They could. There's no, there's nothing that really stops a personal trainer from using it. The problem is that they're just not ready. They're just not that level. They're just not, you know, I mean, they're not, they're not responsible enough. They haven't learned the meta skills.

They're like, why aren't you working my leads for me?

Right, yeah, just like that.

This part right here, sales. I can't make sales. This is your problem.

Right?

And so, oh my God. If you've ever run a marketing agency, that's like literally the most common phrase that you'll ever hear from your, from your lowest tier clients. To be, to be clear.

What'S interesting is that everybody who competed against me, so this is like, I really want you to like, like take this to heart. Everyone who competed against me in the, in the, in the gym space and I'll just say the fitness space couldn't say no to money. And as a result their brands were deluded because they had so many people who didn't get results. And it might not have been because of anything they did, but because of a strategic decision they did to choose to take bad customers. And so instead we just said if you like, we figured out because just like you, you have like a couple people who are doing well, right? So we looked at our top 20% of customers and we said, what do these people have in common in terms of the behaviors they do and the people they are in terms of the like demographics and like quantitative facts about their business that are objective. So we figured out that it was a, it must be a gym owner number one. Number two, they must have a signed lease, number two, number three, they have to have at least one employee. And number number four, they have to have at least 30 members. And if they had those four things, then they would have a very high likelihood of being successful. And so that became our qualification. Inside of our funnel, inside of our application, inside of the copy of our ads, inside of our landing pages, we repeated everywhere. It was the first thing we said on sales calls. And by doing that, the right person's like, oh yeah, perfect, I meet all of these requirements. This is for me. And to the same degree people were not that are like, oh, this isn't for me. And so it actually didn't really increase our CAC that significantly, but it dramatically enhanced the LTV of each customer. And this is why like I told a story and I think one of the other books, maybe I told them the money Miles book, but there was a, there was a, there was a guy that I helped who's in the same space in fitness and he also sold personal traders and stuff. He was doing the same sales velocity as me, same number of sales per month, but his LTV was like 7k. Our LTV was 42. And because of that we were making like 300 times the profit.

That's the game.

You can literally just hear me on the other end just, you know, working through this in my head. Yeah, I mean, so since this.

What.

We'Ve kind of done is just one, we bumped our prices up. We went from 15k to 20k.

For four months. So we're doing four month agreements up front to boost our LTV because again, he said our average LTV needs to be 20k for us to hit a million a month, which we should definitely be on pace for that. But then also we started looking at our, our clients and actually hold up, I'm gonna finish this and then get into that because there's some more, there's some more game that's gonna be spit.

Got it.

So just, I mean, that's interesting you say that because we've done that over the last year and it's just gotten better and better and better every time we do that. So here's kind of the, the thing I'm trying to balance is because like, I don't want to stop at a million a month. Like, I mean, I Know you're a huge fan of the insurance industry, and there's a lot of room that you can go here.

Yeah.

So it's like, I view the marketing agency, like, it seems like in this industry, no one has a skill of marketing.

Yeah.

I think this is a good launch pad to kind of get into something even bigger.

Yeah.

So what I'm trying to figure out is what that play is.

So let me just tell you what, let me. You gotta do this to do that. All right. So don't try and cure cancer before you, like, figure out how to do, like, test tubes and do things that are microscopes. So the point is, this agency crack 10 million, and I've seen a.

Winner and who's not for you to even think about getting into that. And so you gotta do this first. Either way, it's step one regardless. So that should give you a lot of, like, big exhale. You're not doing the wrong thing. You're doing the first thing.

Okay, cool. Because we're spending, like, almost 200 grand or over 200 grand a month on ads.

Yeah, dude.

Like, if we need less volume.

Yeah.

You think we would do less ad? Spend more, like, cold outreach kind of stuff?

No, I think you should still spend the same money. You just need to be very clear in your ads who it's for.

Okay.

Yeah. Just call out the avatar in the ad.

Yes.

That plus the price, plus maybe you add in, you know, a VSL or something like that before they book a call. If you already have one, if you don't already have one, then I think, like, that alone will make the biggest difference. It's just the messaging.

Yeah, got it.

So I just need to do 80, 20 on the clients.

Yes.

Dial that in.

Yes.

Yeah. When it comes to an agency, it's just like the all about the clients. Hard, high churn just does not scale. It breaks at some point. Whether it breaks because your talent flywheel doesn't spin or because the client flywheel doesn't spin, one or both of them honestly break.

I'll tell you right now, I have yet to see an SMB agency crack 10 million. And I've seen a lot of agencies, most agencies get stuck at one to three. Sometimes they get to five, maybe seven. Right. But the reason is that churn. Churn is too high. So they just become these churn factories. And CAC continues to go up and they never get any kind of compounding. And so then a new agency comes in and then just scoops up lower cac and then eventually their CAC gets high as their reputation catch up and that's like the spin cycle that everyone goes on. The only way to break free of that is you do one of two strategies in agencies. Number one is that you actually actively decide to be strategically low priced. So you say, I'm going to organize the entire business with VAS and AI and automation so that I can provide basically a low price commoditized service of lead gen or whatever it is for 300, $500 a month. And then believe it or not, you can get 38 month, 40 month stick rates super low, 2%, 3% churn for those types of customers because they're like, I know I should market, but I don't want to do it. And these guys do good enough, right? Or you say, I'm going to go up market because I'm going to go to a legitimate business because the middle ground is where everyone lives and everyone in the middle there wants somebody who's going to be their savior. They want them to do this. I want you to do the sales for me. I want you to lead nurture for me. I want you to do.

This part is so freaking true. If you've ever run an agency, you know this is true. And if you have yet to run an agency, just wait, you'll find out. So like what he's talking about with going up market is like you basically want to be serving people that are business owners, right? Not really like the B to like Solopreneur B2C with an agency, it doesn't make any sense because their finances are way too unstable. And so this is. I'll tell you guys what our plan is after, after we finish this video real quick and what we're gonna do. But all of this is just so on point. Like if you run an agency, it's just like he's like reading, reading your fricking fortune.

I want you to do everything for me and just send me money in the mail. It's not going to happen. Only the experienced business owners get that that's not going to happen. Or you actually price so that you have the gross margins in a very, very, very scalable, very low cost version of this that you can price it at a place where it's like they know they're not going to because for them $2,500 a month, $3,000 a month is everything. It's so much money, right? So 500amonth is what it feels like for a legit business to spend 5 or 10,000amonth. Right heard. Okay. Rock and roll.

Awesome.

Appreciate you, man. Thank you, dude. Thank you for donating books.

Absolutely.

All right. Yeah.

Alrighty, guys. So biggest takeaways from that and our game plan moving forward is we basically did an 8020 analysis of our clients. And, and we found that, and this will be huge for anyone else that's running an agency, we found that our best clients come to us with a already either recurring or reoccurring income source, meaning that before they ever even become a client, they're already making good money. And the thing is, I mean, that sounds so freaking obvious, right? But I mean, with the industry that we're in and you know, depending on what industry you're in, you might be able to relate to this. There's a lot of, like, entrepreneurs in the insurance industry of, like, people that want to, want to make it and be business owners and want to be successful agents. But like, in reality, most people just aren't, aren't cut out for it. So what we're going to start doing is going after, like, financial advisor firms like RIAs is what they're called, who basically, like, they sell insurance on the front end and then they take assets under management on the back end. AUM is what they call it. So they have this recurring revenue base that just builds and builds and builds and they're going to be much more stable clients. So I'll keep you guys posted in terms of how that goes. Hopefully you guys got value from this video and I'll see you in the next one.