The Two Changes That Grew This Business 44% in One Year | Ep 966
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What challenges did Luis face with his railing business?
You're about to meet Luis. He runs an online store that sells railing. Although he's doing $2.5 million in revenue, the problem is that 81% of his customers are coming from a single source, which is Google Ads. If that changes or stops working, his business could be in very serious trouble. So first, we're gonna dive deep into the business, and then we're gonna break down all the tactics that he and you can use to scale.
How did Luis optimize for DIY and custom orders?
And at the very end, we're going to check in with Luis one year later to see if those tactics actually helped him scale.
Hi, Alex.
What is the one-step sales funnel and how does it work?
My name is Luis Lora, the owner of Optimum Works, and we are a railing company and we sell a variety of railings online. And who we help are homeowners, contractors and designers. And here are some of the examples below of some of the products we make.
What is the structure of an effective video sales letter (VSL)?
Sweet.
How much money do you make?
Currently, we're doing $2.5 million in revenue, $384,000 in profit, and our net margins are 15%, and our LTV to CAC is 1 to 1.
Okay, so something's weird there, obviously. So what do you want to have happen?
How can email nurture frameworks improve customer retention?
I'm trying to build the best railing company in the U.S., and I want a 10x revenue growth and double profit.
That is an ambitious goal. So how do you get customers?
All right, currently, we're getting them through paid ads. And 81% of our customers are coming from Google Ads. And we spent about $21,600 a month on Google.
What were the results of implementing these strategies after one year?
And we spent, on Meta, $4,500 a month. And we have a couple other sources of traffic below.
So what's the issue? What's the problem right now?
We spent over $300,000 in marketing last year. Our CAC is high and it actually doubled from last year and our conversions are too low.
Got it. So you have a conversion rate issue. So any other problems that you're dealing with besides that?
How did fixing data attribution impact Luis's marketing?
Another problem is that not enough customers are repeat buyers. It's only about 10% and we want to increase our LTV.
So you have a different customer mix. So you've got DIY guys and you've got designers, you've got contractors, but 70% of your business is DIY. What percentage is custom versus like just normal off the rack stuff?
70% are just like handrails and like stuff that people buy directly on our website. And then 30% are custom orders.
What are the critical lessons learned from Luis's business transformation?
What percentage of sales are coming from people buying on the side versus a phone?
The last time I checked, it's about like 10 to 20% on the phone.
All right. So many ways to make money here. So I'm going to do this a little differently than I normally do. Instead of giving you like a lot of different things, I would like to just give you like two or three things so that you have a high likelihood of actually doing it that have the highest impact on the business. But fundamentally, I think that we could probably fix a lot of this with like two things.
Okay, great.
All right, so why don't you go over this way and then we'll do some live breakdowns. Let's pull up the meta ads. Okay, so this is the only ad that's running right now. All right. Are you running these or is somebody else running these?
I have a marketing agency that I work with, and they're doing the ads, but we've definitely scaled down on meta, and we're only spending $1,000 to $2,000 a month right now. But we actually use a post-purchase survey, and over 90% of our customers are saying they found us on Google.
Okay. Got it. Well, that's good to know. Yeah, let's do Google real quick. OK, so cacked LTV there doesn't make sense, because it says your LTV is lower than your CAC, unless you're losing money. But it doesn't sound like you're losing money. So something's wrong here. What I'm seeing here, though, is that we have a clear data attribution issue. For me to say, hey, let's spend more on Google or let's spend less on Google, it's like, I have no idea. We don't have any data. So we have numbers, but they're not useful. We have to get the attribution because you're in a business where you are spending money on ads. You're making money, but you have no idea where it's really coming from, besides your post-purchase survey, which says Google.
But when we look at the Google stats, it says you're losing money.
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Chapters
8 chapters
1
What challenges did Luis face with his railing business?
0:00–0:18
2
How did Luis optimize for DIY and custom orders?
0:18–0:24
3
What is the one-step sales funnel and how does it work?
0:24–0:39
4
What is the structure of an effective video sales letter (VSL)?
0:39–0:57
5
How can email nurture frameworks improve customer retention?
0:57–1:16
6
What were the results of implementing these strategies after one year?
1:16–1:39
7
How did fixing data attribution impact Luis's marketing?
1:39–2:07
8
What are the critical lessons learned from Luis's business transformation?
2:07–23:59
Speakers
3 identifiedMore from The Game with Alex Hormozi
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