Wanna scale your business? Click here.Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap
Chapter 1: What common challenges do businesses face?
A number of businesses just lined up over two days to ask me questions. They range from $200,000 a year to $140 million a year. And the crazy thing is, is the questions between businesses are so similar that they apply to all of them. And we pulled out the best moments that we think will give you the highest ROI. Enjoy.
Hey, Alex, thanks.
Yeah, you bet.
So my name's Zach Levine. We sell pain management services to New Yorkers. Okay. Integrated pain, so chiropractic PT.
Like old people, young people, women, men?
We have a bunch of avatars right now, which is potentially a problem.
Okay, brick and mortar?
Brick and mortar. We're out of network insurance, which is a dying, which we'll get to. Sure. We do 4.2 in revenue. Okay.
So you're mostly insurance or you're mostly cash?
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Chapter 2: How can businesses transition from dying models?
So that'd be like a $200 X-ray or something like that that they can get for 19 or 20. You don't care about that. You just want a credit card on file so that when they walk in the door, you have two things. One is that When they walk in the door, well, one, you want them to walk in the door because they paid. Two, you can charge a no-show fee if you want to.
But typically, if you're getting even a low ticket amount, you'll be in the 70% to 80% show rate. So you won't waste practitioner time.
So having them pay up front, actually putting out their credit card. Yeah.
And just for the discount offer, now when they come in the door, you'll do the assessment. And then after the assessment, you don't treat them. You'll do the sale appointment then. You sell at point of greatest need, not point of greatest satisfaction. So at that point is when you'll make the offer. And then you'll be like, hey, awesome, do you want to use the card we have on file?
Because you already have it on file because you got it earlier. It makes a much smoother sale. So the issue he's dealing with is that he's at optimized stage. He's 20 to 49 in terms of his headcount. And the issue, number one, that he has is that he can't hire higher level talent because they expect full compensation and he basically has very little cash to bring in the talent that he needs.
So that's number one issue that he's dealing with. He's spending money to grow, but he's not growing, money's missing, and so that's an issue that he's dealing with in finance.
Because he has so many kind of products and services, the improvement between those things has gone down, and ads aren't converted, basically he doesn't have any real ads or real way of getting customers in, and so costs are going up, right? And so these are the issues he's dealing with, which is really common at this stage. Now let's look at what he has to probably do in order to improve it.
And so he has to create customer segmentation by cohort and activation process and then install sales training for his team so that he can start segmenting people and upselling them down a customer journey path.
Instead of marketing all of these different products, he basically needs to make one or two or three entrance points in the business, then a cross sell and upsell all of these additional services that might not convert as well on the front end, but work very well for continuity or for upsells and downsells or even high ticket upsells on the back end.
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Chapter 3: What strategies can improve customer acquisition?
But if he can keep them, then he can probably blow the doors off this thing, especially if the education can offset his CAC or cost to acquire a customer. Okay, so I think we chatted about this last night. So you have a, there is no right answer, but there is a path that you have to pick.
And so either you're going to be an enterprise company and you're going to build only for that, and I would say like you, probably will just transact on the education side in order to fund this. I, in general, don't like this plan, but you could do this, because you'll be split attention.
And this is fundamentally why people raise money in software, so they can just focus on one customer the whole time, build the product, and then actually get it to work. OK, that's that. Because you said that you're retaining 40% in basically a prosumer-ish market, which is where you're at, I would be inclined to say that you probably are pretty close to a decent product.
So you probably have nailed something there. Because keeping 40% of people one year later on you know, whatever it is for musicians that you guys have for contracts and whatnot. You could absolutely go all in on that and get that to like 50 or 60%. And then you just need to have a different acquisition system. So you probably just need to go spend money acquiring customers.
And that already cash flows because of the education side. And are the people who are still paying you on the software also education customers or no?
They usually come from the education or from my legal services as well. So I have some clients that be 80 percent of the job.
Here's the million dollar question. The million dollar question is, if they stop the education, do they keep paying for the software?
Yes, because it's a one-time fee.
Well, then that's, what, you mean the software's a one-time fee?
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