WEBVTT 1 00:00:00.000 --> 00:00:03.300 Welcome to the game where we talk about how to get more customers, how to make 2 00:00:03.300 --> 00:00:06.440 more customers, how to keep them longer in the many failures and lessons we have 3 00:00:06.440 --> 00:00:09.800 learned along the way. I hope you enjoy and subscribe. If you're stuck in your 4 00:00:09.800 --> 00:00:13.480 business right now, a lot of times you don't need to do it about to show you. 5 00:00:13.480 --> 00:00:17.480 But if you've reached a point and you were focused on a niche, right, and you're 6 00:00:17.480 --> 00:00:21.320 getting to the 1 million or 3 million or 10 million dollar mark, there may be a 7 00:00:21.320 --> 00:00:25.960 time when it might be time for you to increase the size of your total 8 00:00:25.960 --> 00:00:29.320 adjustable market, which the short hand for that is TAM. So in the 9 00:00:29.320 --> 00:00:33.160 investment banking world or the finance world, they call the TAM, the total 10 00:00:33.160 --> 00:00:35.440 adjustment market, and that's one of the first questions they're going to ask 11 00:00:35.440 --> 00:00:38.520 you about your company if you wanted to sell some day. They're like, well, okay, 12 00:00:38.520 --> 00:00:41.680 you've grown, well, how big is the market that we're going after? Because if you're 13 00:00:41.680 --> 00:00:45.160 going after a tiny market, they realize that there's an invisible cap on the 14 00:00:45.160 --> 00:00:48.520 business that they, you know, they're going to say, okay, well, this doesn't, this 15 00:00:48.520 --> 00:00:52.280 isn't a massive opportunity. And so when you increase your TAM, you literally 16 00:00:52.280 --> 00:00:56.040 increase the size of your opportunity. But instead of doing, you also change the 17 00:00:56.040 --> 00:00:58.560 nature of your delivery and your prospect. So it's something you should do with a 18 00:00:58.560 --> 00:01:02.120 great amount of care. That being said, what I want to do is take you through the 19 00:01:02.120 --> 00:01:05.480 three ways to increase your total adjustable market and some of the 20 00:01:05.480 --> 00:01:08.760 considerations around that. All right. So the first way that you can increase 21 00:01:08.760 --> 00:01:12.560 your TAM, and this is one that a lot of people don't look at or more afraid of. 22 00:01:12.560 --> 00:01:15.720 And this is probably one of the most profitable ways to do it. At the end, I'll 23 00:01:15.720 --> 00:01:19.080 show you the ones that we've done and what I would have done differently, 24 00:01:19.160 --> 00:01:23.680 et cetera. All right. So the first way is to go up market. When the term up market, 25 00:01:23.680 --> 00:01:27.880 what that means is is that if you're in a service business of some kind, and you 26 00:01:27.880 --> 00:01:31.480 serve a specific avatar. So let's say I helped, you know, salon owners, 27 00:01:31.480 --> 00:01:35.520 generate customers, whatever, right? If I wanted to go up market, then I would 28 00:01:35.520 --> 00:01:39.080 say, okay, this is, think about it like a Christmas tree. Each one of these 29 00:01:39.080 --> 00:01:43.680 individual, like units has people below it and people above it. Above it would 30 00:01:43.680 --> 00:01:47.840 be the organizations or conglomerates of these people that I currently have. 31 00:01:48.080 --> 00:01:52.240 So can I go after associations? Can I go after franchises? Can I go after 32 00:01:52.440 --> 00:01:57.320 licenses or licenseors of this type of business model? By doing that and 33 00:01:57.320 --> 00:02:01.360 serving those people, I now have changed the nature of my business. So if I'm 34 00:02:01.360 --> 00:02:06.560 serving somebody who serves salons, then I go up market. I get another degree of 35 00:02:06.560 --> 00:02:10.760 leverage. This typically happens when you have more experience in the field, 36 00:02:10.760 --> 00:02:14.560 you have demonstrated results. You have evidence of your efficacy or your 37 00:02:14.560 --> 00:02:18.240 systems or your process or whatever it is to add value. This is one of the best 38 00:02:18.240 --> 00:02:23.000 ways to gain leverage and instantly sell hundreds of clients at a time. All 39 00:02:23.000 --> 00:02:27.840 right? So that is the first way to increase your tam and also increase the 40 00:02:27.840 --> 00:02:31.800 the quality and size of the contracts that you're dealing with when you're 41 00:02:31.800 --> 00:02:37.920 selling. The second way to increase your tam is to go adjacent. All right, adjacent 42 00:02:37.920 --> 00:02:43.360 would be if I'm a salon owner, I'll just use that one as the, or if I'm serving 43 00:02:43.360 --> 00:02:47.240 salons or excuse me, if I wanted to go adjacent, there's a couple of different ways 44 00:02:47.240 --> 00:02:52.840 I could do this. One is I could go for people who manufacture stuff for salon 45 00:02:52.840 --> 00:02:56.560 owners, right? I might go after a pair of drying companies or a chair companies 46 00:02:56.560 --> 00:02:59.560 that do the little chairs that they have there, or it might be the physical 47 00:02:59.560 --> 00:03:04.880 product side of the salon business. It could also be a business that's closely 48 00:03:04.880 --> 00:03:09.560 related to salon. So I might go after nail salon, right? Or I might go after a 49 00:03:09.560 --> 00:03:16.840 lash expert or whatever, right? And so this is how I could go adjacent and do the 50 00:03:16.840 --> 00:03:20.640 same thing, right? So I give you two different examples that one is changing the 51 00:03:20.640 --> 00:03:24.080 nature of the business. So if I started selling physical products within that 52 00:03:24.080 --> 00:03:27.120 same sphere, that would increase the size of my tam, but I also go direct to 53 00:03:27.120 --> 00:03:32.200 consumers. So there's multiple levels of that. The most direct adjacent jump would 54 00:03:32.200 --> 00:03:37.040 be going from helping salon owners to helping nail salons, like so a hair 55 00:03:37.040 --> 00:03:41.520 salon, to a nail salon, to a lash salon, or whatever, right? So it's 56 00:03:41.520 --> 00:03:45.120 carving out these little vertical stripes that are close enough to one another 57 00:03:45.120 --> 00:03:48.880 than the lot of the best practices that you've already learned, probably apply. 58 00:03:48.880 --> 00:03:53.080 All right? And so this is the second way that you can increase the total 59 00:03:53.080 --> 00:03:56.680 addressable market that you are serving. And by doing that, if you can triple the 60 00:03:56.680 --> 00:03:59.240 amount of customers that you can, that you can market to, then you can triple them 61 00:03:59.240 --> 00:04:03.600 people you can sell. And this is especially important when you reach a 62 00:04:03.640 --> 00:04:07.440 bottleneck. Now it's important to understand that you might have a bottleneck on 63 00:04:07.440 --> 00:04:09.840 your current channel. So let's say you're running Facebook as to get these 64 00:04:09.840 --> 00:04:12.560 customers, or you're running, you know, Google search ads, or you're running, or 65 00:04:12.560 --> 00:04:14.720 you have a great affiliate partner, whatever it is, whatever you're getting 66 00:04:14.720 --> 00:04:18.680 customers, you might have an artificial bottleneck. So you feel or you perceive 67 00:04:18.680 --> 00:04:21.680 like you can't grow any more within that space, but you realize that this is 68 00:04:21.680 --> 00:04:25.800 $60 billion space in health and beauty, and you're doing $4 million a year. 69 00:04:25.920 --> 00:04:29.040 Well, you probably should keep everything you have the same and add a different 70 00:04:29.040 --> 00:04:32.400 channel to it or increase how much you're making per customer, which is beyond 71 00:04:32.400 --> 00:04:34.440 the scope of this video, but just something to think about as you're, as you're 72 00:04:34.440 --> 00:04:39.360 going through this. All right, the third way that you can do this is to go down 73 00:04:39.360 --> 00:04:44.240 market. All right, this one I have, I have personally tried and hated it. 74 00:04:44.240 --> 00:04:47.280 But I'll explain some of that my personal experience with these things in a 75 00:04:47.280 --> 00:04:47.560 second. 76 00:04:50.120 --> 00:04:53.720 We'll go, guys, you guys already know that I don't run any ads on this and I 77 00:04:53.720 --> 00:04:57.000 don't sell anything. And so the only ask that I can ever have are you guys that 78 00:04:57.000 --> 00:05:00.040 you help me spread the words we cannot more entrepreneurs, make more money, 79 00:05:00.040 --> 00:05:03.560 feed their families, make better products, and have better experiences for 80 00:05:03.560 --> 00:05:04.960 their employees and customers. 81 00:05:05.040 --> 00:05:08.880 And the only way we do that is if you can rate and review and share this 82 00:05:08.880 --> 00:05:11.960 podcast. So the single thing that I asked you to do is you can just leave a review, 83 00:05:12.080 --> 00:05:14.880 let's take 10 seconds or one type of the thug that it means the absolute 84 00:05:14.880 --> 00:05:17.880 will to me and more importantly, it may change the world or someone else. 85 00:05:20.400 --> 00:05:24.280 All right, so going down market is, let's see, use the salon owner example 86 00:05:24.280 --> 00:05:28.880 again, if our going down market, then I would be serving hairstylists, right? 87 00:05:28.880 --> 00:05:32.160 So what's one level below the person that I'm currently currently serving? 88 00:05:32.440 --> 00:05:36.560 It would be hairstylists or actual nail polished people, right? 89 00:05:36.840 --> 00:05:37.960 And you absolutely can do that. 90 00:05:37.960 --> 00:05:41.080 So if I had a certification or something that would help them, you know, 91 00:05:41.080 --> 00:05:45.880 be better or service more customers or allow them to charge higher rates 92 00:05:45.880 --> 00:05:49.480 because we had a proprietary system around it or whatever, then this would be 93 00:05:49.480 --> 00:05:54.400 something that I would be able to sell down market. Now, typically what happens 94 00:05:54.400 --> 00:05:57.120 if you're thinking about this from a pricing perspective, this is what you're 95 00:05:57.200 --> 00:05:58.040 normally charging. 96 00:05:59.080 --> 00:06:02.040 This is probably what you're charging times five to 10, right? 97 00:06:02.360 --> 00:06:06.400 And this is what you're charging probably divided by five to 10, right? 98 00:06:07.280 --> 00:06:11.440 And if you think about this, this is much more akin to a pyramid, right? 99 00:06:11.680 --> 00:06:14.880 Where you have where you're currently at, you have your down market, oops, 100 00:06:14.920 --> 00:06:17.080 and then you have your own market, right? On the top of that. 101 00:06:17.360 --> 00:06:20.520 And so making the decision about what to do here, I would say that most 102 00:06:20.520 --> 00:06:23.200 people are in this kind of number two bucket, right? 103 00:06:23.600 --> 00:06:24.640 You are where you're at. 104 00:06:24.640 --> 00:06:25.760 You serve who you serve. 105 00:06:26.200 --> 00:06:29.360 And most times what you're encountering is an artificial bottleneck. 106 00:06:29.360 --> 00:06:33.040 You just have maxed out this particular stream of getting customers. 107 00:06:33.040 --> 00:06:35.080 And there's lots of ways to solve that bottleneck. 108 00:06:35.440 --> 00:06:36.880 One is by adding another channel. 109 00:06:36.880 --> 00:06:39.360 The other way would be increasing the lifetime growth profit per customer. 110 00:06:39.360 --> 00:06:42.400 So that you can market twice as hard or spend twice as much or three times as 111 00:06:42.400 --> 00:06:45.320 much on that same channel to acquire more customers, right? 112 00:06:45.520 --> 00:06:47.480 And so one of those is back in solution. 113 00:06:47.480 --> 00:06:48.520 The others are front in solution. 114 00:06:48.520 --> 00:06:50.840 Both of them are viable. It depends on where you're at, all right? 115 00:06:51.000 --> 00:06:54.080 And so me personally, I'll give you the gym example. 116 00:06:54.120 --> 00:06:57.440 So we serve gym owners in one of our portfolio companies, 117 00:06:57.440 --> 00:07:01.480 Jim, if we wanted to go down market, it would be helping personal trainers. 118 00:07:01.720 --> 00:07:04.840 If we want to go up market, it would be helping franchise oars, you know, 119 00:07:04.840 --> 00:07:07.680 make more money with their franchise within that space, right? 120 00:07:07.680 --> 00:07:09.640 So that would be an example of all three of those things. 121 00:07:09.880 --> 00:07:13.760 If I wanted to go adjacent, it might be like kind of like, 122 00:07:13.760 --> 00:07:16.120 I would say cross diagonal, both adjacent and down market, 123 00:07:16.120 --> 00:07:19.440 but having the potential to go up market would be like having online fitness 124 00:07:19.440 --> 00:07:22.680 business, because some online fitness businesses can be bigger. 125 00:07:22.760 --> 00:07:26.320 Some can be about the same as the gym and many, many, many, many of them are 126 00:07:26.320 --> 00:07:29.440 less than that because most of those people are kind of more along the lines of 127 00:07:29.440 --> 00:07:32.520 business opportunity seekers, which leads me to the kind of the fourth final 128 00:07:32.520 --> 00:07:33.440 point that I want to make here. 129 00:07:33.480 --> 00:07:36.440 If you are in some way involved with client acquisition, which many of the 130 00:07:36.440 --> 00:07:40.800 people who listen to this channel are, because it's just the nature of the world 131 00:07:40.800 --> 00:07:45.840 that I've been in, if you're in that world, one of the ways that you can make 132 00:07:45.920 --> 00:07:49.800 your opportunity appeal to more people is by transitioning from an 133 00:07:49.800 --> 00:07:52.440 improvement offer, which is where you help people do better with the thing 134 00:07:52.440 --> 00:07:56.440 that they are doing to a new opportunity being a business opportunity. 135 00:07:56.440 --> 00:07:59.880 So it's helping people who do not have or who do not enjoy, you know, 136 00:07:59.880 --> 00:08:02.840 the job they're in or do not enjoy their current vehicle and want to try 137 00:08:02.840 --> 00:08:03.720 something else is different. 138 00:08:03.720 --> 00:08:06.000 If you have a better way of doing it, that doesn't have a huge bear to 139 00:08:06.000 --> 00:08:09.840 entry, then that can be a viable, I would say like option, you know, 140 00:08:09.840 --> 00:08:12.840 3.5 is, is biz up, right? 141 00:08:13.160 --> 00:08:18.000 With each of these levels, as you go down this way, so too does the quality 142 00:08:18.000 --> 00:08:19.680 of the prospect, right? 143 00:08:19.800 --> 00:08:24.480 When you are selling somebody who's a hairstylist or a personal trainer or 144 00:08:24.480 --> 00:08:30.640 a real estate agent, right, versus a real estate brokerage or a gym owner or 145 00:08:30.640 --> 00:08:36.600 a haze salon owner versus a license, a franchise or of any of those things 146 00:08:36.600 --> 00:08:39.720 or a broker, if I was in the real estate space, hopefully you're seeing the 147 00:08:39.720 --> 00:08:44.360 parallels here, like all industries work this way, and the ultimate FU 148 00:08:44.360 --> 00:08:47.560 position to have, and this is what, you know, the banking world and what 149 00:08:47.560 --> 00:08:52.320 creates real, real, tremendous enterprise value is something called vertical 150 00:08:52.320 --> 00:08:53.920 integration, vertical integration. 151 00:08:54.760 --> 00:08:58.840 And what that means is actually owning all aspects of the supply chain. 152 00:08:59.240 --> 00:09:04.080 So for example, if I own a business that certified, you know, personal 153 00:09:04.080 --> 00:09:07.880 trainers and help them, you know, start their first gym, and then I help 154 00:09:07.880 --> 00:09:12.120 them grow their gym, and then I either had a franchise or I consulted with 155 00:09:12.120 --> 00:09:14.560 franchises or was in our made recommendations to these people to go into a 156 00:09:14.560 --> 00:09:17.320 franchise, then that would be a completely vertically integrated business. 157 00:09:17.320 --> 00:09:19.320 Now, I might also own adjacent portions of that. 158 00:09:19.320 --> 00:09:23.240 I might own the processing, I might own the CRMs, I might own the physical 159 00:09:23.240 --> 00:09:26.080 products that they're selling within that distribution base, and all of these 160 00:09:26.080 --> 00:09:28.840 are different ways that you can increase your total addressable market and 161 00:09:28.840 --> 00:09:30.120 ultimately the amount of things they sell. 162 00:09:30.320 --> 00:09:33.640 Now, with each of these changes comes tremendous operational complexity. 163 00:09:33.920 --> 00:09:36.760 And so if you're going to make one of these switches, I would do so incredibly 164 00:09:36.760 --> 00:09:40.160 carefully and make sure that you're not doing the number one mistake that 165 00:09:40.160 --> 00:09:43.720 I see all entrepreneurs make, which is thinking that an artificial bottleneck 166 00:09:43.760 --> 00:09:47.920 on a channel is a is a reflection of the bottleneck of the size of their 167 00:09:47.920 --> 00:09:50.520 market. All right, it's one of the number one issues that I see. 168 00:09:50.600 --> 00:09:52.360 And so hopefully found value to this. 169 00:09:52.480 --> 00:09:55.320 Hopefully if you are stuck at your current level of growth, think about 170 00:09:55.320 --> 00:09:58.400 increasing the lifetime growth profit per customer, or just adding another 171 00:09:58.400 --> 00:10:02.400 channel, either of those things will likely be bottleneck you, but you may be 172 00:10:02.400 --> 00:10:05.400 in a situation where it might be better for you to go down market or go up 173 00:10:05.440 --> 00:10:08.720 market and make sure that when you're doing that, you're addressing the pricing 174 00:10:08.720 --> 00:10:11.520 accordingly. You can't go up market and just charge twice as much because 175 00:10:11.520 --> 00:10:13.960 there's so much so many fewer of those customers than they're going to expect 176 00:10:13.960 --> 00:10:16.600 a lot more. And to the same degree, and this is one of the biggest mistakes that 177 00:10:16.600 --> 00:10:18.280 I've made, I went down market. 178 00:10:19.040 --> 00:10:22.600 I adjusted my price accordingly, but I actually kept my service the same. 179 00:10:22.600 --> 00:10:25.520 And so it was actually not viable for me because I was putting so much time 180 00:10:25.520 --> 00:10:28.600 and effort into people who didn't pay enough and then it didn't work out. 181 00:10:28.640 --> 00:10:30.760 All right. And so hopefully this makes sense to you. 182 00:10:30.960 --> 00:10:31.920 Hopefully found value in this. 183 00:10:31.920 --> 00:10:34.560 Click subscribe and I'll see you guys in the next video. 184 00:10:34.560 --> 00:10:35.120 Bye.