WEBVTT 1 00:00:00.000 --> 00:00:03.040 Welcome to the game where we talk about how to get more customers, how to make more 2 00:00:03.040 --> 00:00:06.280 per customer, how to keep them longer, and the many failures and lessons we have learned 3 00:00:06.280 --> 00:00:07.280 along the way. 4 00:00:07.280 --> 00:00:08.280 I hope you enjoy and subscribe. 5 00:00:08.280 --> 00:00:09.280 What's going on, everyone? 6 00:00:09.280 --> 00:00:13.160 In this video, I'm going to show you how to raise your prices in a tactical way on 7 00:00:13.160 --> 00:00:14.920 your existing customer. 8 00:00:14.920 --> 00:00:18.240 So it's one thing to raise your prices on new customers, which for many times, you know, 9 00:00:18.240 --> 00:00:21.800 that's something that you have to do because you need to, you know, you want to reinvest 10 00:00:21.800 --> 00:00:23.760 in making the business better. 11 00:00:23.760 --> 00:00:26.880 You want to cover some capital expenses or you just want to make more money, which is 12 00:00:26.880 --> 00:00:27.880 fine. 13 00:00:27.880 --> 00:00:30.840 And the number one lever on making money is what you're pricing it, right? 14 00:00:30.840 --> 00:00:34.800 We've done this in thousands of businesses now, and there's a process that we go about 15 00:00:34.800 --> 00:00:40.080 this because if you raise on existing customers, be ready to have people be upset. 16 00:00:40.080 --> 00:00:41.640 But here's why this is so important. 17 00:00:41.640 --> 00:00:45.200 So let's say that your business runs at a 20% net margin, which is fine, right? 18 00:00:45.200 --> 00:00:48.600 And let's say that you, just for a number of sake, you charge $100 a month. 19 00:00:48.600 --> 00:00:52.520 If you're running a 20% net margin and you're at $100 a month, a 20% increase in pricing 20 00:00:52.520 --> 00:00:57.640 would double your profit, a 50% increase in pricing with three and a half extra profit. 21 00:00:57.640 --> 00:00:58.960 That's pretty good. 22 00:00:58.960 --> 00:01:02.640 If you doubled your price, you would 6X how much money you make. 23 00:01:02.640 --> 00:01:06.320 And so this is how big of a lever pricing is on how much profit you make. 24 00:01:06.320 --> 00:01:09.880 And so knowing how to raise your prices obviously would be something that would be very important. 25 00:01:09.880 --> 00:01:12.040 So there is a right way and a wrong way to do it. 26 00:01:12.040 --> 00:01:14.280 So what I want to do is show you the right way, because the wrong way to do it is send 27 00:01:14.280 --> 00:01:18.720 an email saying, hey, we're raising our prices, you know, screw you, and you'll get a ton 28 00:01:18.720 --> 00:01:22.320 of customers who leave you and then you'll end up being worse off than you were before. 29 00:01:22.320 --> 00:01:27.200 But I did this in my facility, this is one of my first businesses, and I actually had 30 00:01:27.200 --> 00:01:30.760 a third of my customers cancel, but I tripled my price. 31 00:01:30.760 --> 00:01:34.400 And so I was able to keep two thirds of my customers at three times the price and lose 32 00:01:34.400 --> 00:01:37.160 one third of my biggest employees called it the calling. 33 00:01:37.160 --> 00:01:39.080 We got rid of all the problem customers in one fell swoop. 34 00:01:39.080 --> 00:01:42.080 So if you have a pain, a bunch of customers were always complaining about stuff, you might 35 00:01:42.080 --> 00:01:44.800 want to do this because you'll get rid of all the cancerous people and keep only the 36 00:01:44.800 --> 00:01:45.800 people who love you. 37 00:01:45.800 --> 00:01:48.320 And when I did that, I doubled my revenue. 38 00:01:48.320 --> 00:01:49.920 And here's what's even cooler. 39 00:01:49.920 --> 00:01:53.680 My profit went through the roof, because I even had to service a third fewer customers, 40 00:01:53.680 --> 00:01:54.680 which was awesome. 41 00:01:54.680 --> 00:01:55.680 All right. 42 00:01:55.680 --> 00:01:57.800 And so the way that we do this is through a price increase letter. 43 00:01:57.800 --> 00:02:02.700 And if you're curious, my Jim won a secret book is a book that is about gyms, but is a 44 00:02:02.700 --> 00:02:05.160 business book that is simply applied to gyms. 45 00:02:05.160 --> 00:02:08.560 If you want it, you can grab it is not how I make money. 46 00:02:08.560 --> 00:02:10.200 But let's say, let's walk through this. 47 00:02:10.200 --> 00:02:12.800 So you have your letter to increase prices, right? 48 00:02:12.800 --> 00:02:15.520 Now, there's a format to doing this, all right? 49 00:02:15.520 --> 00:02:18.840 Now it's not about you, it's about the prospect, it's about the consumer. 50 00:02:18.840 --> 00:02:19.840 All right. 51 00:02:19.840 --> 00:02:23.520 So the first thing that we want to do, right, is we're going to say, hey, you've probably 52 00:02:23.520 --> 00:02:25.240 known that we've been growing a lot. 53 00:02:25.240 --> 00:02:29.000 You've probably noticed a lot of the good things that are going on right now, and so that's 54 00:02:29.000 --> 00:02:30.000 why I'm writing this letter. 55 00:02:30.000 --> 00:02:31.000 All right. 56 00:02:31.000 --> 00:02:31.800 So it's like, why am I doing this? 57 00:02:31.800 --> 00:02:32.960 Why am I writing this letter to you? 58 00:02:32.960 --> 00:02:34.080 What's the intention of the letter? 59 00:02:34.080 --> 00:02:35.080 All right. 60 00:02:35.080 --> 00:02:37.880 The second is we're going to talk about what we currently are doing. 61 00:02:37.880 --> 00:02:38.880 All right. 62 00:02:38.880 --> 00:02:43.960 And so this is allowing you to resell them a little bit on what you're currently doing 63 00:02:43.960 --> 00:02:46.400 to value, you're currently providing them because sometimes they forget because they might 64 00:02:46.400 --> 00:02:48.720 only use one aspect of your service. 65 00:02:48.720 --> 00:02:51.080 Because they're like, oh, wow, there's a lot of extra stuff that I didn't even know about 66 00:02:51.080 --> 00:02:53.760 and believe me, I can't even tell you the amount of times people read this letter and 67 00:02:53.760 --> 00:02:56.200 they're like, I didn't even know you were doing all this stuff, right? 68 00:02:56.200 --> 00:03:00.360 And so you want to list out the stuff that you're doing and say, okay, we hire and retain 69 00:03:00.360 --> 00:03:01.680 the best talent. 70 00:03:01.680 --> 00:03:05.480 We offer continued education for our employees. 71 00:03:05.480 --> 00:03:10.680 We're providing new softwares and equipment to our members that we always try to keep 72 00:03:10.680 --> 00:03:11.680 up to date. 73 00:03:11.680 --> 00:03:12.680 That's what we're currently doing. 74 00:03:12.680 --> 00:03:13.680 They're like, oh, I didn't even think about that. 75 00:03:13.680 --> 00:03:17.560 So the goal here is to get them to think about your costs. 76 00:03:17.560 --> 00:03:22.760 And get them into the mind of you as an entrepreneur to the best of your ability, right? 77 00:03:22.760 --> 00:03:25.160 These are the things that we incur in order to provide this value. 78 00:03:25.160 --> 00:03:28.560 It's not like we're just taking all the money you give us and putting it in our pockets 79 00:03:28.560 --> 00:03:30.560 because that's what everyone always thinks, all right? 80 00:03:30.560 --> 00:03:33.800 The next thing we do is we're going to say, wow, despite all the stuff that we're doing, 81 00:03:33.800 --> 00:03:37.520 we want to do even more because we're losing our minds because we just provide crazy value, 82 00:03:37.520 --> 00:03:38.520 all right? 83 00:03:38.520 --> 00:03:43.600 And so it's like, we want to, like, you know, we're currently a rag-tug bunch of champions 84 00:03:44.600 --> 00:03:45.600 our facility. 85 00:03:45.600 --> 00:03:48.160 If you have an actual facility and if you're online, it's like, you know, we've had a lot 86 00:03:48.160 --> 00:03:49.520 of stuff that's duct taped together. 87 00:03:49.520 --> 00:03:53.560 We want to really, you know, level up the brand and we want to do it for you, right? 88 00:03:53.560 --> 00:03:55.440 So you want to tell them what's coming. 89 00:03:55.440 --> 00:03:57.760 So this is like, we want to add these X, Y and Z things. 90 00:03:57.760 --> 00:03:58.760 We want to add specially programs. 91 00:03:58.760 --> 00:04:00.520 We want to add higher levels of service. 92 00:04:00.520 --> 00:04:03.720 We want to add, you know, events to our business. 93 00:04:03.720 --> 00:04:04.880 We want to add all these things, right? 94 00:04:04.880 --> 00:04:07.360 A massive improvement to our level of service. 95 00:04:07.360 --> 00:04:10.400 These are all things that we want to be adding, right? 96 00:04:10.400 --> 00:04:16.680 And then what I like to do is I like to tie this, tie this increase to a promise of values. 97 00:04:16.680 --> 00:04:17.680 Okay? 98 00:04:17.680 --> 00:04:22.600 Now, what I mean by that is real quick, guys, if you can think about how you found this 99 00:04:22.600 --> 00:04:27.440 podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something 100 00:04:27.440 --> 00:04:28.440 like that. 101 00:04:28.440 --> 00:04:30.520 The only way this grows is through word of mouth. 102 00:04:30.520 --> 00:04:31.880 And so I don't run ads. 103 00:04:31.880 --> 00:04:32.880 I don't do sponsorships. 104 00:04:32.880 --> 00:04:34.040 I don't sell anything. 105 00:04:34.040 --> 00:04:36.360 My only ask is that you continue to pay it forward. 106 00:04:36.360 --> 00:04:39.560 Do whoever showed you or however you found out about this podcast that you do the exact 107 00:04:39.560 --> 00:04:40.560 same thing. 108 00:04:40.560 --> 00:04:44.200 So if it was a review, if it was a post, if you do that, it would mean the world to me and 109 00:04:44.200 --> 00:04:48.560 you'll throw some good karma out there for another entrepreneur. 110 00:04:48.560 --> 00:04:54.160 I want to tie this to values that I have described to you that no one can contest. 111 00:04:54.160 --> 00:04:56.200 So I can say, I have made this promise to you. 112 00:04:56.200 --> 00:05:01.960 And with integrity, I can no longer provide the level of service that I have promised unless 113 00:05:01.960 --> 00:05:05.080 we do these things because I will not stand here in this marketplace and say that we are 114 00:05:05.080 --> 00:05:08.240 the best at XYZ unless we do these things. 115 00:05:08.240 --> 00:05:11.840 And the only way for me to do these things is for us to have a corresponding increase 116 00:05:11.840 --> 00:05:12.840 in price. 117 00:05:12.840 --> 00:05:16.400 Now mind you, when you're communicating the price, it's also important to communicate 118 00:05:16.400 --> 00:05:18.080 the price in a way that's attractive. 119 00:05:18.080 --> 00:05:21.280 So you don't want to say, hey, it's going to cost you $5,000 extra year. 120 00:05:21.280 --> 00:05:25.480 You would say it'd be better to say it's going to cost you an extra 100 bucks a week. 121 00:05:25.480 --> 00:05:26.480 Sounds like a lot less. 122 00:05:26.480 --> 00:05:28.280 You can break down even more. 123 00:05:28.280 --> 00:05:29.280 It's 15 bucks a day. 124 00:05:29.280 --> 00:05:32.720 It depends on who we're talking to and what level of service you have, but you can break 125 00:05:32.720 --> 00:05:34.600 it down to weekly or break it down to daily. 126 00:05:34.600 --> 00:05:39.040 And that's why insurance quotes people in days, it's only a dollar a day, right? 127 00:05:39.040 --> 00:05:42.640 So that you can do this and it will minimize what the perceived cost is. 128 00:05:42.640 --> 00:05:46.040 So ideally, you want to maximize by saying, this is all the stuff we're doing that we 129 00:05:46.040 --> 00:05:47.240 didn't even know about. 130 00:05:47.240 --> 00:05:49.640 This is the stuff we want to do that's even more than that. 131 00:05:49.640 --> 00:05:51.320 And this is how little it's going to cost you. 132 00:05:51.320 --> 00:05:56.320 And the reason we must do this is so that I can maintain my integrity to you and the promise 133 00:05:56.320 --> 00:05:57.320 that I made you. 134 00:05:57.320 --> 00:06:01.840 I'm fervent that this is something I'm planning my flag here is that I demand to be the 135 00:06:01.840 --> 00:06:02.840 best in the marketplace. 136 00:06:02.840 --> 00:06:04.680 And for us to do this, we must continually invest. 137 00:06:04.680 --> 00:06:08.400 And for us to do that, like, this is what is required, right? 138 00:06:08.400 --> 00:06:12.520 And then, and here's what's cool is that I like to add a little PS at the end. 139 00:06:12.520 --> 00:06:15.480 And that little PS is to give perspective, all right? 140 00:06:15.480 --> 00:06:20.200 And what I do here is I say, if this is going to materially affect your life, if you're 141 00:06:20.200 --> 00:06:22.480 not going to be able to pay your mortgage or not going to be able to buy groceries for 142 00:06:22.480 --> 00:06:26.080 your kids, please reach out to me and we can figure something out. 143 00:06:26.080 --> 00:06:29.360 And so by saying that, you automatically perspective to everyone that listen. 144 00:06:29.360 --> 00:06:30.840 No one's going to go homeless over this thing, right? 145 00:06:30.840 --> 00:06:34.760 No one's going to lose their house because we're raising the price of our XYZ, right? 146 00:06:34.760 --> 00:06:35.760 Right. 147 00:06:35.760 --> 00:06:39.720 But we open the door for discussion for the people who feel obligated or feel the need 148 00:06:39.720 --> 00:06:40.720 to do this. 149 00:06:40.720 --> 00:06:43.560 Now, if you make an announcement like this, which I recommend you doing via video and via 150 00:06:43.560 --> 00:06:48.040 direct mail, you want to make it and then also turn the comments off on whatever the 151 00:06:48.040 --> 00:06:50.600 post is because believe me, you don't want to deal with that. 152 00:06:50.600 --> 00:06:53.440 As you say, hey, I don't want this to be a gossip form. 153 00:06:53.440 --> 00:06:56.560 If you have anything, just bring it to me directly out of respect for you. 154 00:06:56.560 --> 00:07:00.400 I want to deal with these, you know, face to face and not over the keyboard, right? 155 00:07:00.400 --> 00:07:03.960 And so it's an easier way to also manage and mitigate any kind of negativity that happens. 156 00:07:03.960 --> 00:07:06.800 And believe me, if you raise your prices, you're going to have people, we're going to be 157 00:07:06.800 --> 00:07:07.800 squeaky wheels. 158 00:07:07.800 --> 00:07:09.920 And it's in their best interest to get you to not raise the prices. 159 00:07:09.920 --> 00:07:11.600 So just don't check it out. 160 00:07:11.600 --> 00:07:15.080 Once you commit to it, stick with it, all right, because I'm telling you, if you raise 161 00:07:15.080 --> 00:07:18.200 your price, like I just told you, if you have a 25% margin and you raise your price by 162 00:07:18.200 --> 00:07:20.840 25%, you double your profit, all right? 163 00:07:20.840 --> 00:07:23.200 So I told you, I lost a third of my customers. 164 00:07:23.200 --> 00:07:28.120 That's because I tripled my price and most businesses don't realize how much of a pain 165 00:07:28.120 --> 00:07:30.440 it is to find another one of your business. 166 00:07:30.440 --> 00:07:35.800 And so if you can capitalize on that and you can usually eke out an increase in revenue 167 00:07:35.800 --> 00:07:40.240 and profit as a result, you will be far out rewarded by making that change. 168 00:07:40.240 --> 00:07:43.200 And the people who do leave are usually your worst customers and you've been wanting 169 00:07:43.200 --> 00:07:44.200 to get rid of them anyways. 170 00:07:44.200 --> 00:07:46.000 And this gives you a great time to do it. 171 00:07:46.000 --> 00:07:49.680 So if you're going to raise your prices, this is the way that I do it to existing customers. 172 00:07:49.680 --> 00:07:50.680 I write a letter. 173 00:07:50.680 --> 00:07:54.000 I tell them, you know, why I'm setting the stage for why we're doing this. 174 00:07:54.000 --> 00:07:57.360 I tell them all the things that we're currently doing that they don't know that we're doing. 175 00:07:57.360 --> 00:07:58.480 And you probably do tons of stuff. 176 00:07:58.480 --> 00:07:59.800 It's good to list stuff out. 177 00:07:59.800 --> 00:08:02.600 Then you talk about the future of what's going to happen, what the benefits are going to 178 00:08:02.600 --> 00:08:06.480 be to them, to what they're about to enjoy and how that's going to impact them in a real 179 00:08:06.480 --> 00:08:10.040 way in every single time they see you, they experience your business, they interact 180 00:08:10.040 --> 00:08:13.440 with you and what benefit of the benefit is going to occur. 181 00:08:13.440 --> 00:08:17.200 And then finally, I like to end with values in perspective, all right, so probably values 182 00:08:17.200 --> 00:08:18.200 are right here. 183 00:08:18.200 --> 00:08:24.240 So values is kind of the wrap up, so just consider that 3.5, sorry, 3.5, right? 184 00:08:24.240 --> 00:08:28.320 And then you have your wrap up, which is, hey, big picture, this isn't going to make 185 00:08:28.320 --> 00:08:31.280 you a break you, you're not going to go homeless because of this, but if you do have something 186 00:08:31.280 --> 00:08:33.960 that's going to materially affect you, because you have that anchor, it makes it very 187 00:08:33.960 --> 00:08:35.200 easier for you to have that discussion.