WEBVTT

1
00:00:00.000 --> 00:00:03.840
We doubled the profit of a five million dollar business in less than eight weeks,

2
00:00:03.840 --> 00:00:07.360
and we followed a single specific process that I'll break out in this video.

3
00:00:07.360 --> 00:00:10.320
And at the very end of the video, I'll walk you through a hypothetical example of a

4
00:00:10.320 --> 00:00:13.920
Cavs business that would be the best business ever that taught people how to grow their

5
00:00:13.920 --> 00:00:16.800
calves so you can apply to your business using the same process.

6
00:00:16.800 --> 00:00:20.000
So I want you to imagine that you have a business or you'd like to start a business that has

7
00:00:20.000 --> 00:00:23.920
a hundred customers that pay a hundred dollars a month. So I'm trying to use the simplest math

8
00:00:23.920 --> 00:00:27.600
possible. So a hundred customers, a hundred dollars a month. So that means it's doing

9
00:00:27.600 --> 00:00:31.600
ten thousand dollars a month in revenue. Now, let's assume that in order to fulfill those

10
00:00:31.600 --> 00:00:35.280
customers, we have eight thousand dollars a month in cost, so we're making two thousand

11
00:00:35.280 --> 00:00:38.800
dollars a month in profit. Ten thousand dollars offline, two thousand dollars bottom line,

12
00:00:38.800 --> 00:00:42.960
eight thousand dollars of cost. That's the business. Now, you rub a magic iPad.

13
00:00:44.480 --> 00:00:49.040
A genie appears and this is not any kind of genie. This is a very a business genie. And this

14
00:00:49.040 --> 00:00:54.640
niche genie has one wish that he can grant you. And so he says, I can grant you one wish. He says,

15
00:00:54.640 --> 00:00:59.120
I will double your business in one of three ways. You need to tell me which way you want me to do.

16
00:00:59.120 --> 00:01:04.080
Door number one or wish grants number one is I will double the amount of customers that you bring

17
00:01:04.080 --> 00:01:08.880
in every month. With this business, let's assume that your churn is not that good, so people stay

18
00:01:08.880 --> 00:01:13.360
for an average three months. Number two, I will double your price. So you have the same amount of

19
00:01:13.360 --> 00:01:17.040
customers and I'll double how much they pay you every single month. Nothing else will change.

20
00:01:17.040 --> 00:01:20.960
Door number three, he says, now what I'll do is I'll double how long they stay. So instead of

21
00:01:20.960 --> 00:01:25.520
staying for three months, they'll stay for six months. Which of the wishes do you take the genie

22
00:01:25.520 --> 00:01:30.400
apart? Really, be honest. In the comments, tell me what your first guest was going to be. A, B,

23
00:01:30.400 --> 00:01:37.440
or C. So with door A, he doubles it. So now we have 200 customers a month. What happens? Well,

24
00:01:37.440 --> 00:01:42.000
if we have 200 customers paying us a month, we now are making $20,000 in top line revenue and

25
00:01:42.000 --> 00:01:47.600
assuming everything scaled proportionally, we would have $4,000 a month in profit and $16,000 a month

26
00:01:47.760 --> 00:01:52.160
in cost. Double the number of customers, we double the amount of profit, double our business.

27
00:01:52.160 --> 00:01:56.800
Awesome. Let's go to door three, because people are staying twice as long, but you're getting the same

28
00:01:56.800 --> 00:02:01.760
amount of customers per month, eventually you will get to the same equilibrium point as the first

29
00:02:01.760 --> 00:02:07.120
one. The exception is that that wish accomplished does something more powerful, which is it increases

30
00:02:07.120 --> 00:02:12.240
your LTV. Now, because of that, and the additional months that they pay you, most businesses, it's

31
00:02:12.240 --> 00:02:16.240
more profitable the last one someone pays than the first one. Usually it costs a back position,

32
00:02:16.320 --> 00:02:19.760
cost of onboarding. There's more cost associated with getting a new customer than keeping someone.

33
00:02:19.760 --> 00:02:24.240
If you can double the lifetime risk profit per customer, then your cost of acquisition can be

34
00:02:24.240 --> 00:02:28.480
bigger than it could in the first example. Here, I eventually get to the same top line,

35
00:02:28.480 --> 00:02:32.880
but I have more bottom links I didn't have to spend as much on marketing. So between A and C,

36
00:02:32.880 --> 00:02:37.440
you pick C. Now you're like, all right, well, what about door B? So let's say we had the same

37
00:02:37.440 --> 00:02:41.440
hundred customers, but now instead of paying $100 a month, they're paying $200 a month. We

38
00:02:41.440 --> 00:02:46.400
still have the same cost of fulfilling them, $8,000. And our profit went from $2,000 a month.

39
00:02:46.400 --> 00:02:52.800
But now we have literally the extra $100 a month that's pure profit. So we six X'd the profit of

40
00:02:52.800 --> 00:02:56.720
the business with one change. For those in the audience who are thinking, but not as many people would

41
00:02:56.720 --> 00:03:00.640
buy. So I told you that we increased how much profit the business made. I'll tell you the one

42
00:03:00.640 --> 00:03:04.240
change that we did was we looked at the entire marketplace that we're selling to similar services

43
00:03:04.240 --> 00:03:08.880
to theirs. And it was based on our research, we felt that the market could support a 50% higher price.

44
00:03:08.880 --> 00:03:13.360
And so we literally, and this is already a pretty expensive thing, we literally did nothing,

45
00:03:13.360 --> 00:03:18.320
but add 50% to the price and changed nothing about the product. And guess what happened?

46
00:03:18.320 --> 00:03:23.280
More people bought. Why? Because when something becomes more expensive, people perceive its value

47
00:03:23.280 --> 00:03:27.600
in a higher way. And because of the brand that the person had, it was more aligned with the person

48
00:03:27.600 --> 00:03:31.760
to have a higher price tag. Now, most times in most markets, you have supply and demand. And when

49
00:03:31.760 --> 00:03:36.880
the price goes up, demand goes down in most markets. Now, not all markets, and more times than not,

50
00:03:36.880 --> 00:03:41.280
it doesn't drop by the same proportion. So if you double the price, sometimes you sell a third

51
00:03:41.280 --> 00:03:46.400
fewer. But if you double the price and you've six x the profit, potential on a customer,

52
00:03:46.400 --> 00:03:51.440
if I six x my profit on a potential customer, and I do it at two thirds the price,

53
00:03:51.440 --> 00:03:56.000
then I triple the profit of the business still. You still make way more money. And so finding the

54
00:03:56.000 --> 00:04:01.840
absolute perfect point of profit many times comes from raising the price. And pricing is one of those

55
00:04:01.840 --> 00:04:05.280
very interesting things because it's very tied to emotions. A lot of people are very afraid of

56
00:04:05.280 --> 00:04:08.480
raising the price because they don't want to break it. I want to talk to you about how to raise the

57
00:04:08.480 --> 00:04:12.480
price if that is your goal, which is why the number one lever that you have on profits is pricing.

58
00:04:12.480 --> 00:04:16.080
And constantly testing a lot of people's tests, split test their pages, they split test their

59
00:04:16.080 --> 00:04:19.520
scripts, they split test their offers, but the thing that they forget to test is their price. And

60
00:04:19.520 --> 00:04:23.600
it's the strongest lever of all three levers. Okay, so let's walk through a hypothetical business.

61
00:04:23.600 --> 00:04:27.200
And the steps that we would need to take in order to increase the price if that's what we decide

62
00:04:27.200 --> 00:04:30.640
it was the right call. So the first thing we would do is we'd survey the existing audience using

63
00:04:30.720 --> 00:04:34.000
the Ben West or pricing survey. And let's say this business sold a 12 week,

64
00:04:34.000 --> 00:04:38.640
grow your cabs program. And let's say it was $1,200 for 12 weeks, very simple. And on the first

65
00:04:38.640 --> 00:04:41.440
third of the survey, we're trying to find out more about the customer. So we're like, Hey,

66
00:04:41.440 --> 00:04:44.880
you know, what was the main reason that you bought this? Was there an event that was coming up

67
00:04:44.880 --> 00:04:48.800
that incentivized you to do it? What's your income level? What's your job? What was the primary

68
00:04:48.800 --> 00:04:52.000
way that you found out about us, right? So it's like, Okay, these are the things that we know about

69
00:04:52.000 --> 00:04:56.720
the avatar. And so we've got those client demographics. Okay, second part is the four questions

70
00:04:57.520 --> 00:05:00.720
what if it was super expensive, what if it were way too cheap, what if it were a stretch,

71
00:05:00.720 --> 00:05:04.480
and then what if it were a bargain, right? Those are the four questions. Now we say of all the things

72
00:05:04.480 --> 00:05:08.080
that we do in our cabs bargain, which is the book, the training, the nutrition, the stretching

73
00:05:08.080 --> 00:05:11.440
thing that we have, the one-on-one calls for accountability, the buddy system that we've put

74
00:05:11.440 --> 00:05:14.880
together, she have an accountability buddy, like all of these things that we do in our value stack,

75
00:05:14.880 --> 00:05:18.880
which of these if we only had one of them, you would keep and which of these if we got rid of one,

76
00:05:18.880 --> 00:05:23.760
you would lose and not care. You take that data number one. Number two, now we communicate it

77
00:05:23.760 --> 00:05:27.840
internally first. All right, so we got to communicate to the team, got to communicate to the sales team,

78
00:05:27.840 --> 00:05:32.080
secure it to the marketing team, then we communicate it to our customers. This is what's happening,

79
00:05:32.080 --> 00:05:35.680
this is why it's happening past, present, future, this is what we did to get here, this is why it's

80
00:05:35.680 --> 00:05:38.800
important. Now this is what we're trying to do later. We're investing into business because we

81
00:05:38.800 --> 00:05:43.920
want to fulfill our promises. Finally, now we bring it up to the new customers we're coming in.

82
00:05:43.920 --> 00:05:47.600
So we hit our list stuff to let them notice we had the urgency and stuff for, and then the last

83
00:05:47.600 --> 00:05:52.000
step is now we officially have this new price. Now what we want to do now is expect the fact that

84
00:05:52.000 --> 00:05:57.040
the changing price will probably result in fewer sales by total volume. And the reason for that

85
00:05:57.040 --> 00:06:00.640
is because we cleared the pipeline before the price change. It happens. Once you have that,

86
00:06:00.640 --> 00:06:04.560
you have to let it shake out, you have to let it settle and it's really trying. It's very difficult

87
00:06:04.560 --> 00:06:08.880
to do that because it takes guts. But once you make that and you let it settle, then you just do the

88
00:06:08.880 --> 00:06:12.960
math and let the math do the talking. But if you sell it at twice the price, you make more money.

89
00:06:12.960 --> 00:06:18.000
So in our hypothetical cap scenario, let's say we bumped into $2,000 or $3,000 because we found out

90
00:06:18.000 --> 00:06:21.840
that that was the price that was right at that sweet spot. That was the stretch, but they'd still do

91
00:06:21.840 --> 00:06:26.400
it. We might have just two or three acts of the profit of the business by making that one change.

92
00:06:26.400 --> 00:06:30.080
And maybe because caps are the coolest thing ever, got even more people to buy it because they

93
00:06:30.080 --> 00:06:35.200
thought they really could get the results that we said we were going to help them experience.