WEBVTT 1 00:00:00.000 --> 00:00:04.880 Welcome back to the game. Today, I'm going to do something brand new that I'm really excited about. 2 00:00:04.880 --> 00:00:10.640 And this is a podcast first episode, which is a business critique. 3 00:00:11.200 --> 00:00:15.040 Something that I don't share as often as I probably showed is that I spend a lot of my time 4 00:00:15.040 --> 00:00:18.720 looking at what significantly larger companies are doing and trying to think like, 5 00:00:18.720 --> 00:00:25.840 what can I do that they're doing to make money? What I want to do is break down Rihanna's 6 00:00:25.840 --> 00:00:32.160 Savage X Fenty. The big thing here is what is she doing that has created this massive wealth? 7 00:00:32.160 --> 00:00:37.280 So if you didn't know this, Rihanna is now worth $1.7 billion and the vast majority of that 8 00:00:37.280 --> 00:00:41.760 is not from her music. It's actually from her company. So she has a skincare slash makeup line 9 00:00:41.760 --> 00:00:47.040 and she has a lingerie slash activewear slash loungewear line which she's started. 10 00:00:47.040 --> 00:00:52.000 She's done a lot of really clever moves that I think are worth breaking down. Notwithstanding, 11 00:00:52.000 --> 00:00:56.880 I think the most impressive one is actually her membership offer all together. So let's dive in. 12 00:00:56.880 --> 00:01:00.320 I think there's five things that I kind of identified that I thought are worth a while for us 13 00:01:00.320 --> 00:01:06.240 as business owners to kind of examine. The first one is she partnered with somebody who basically 14 00:01:06.240 --> 00:01:10.080 managed all of her deficits. And I think this is something that took me way too long as a business owner 15 00:01:10.080 --> 00:01:13.600 to kind of like wrap my head around. I always wanted to do everything. I wanted 100% of the pie. 16 00:01:13.600 --> 00:01:18.240 But when I look at the wealthiest people in the world, none of them, like Mark or none of them, 17 00:01:18.800 --> 00:01:24.080 have 100% of their business. And so that's such an interesting lesson. Like literally none of them 18 00:01:24.080 --> 00:01:29.120 have that. And so that means that if I if I have a business that have 100% of that means that I'm 19 00:01:29.120 --> 00:01:34.640 fundamentally don't I'm not capturing as many stallions that I otherwise could, helping achieve 20 00:01:34.640 --> 00:01:41.120 this big goal. Because I have this kind of working thesis on the hypothetical maximum size of a 21 00:01:41.120 --> 00:01:48.720 business. It's limited by the collective intelligence and experience and knowledge set of the people 22 00:01:48.720 --> 00:01:52.160 contained within it. Now, that means that in the beginning, if you're a smart entrepreneur, 23 00:01:52.160 --> 00:01:56.240 then you can bring a lot of things to the table. But over time, you can only really live one lifetime. 24 00:01:56.240 --> 00:02:00.960 You can only learn so many things. Being able to attract people who can help you and sometimes 25 00:02:00.960 --> 00:02:05.280 partner because some of the people who bring a lot to the table want a piece of the pie. And the best 26 00:02:05.280 --> 00:02:08.640 people often do, you need to be comfortable with that. And I think it's something that's going to be 27 00:02:08.640 --> 00:02:12.240 really long time to make. And this is just like a great reminder. And so if you don't know, 28 00:02:12.240 --> 00:02:17.680 she partnered with LVMH. And so LVMH is a is a conglomerate owned by Bernard Arno, 29 00:02:18.480 --> 00:02:22.800 one of the richest men in the world, a centibillionaire. And he's also, and I think this is unique. 30 00:02:22.800 --> 00:02:29.600 He's a centibillionaire in a non tech, non technology, a centibillionaire. And so he owns 31 00:02:30.240 --> 00:02:35.440 many brands that you have heard of. So Louis Vuitton, Christian Dior, Givenchy. I think I was 32 00:02:35.440 --> 00:02:40.800 pronounced it wrong. I had to see Tiffany and like a hundred other ones that you that you've heard of, 33 00:02:40.800 --> 00:02:45.520 right? Birkenstock. They actually bought the Moai, which is a champagne company. I think they 34 00:02:45.520 --> 00:02:48.720 have done Perignon. They have a bunch, right? They have a lot of stuff. The thing that they brought 35 00:02:48.720 --> 00:02:54.480 to the table, which basically enabled this from even being a thing is that they brought brick-and-mortar 36 00:02:54.480 --> 00:02:59.600 distribution. Number one, number two, they brought retail and online sales experience. And then 37 00:02:59.600 --> 00:03:04.720 third, they brought manufacturing expertise globally, right? So they have 118 factories. They've 38 00:03:04.720 --> 00:03:09.520 6,000 retail locations in aggregate. And so they know how to move product and they know how to 39 00:03:09.520 --> 00:03:16.160 create products. So basically click to close from thread to someone's hands. They're vertically 40 00:03:16.160 --> 00:03:19.760 integrated. They know how to do the whole thing. Rihanna trying to relearn that from day one was 41 00:03:19.760 --> 00:03:24.000 really unlikely. But the fact that she was able to go from basically zero to a right now, I think it's 42 00:03:24.000 --> 00:03:32.400 validated around $2.8 billion in two, three years is just gives testament to how much the value 43 00:03:32.400 --> 00:03:36.880 of having a good partner that manages your deficiencies is. And so I want to be clear, 44 00:03:36.880 --> 00:03:41.440 somebody's either got have money you don't have. They got to have time you don't have or some sort 45 00:03:41.440 --> 00:03:45.360 of experience that you don't have. And I would say I would put this kind of basis, some sort of 46 00:03:45.360 --> 00:03:50.320 experience or asset rather. Maybe I should alter that because I've always said money time 47 00:03:50.320 --> 00:03:54.720 experience. I might have to add asset to that list. I think I might have to add asset. Huh, 48 00:03:54.720 --> 00:03:58.960 there you go. We discovered that life. They have to one of those four things that they can bring. 49 00:03:58.960 --> 00:04:05.440 And also LVMH brings a nice brand boost to because it's largely luxury goods. And so that's a really 50 00:04:05.440 --> 00:04:09.600 good association for Rihanna. Now, the second big thing that I think that she did really well, 51 00:04:09.600 --> 00:04:13.680 I thought this was really clever was that she serves a really good market. So she picked a 52 00:04:13.680 --> 00:04:17.840 growing market in a number of different kind of categories. So if we measure a growing market 53 00:04:17.840 --> 00:04:24.080 by Kagger, so compounded annual growth rate, Lounge R is a 23% plus annual growth rate. So 54 00:04:24.080 --> 00:04:29.360 just to put that in context, if she just keeps the same market share, it would double in between 55 00:04:29.360 --> 00:04:36.480 four and five years. So like pretty impressive. So much faster than GDP growth at a nationwide level. 56 00:04:36.480 --> 00:04:40.080 So if your market's just stable, it's going to grow at GDP, which is two to three percent, 57 00:04:40.800 --> 00:04:45.200 whereas here at 23%, you're talking double digit, multi double digit growth rates. 58 00:04:45.200 --> 00:04:49.520 Now, Lounge Rih, which is the kind of, I think the entry product, the wedge product that she 59 00:04:49.520 --> 00:04:54.800 started with, is a slower growth rate in a much smaller market. So Lounge Rih is about an 80 60 00:04:54.800 --> 00:05:00.080 billion dollar market. Active wear is just under 600 billion, it's 567 billion dollar market. So much 61 00:05:00.080 --> 00:05:05.840 bigger in active wear, right? Versus Lounge Rihanna. So she got into both of those. But I think the 62 00:05:05.840 --> 00:05:12.000 real genius behind this, you know, besides those obvious picks, is that she came into it. 63 00:05:12.000 --> 00:05:14.960 She was able to actually find a unique angle, which I thought was kind of interesting. I think a 64 00:05:14.960 --> 00:05:19.360 lot of celebrities who try to create their brands, sometimes they fall in flat ears, because they're 65 00:05:19.360 --> 00:05:23.040 not authentic to the celebrity. It's clear that's a money grab. Now, to be fair, I don't think there's 66 00:05:23.040 --> 00:05:26.240 any issue. I don't think people have a problem with people making money. I think people have a problem 67 00:05:26.240 --> 00:05:29.920 with people making money in a way that's not authentic to the brand that they grew to love, right? 68 00:05:29.920 --> 00:05:34.880 For her, she ran into a problem. So A16Z has this framework that I like a lot, which is that 69 00:05:34.880 --> 00:05:39.280 they want to find a founder who has lived with the problem for five to 10 years. And so Rihanna 70 00:05:39.280 --> 00:05:43.600 is a mixed ethnicity and she's super diverse background. And she has a super diverse audience. 71 00:05:43.600 --> 00:05:49.200 And one of the things that she realized was that nude wear are like nude, you know, nude underwear. 72 00:05:49.200 --> 00:05:53.280 There was only like one color of nude, right? And she was like, wait, there should be a color of 73 00:05:53.280 --> 00:05:57.360 nude for super pale girls and super dark-skinned girls and everything in between. And so she came 74 00:05:57.360 --> 00:06:03.200 out 40 shades of nude. And that was kind of like one of the big kind of pillars or brand builders 75 00:06:03.280 --> 00:06:09.520 that she was able to build this whole business on. She picked a growing marketplace. She picked a 76 00:06:09.520 --> 00:06:14.800 unique entry point. She found a pain point that she knew from a pricing perspective, if we're 77 00:06:14.800 --> 00:06:19.040 following the $100 million offers framework, right? Which is pain first, purchasing power second. 78 00:06:19.040 --> 00:06:23.920 She priced it at actually really, really good prices. And so I think this was a really 79 00:06:23.920 --> 00:06:28.160 smart strategic decision, which was probably a huge discovery with LVMH, right? Because they're 80 00:06:28.160 --> 00:06:31.600 obviously luxury. And you know, she could have priced this higher, but I think it would have been a 81 00:06:31.600 --> 00:06:36.080 mistake brand wise. And I think she did it beautifully. The next piece is easy to find. So this is the 82 00:06:36.080 --> 00:06:41.440 asset she brought to the table in her deal with LVMH is that she has this massive audience globally. 83 00:06:41.440 --> 00:06:44.720 And so she could bring that distribution to the table so they were very easy to find for that 84 00:06:44.720 --> 00:06:48.960 target avatar. And then finally, the growing, which I kind of covered first, she went after a 85 00:06:48.960 --> 00:06:54.160 marketplace that overall the demand for these types of products is going up year over year. So 86 00:06:54.160 --> 00:06:58.320 that's the second thing that I think she did really well. Now, the third thing is that she has 87 00:06:58.320 --> 00:07:02.560 a brand. Now, rather than just say, yes, she has a brand. I think it's more, it's probably more 88 00:07:02.560 --> 00:07:07.600 relevant to talk about what she did differently to build her brand. So Rihanna has a gazillion 89 00:07:07.600 --> 00:07:12.960 followers across her channels, but I think a Savage X Fenty, which she did that was brilliant about it. 90 00:07:12.960 --> 00:07:17.840 She did a whisper tea shout launch, which is the same framework that I have in the $100,000 91 00:07:17.840 --> 00:07:22.160 leads book. And so she whispered it with just having one company that she was following, 92 00:07:22.160 --> 00:07:25.760 which she hadn't posted anything. So it was all this curiosity. And then when she teased it, 93 00:07:25.760 --> 00:07:30.240 she gave kind of an idea of what the product line was going to be about. And then obviously, 94 00:07:30.240 --> 00:07:36.640 she made her shout component when she officially released the first line. She's been platform-specific 95 00:07:36.640 --> 00:07:42.080 with her content. She's made native content for each platform. So IG, she does way more aesthetic, 96 00:07:42.080 --> 00:07:46.800 high-fi, high-production, and the only BTS stuff. So behind the scenes stuff is on stories. 97 00:07:46.800 --> 00:07:55.120 For her YouTube stuff, she does more like trions and fashion shows and some people kind of get to 98 00:07:55.120 --> 00:08:00.400 see it being used and TikTok, she talks more about the product, more UGC stuff, more casual, right? 99 00:08:00.400 --> 00:08:04.800 And so she's very platform-specific with the types of content that she's making on Savage X Fenty 100 00:08:04.800 --> 00:08:08.720 for those platforms, which I think was wise. But I think it's also worth highlighting here that, 101 00:08:08.720 --> 00:08:13.200 you know, the corporate brand is significantly smaller than her personal brand, but it's catching up. 102 00:08:13.680 --> 00:08:17.520 And the reason it's catching up is that she's leveraged affiliates in a really big way, 103 00:08:17.520 --> 00:08:21.600 which is the fourth big thing that she did. So like, you know, obviously, leverage is a huge, 104 00:08:21.600 --> 00:08:25.680 talking point for me at acquisition.com. I think supply and demand and leverage are the two greatest 105 00:08:25.680 --> 00:08:30.560 greatest forces in business. And so from a leverage perspective, leverage, big lever number one, 106 00:08:30.560 --> 00:08:33.760 she did was she did the partnership, right? She got to tap into existing distribution, 107 00:08:33.760 --> 00:08:39.520 existing branding, existing manufacturing prowess, and existing retail and online sales knowledge. 108 00:08:39.520 --> 00:08:44.160 All of that, she got to tap into day one, right? Now what she brought to the table is obviously 109 00:08:44.160 --> 00:08:48.080 her initial boost of distribution. But what I think was really clever is that she didn't stop 110 00:08:48.240 --> 00:08:52.400 there. And I think this is where a lot of celebrity brands make big mistakes, right? They want to 111 00:08:52.400 --> 00:08:56.080 make it about them, rather than about the customer, about the audience. And so if you make it about 112 00:08:56.080 --> 00:09:02.000 the audience, then you bring in more champions, like, like the best brand in my opinion, the world 113 00:09:02.000 --> 00:09:06.240 that leverages influencers is Nike, right? Like, like, if you want to compete with Nike, it's like, 114 00:09:06.240 --> 00:09:09.680 you've got to, you've got to compete with LeBron, you've got to compete with Michael Jordan, 115 00:09:09.680 --> 00:09:13.280 you've got to compete with, you got to compete with so many different huge massive goat brands 116 00:09:14.000 --> 00:09:18.080 that other people don't, don't, you know, like, if you're just, like, man, I'm an influencer and I 117 00:09:18.080 --> 00:09:21.760 have my own, you know, shorts, but I can't get them to grow. It's like, yeah, because it's just about 118 00:09:21.760 --> 00:09:25.520 you. And there's only going to be a certain amount of audience that's going to mess with you, right? 119 00:09:25.520 --> 00:09:30.160 Like, now obviously that can grow over time, but what she did is like, she's got the Hadid sister, 120 00:09:30.160 --> 00:09:33.280 so she's got Gigi and Bella Hadid, so she's got super models, right? And they have a very 121 00:09:33.280 --> 00:09:37.840 specific look. She's got Demi Moore, an older, right? She's much older. Demi is like 60 plus, 122 00:09:37.840 --> 00:09:41.440 right? And she has a different look. And then you've got like, Iso, who's younger and has a different 123 00:09:41.440 --> 00:09:46.880 body shape, right? And then you've got Normani, who's also a different, uh, skin tone and look and 124 00:09:46.880 --> 00:09:50.560 feel. And so I could keep going on the list, but she has a lot of a list celebrities that she was 125 00:09:50.560 --> 00:09:54.480 a rescindy Crawford, right? She brought in so many different, different age groups, different 126 00:09:54.480 --> 00:09:58.880 skin types, different, uh, beauty ideals, but I think the through line for all of them is that many 127 00:09:58.880 --> 00:10:03.280 of them are considered beautiful. And so whether or not you agree or not, one of the people on the 128 00:10:03.280 --> 00:10:07.040 list, you might consider beautiful. And then that's, that would, the brands entry point to you. 129 00:10:07.040 --> 00:10:10.960 Her message around inclusion and body positivity, because she's obviously gone through 130 00:10:10.960 --> 00:10:16.080 her weight loss and gain with pregnancy, et cetera, um, was a, a relevant factor in both the 131 00:10:16.080 --> 00:10:20.000 product line and also the affiliates that she chose to associate with. And so what happens is 132 00:10:20.000 --> 00:10:26.560 there's this brand affiliate loop that gets created where the brand, uh, attracts certain influencers 133 00:10:26.560 --> 00:10:31.040 and affiliates who want to make that association. And then the affiliates then represent the brand 134 00:10:31.040 --> 00:10:35.280 and then reinforce or obviously do it poorly, uh, detract from the brand. And so there's this loop 135 00:10:35.280 --> 00:10:39.600 of the brand gets reinforced and brings in more affiliates influencers, which if you create 136 00:10:39.600 --> 00:10:44.080 it correctly, get the right influencers in. And then that then reinforces the brand and then 137 00:10:44.080 --> 00:10:47.520 the, the, the, the virtuous cycle continues. Some of the things that she didn't, I think this is, uh, 138 00:10:47.520 --> 00:10:50.400 a highlightable thing before I get to the final portion, which is going to be about the, uh, 139 00:10:50.400 --> 00:10:54.640 the offer itself, which I think was really brilliant, is that she tried to make it brand 140 00:10:54.640 --> 00:11:00.320 accretive, meaning she wanted all brands to benefit from the association. So what does that mean? 141 00:11:00.320 --> 00:11:04.800 So one, she, everyone benefits from the LVMH association, which is probably one of the, the highest, 142 00:11:04.800 --> 00:11:09.120 you know, tiered brands out there in terms of luxury, right? It's super ultra premium. And so 143 00:11:09.120 --> 00:11:13.680 there's everyone benefits from that association. So that's number one. Number two is that because 144 00:11:13.680 --> 00:11:18.080 of the price point that she chose because of the inclusive messaging, um, there's a wide 145 00:11:18.080 --> 00:11:23.040 percentage of the audience that would, would resonate with that. And so it wasn't an ask for, 146 00:11:23.040 --> 00:11:28.000 as hard of an ask, rather, for her affiliates or influencers to make the association and a bonus 147 00:11:28.000 --> 00:11:31.840 piece that she did, and this effort was really, really classy, is that she put on these fashion 148 00:11:31.840 --> 00:11:36.800 shows with these, uh, influencers. And when she did that, like she did really high-fi shows so 149 00:11:36.800 --> 00:11:40.880 much so that they actually got an Emmy award, right? And so this is brand accretive for everyone. 150 00:11:40.880 --> 00:11:44.800 Everyone wants an association with Emmy because the Emmy has status. Emmy is in itself a brand, 151 00:11:44.800 --> 00:11:47.920 and that's an association that many, I mean, think about it. People want to win the award because 152 00:11:47.920 --> 00:11:52.080 they want the association, right? And so this is a way that they almost got to collectively win 153 00:11:52.080 --> 00:11:56.160 that association for everyone. And she made it easy for them from a tactical perspective, 154 00:11:56.160 --> 00:12:00.960 not only by curating the show, obviously she had help, but, um, beyond that, uh, for the 155 00:12:00.960 --> 00:12:05.040 actual promotional materials, she, you know, this is on a really tactical level, but she gives the 156 00:12:05.040 --> 00:12:07.600 images, she gives the links, she gives the banner, she gives the promotions, so that's very 157 00:12:07.600 --> 00:12:11.680 easy for them to, uh, to make the asks and the gifts of their audience on a regular basis, 158 00:12:11.680 --> 00:12:14.800 right? So I think she did that really, really masterfully, and it shows in the sales, right? 159 00:12:14.800 --> 00:12:18.320 They're doing hundreds of millions of dollars a year. Now, last piece, and this is, 160 00:12:18.320 --> 00:12:20.880 this is the one that I was really excited to break down for you guys because 161 00:12:21.920 --> 00:12:26.400 this is one that I'm, and maybe I'm not, maybe I'm not, I'm not shopping for enough lingerie. 162 00:12:27.040 --> 00:12:32.160 She has the bonus stack of bonus stacks, and she did something really clever here, right? Which is 163 00:12:32.160 --> 00:12:39.520 that she took, uh, what would otherwise not be considered a recurring, uh, product, right? 164 00:12:39.520 --> 00:12:42.880 Most people are like, oh, you know what, I buy lingerie every month, I buy, actually wherever 165 00:12:42.880 --> 00:12:45.840 with, maybe some people do, right? But the vast majority of people, if I were to say, you know, 166 00:12:45.840 --> 00:12:50.400 blank slate, hey, name a membership, right? The first thing they came to mind probably wouldn't be, 167 00:12:50.960 --> 00:12:55.120 uh, you know, G-strings, right, and thugs, right? It'd probably be like my internet connection, 168 00:12:55.120 --> 00:12:59.600 my cell phone, right? My, you know, gym membership, whatever. Like these are traditional, uh, 169 00:12:59.600 --> 00:13:04.160 memberships, whereas this is very non-traditional membership. And so she has done first off, 170 00:13:04.160 --> 00:13:08.080 they emphasize the membership above everything else. If you look at the site, like the, the button 171 00:13:08.080 --> 00:13:12.640 just says like, member add to bag, it basically assumes the clothes, and they do a price drop on 172 00:13:12.640 --> 00:13:18.560 the site where they show guest, and then member, and then first time guest or new member, excuse me, 173 00:13:18.560 --> 00:13:24.400 new member. And so it's like a 60% discount between guest and new members, or there's a giant 174 00:13:24.400 --> 00:13:28.400 incentive to take action that first day. I would bet that they're willing to lose money 175 00:13:28.480 --> 00:13:32.320 on that first transaction because they know what their LTV is. What are the other components 176 00:13:32.320 --> 00:13:35.360 that they made about this membership offer that make you unique? Okay, so number one, 177 00:13:35.360 --> 00:13:39.760 let me just tell, let me outline with the actual offers. So it's 59, 95 a month, so just under 60 178 00:13:39.760 --> 00:13:43.680 bucks, and it's subscription, but it's description for credit. So rather than saying, oh, you're 179 00:13:43.680 --> 00:13:46.240 going to get a box of stuff every month, it's, you're going to get a credit, and then you can spend 180 00:13:46.240 --> 00:13:50.480 it on whatever you want, which is crazy, because basically this is just like a recurring subscription 181 00:13:50.480 --> 00:13:54.960 to buy stuff, right? Which is just like getting a gift card every month functionally. But the question 182 00:13:55.200 --> 00:13:59.120 is, how is she getting so many people to take it? And this is where all the other benefits she's 183 00:13:59.120 --> 00:14:04.560 including are making this a compelling offer. Number one is that it's a discount. All right, so 184 00:14:04.560 --> 00:14:08.800 every member gets a discount on all products. That's not that uncommon, but it's up to 25%, so it's 185 00:14:08.800 --> 00:14:13.760 relatively significant. To put that in context, I think like I was, I was clicking on our site, 186 00:14:13.760 --> 00:14:20.400 so it was like $12 in some change for some underwear, which then if you're a member, it's like 187 00:14:20.400 --> 00:14:27.760 $9.95, so it's $13 to $10, and then if you're, so that's 25% offer, that's more than I think 25% 188 00:14:27.760 --> 00:14:31.360 offer. So pretty significant. Now, back to the bonuses. So number one is she's got the discount. 189 00:14:31.360 --> 00:14:36.240 Okay, cool. The next thing is that they have exclusive sales and offers only for people who are 190 00:14:36.240 --> 00:14:41.200 members, so they get even more discounts from that. Number three, they have free shipping on all 191 00:14:41.200 --> 00:14:46.560 orders over $59.95. And so if they use the entirety of the gift card or the credit that they got 192 00:14:46.560 --> 00:14:50.720 that month, it's free shipping. So that's another bonus. On top of that, so to reduce risk, 193 00:14:50.720 --> 00:14:54.080 remember, let's think through the the value equation, right? You got a dream outcome. You've got 194 00:14:54.960 --> 00:14:58.000 perceived like the achievement, which is reduction of risk, like the likely that they get what they 195 00:14:58.000 --> 00:15:02.560 actually want, that we've got time to lay, and then we've got effort and sacrifice to ease convenience. 196 00:15:02.560 --> 00:15:08.080 If we're thinking through this, right, the free shipping is a time is a is a is a is a dream outcome 197 00:15:08.080 --> 00:15:11.440 thing. It's actually in some ways, I think people probably consider free shipping probably an 198 00:15:11.440 --> 00:15:14.080 ease thing more than anything. I don't know why, because free shipping is kind of like in a 199 00:15:14.080 --> 00:15:18.560 Morpheus, like it takes on, there's so much association with shipping costs. I won't get into it, 200 00:15:18.560 --> 00:15:23.600 but it definitely removes a negative. The next one is for reduction of risk, it's a 90 day fit guarantee. 201 00:15:23.600 --> 00:15:27.760 So probably traditional people, I probably should look it up, but I'm guessing it's 30 days for members 202 00:15:27.760 --> 00:15:32.160 that's 90. So the likely that you get what you want is super high. You got three months to return it. 203 00:15:32.160 --> 00:15:37.600 So that feels good. Now, on top of that, now, I'm not even getting to the big, the Kahuna, the Kahuna, 204 00:15:37.600 --> 00:15:42.480 I'm going to tell you in a second, right? And it's the last one. The next one is they get a cross 205 00:15:42.480 --> 00:15:46.960 discount on her skincare line and her makeup line. So get 15% off that as well. So that's one of 206 00:15:46.960 --> 00:15:52.240 the benefits when you start having conglomerates is that you can start off in cross company promotions, 207 00:15:52.240 --> 00:15:55.520 which then just cross sells customers, which is a great way to just make more money, right? It's 208 00:15:55.520 --> 00:15:59.600 basically being affiliate of one another. The next thing is that she gives an annual gift to 209 00:15:59.600 --> 00:16:03.760 everyone on their birthday, which I think is super clever. I talk about this, actually, you know, 210 00:16:03.760 --> 00:16:07.440 hasn't come out of my emails yet, which if you're not subscribed to the email, you should be. It's 211 00:16:08.000 --> 00:16:13.440 it's a one minute read. They're literally just money making tactics. And so this one is she's 212 00:16:13.440 --> 00:16:16.640 giving a gift at People's Birthday Month. And so what's really interesting about this is that 213 00:16:17.200 --> 00:16:20.480 people in the kind of like their peak emotional state, they're thinking about their last year, 214 00:16:20.480 --> 00:16:23.520 the thing about themselves a lot like their birth month, their birth week, their birthday. 215 00:16:24.240 --> 00:16:28.400 I have obviously contrary views on people who celebrate this a lot, but people do, right? 216 00:16:28.400 --> 00:16:31.840 If you give a gift in that moment, it's like it's almost like you're a friend, right? Like who gives 217 00:16:31.840 --> 00:16:35.360 who gives people gifts on their birthday? They're friends. What more valuable position could you have 218 00:16:35.360 --> 00:16:39.040 in a prosthetics mind than their friend, right? I think it's really, really clever. And of course, 219 00:16:39.040 --> 00:16:43.360 it's a reminder. And when are people going to spend money on themselves on their birthdays? 220 00:16:43.360 --> 00:16:47.440 When is there a special occasion that someone might dress up in lingerie on their birthdays? 221 00:16:47.440 --> 00:16:52.720 When do you think someone's going to start a new fitness routine on their birthday? I think it's 222 00:16:52.720 --> 00:16:56.640 brilliant idea on many, many levels. And obviously the nice thing with, you know, like underwear, 223 00:16:56.640 --> 00:17:01.040 something like that, it cost almost nothing, right? Now the next thing is they get early access. 224 00:17:01.760 --> 00:17:05.120 So I see this as a speed or time delay thing, right? So they get early access, 225 00:17:05.120 --> 00:17:09.600 it's exclusive for new products and new drops. So some stuff that sells out fast because she has 226 00:17:09.600 --> 00:17:14.240 such a large audience, they get access to it as a member, which is great. Okay. Now I'll give you 227 00:17:14.240 --> 00:17:19.600 one more and then I'll give you the Kahuna. So the one more is they give a free gift after your 228 00:17:19.600 --> 00:17:24.880 fifth purchase. So they probably figured out because they're smart people that their churn was 229 00:17:24.880 --> 00:17:29.440 probably right after the fifth month. They give a bonus right before or after the churn point. 230 00:17:29.440 --> 00:17:35.760 Now research typically suggests that you do, you add this additional value prior to the churn point. 231 00:17:35.760 --> 00:17:39.440 And I think part of that is because if that's the churn point, then there's like if that's the 232 00:17:39.440 --> 00:17:42.240 average churn, then there's people who are doing it before that, right? And so you want to capture 233 00:17:42.240 --> 00:17:46.240 before the churn point. In this instance, there's kind of this idea of like trying to get someone to 234 00:17:46.240 --> 00:17:52.320 stay until after. I don't know, but I'll just say this, wherever they gave the gift is likely right 235 00:17:52.320 --> 00:17:56.160 around the churn point, either right before, right after. And if you're not sure, at least having 236 00:17:56.160 --> 00:17:59.600 something around that point, it's probably going to benefit at least half the audience in terms of 237 00:17:59.600 --> 00:18:03.680 the people who are likely to turn. I'll just leave it there. So they have that. Now here's the Kahuna. 238 00:18:03.680 --> 00:18:07.280 All right, here's the big boy. And this is the one that I thought I was like, I hadn't heard of this, 239 00:18:07.280 --> 00:18:13.440 now maybe some of you have heard of this, but I had it, which is they make the recurring membership 240 00:18:13.440 --> 00:18:18.400 skippable. All right, now hear me out. Now some memberships say, yeah, you can skip this month, 241 00:18:18.400 --> 00:18:23.760 but they wove it into the membership and they're very deliberate about highlighting it, all right? 242 00:18:23.760 --> 00:18:27.680 Now, the reason that I think this is so interesting is that because the nature of the subscription is 243 00:18:27.680 --> 00:18:31.360 that it is not, and people aren't trying to buy, I mean, maybe some people are trying to buy stuff 244 00:18:31.360 --> 00:18:35.600 every month, but a lot of people aren't. Between the first and the fifth of the month, they will then 245 00:18:35.600 --> 00:18:43.360 personalize a basket of things based on your preferences. So they have a lead magnet, a 246 00:18:43.360 --> 00:18:47.840 Mondo lead magnet, which I'm obviously a Mondo fan of, which is to get more traffic to convert, 247 00:18:47.840 --> 00:18:51.520 rather than trying to get someone to buy immediately, they just say, hey, you know, they ask them like 248 00:18:51.600 --> 00:18:55.360 seven questions, and then they ask for their contact information. So they ask, hey, you know, 249 00:18:55.360 --> 00:18:59.600 what type of stuff are you looking for, what colors do you like, what size are you, and they kind of 250 00:18:59.600 --> 00:19:04.640 go through this questionnaire, right? And then it finishes with, you know, asking for their 251 00:19:04.640 --> 00:19:08.400 information. And after you have that commitment and consistency bias, and you kind of the so-cost 252 00:19:08.400 --> 00:19:11.520 of your time, you're like, I ask for it, I might as well create the account, but on top of that, 253 00:19:11.520 --> 00:19:15.200 they give a cookie right at the end for creating the account, which they immediately give a discount 254 00:19:15.200 --> 00:19:19.200 on purchasing. So all of this is with the intention of obviously driving conversions, and so they 255 00:19:19.200 --> 00:19:21.840 give an immediate discount, and what do you think the likelihood of somebody who just selected 256 00:19:21.840 --> 00:19:26.320 went through seven question questionnaire, and as a discount is on buying, probably pretty decent, 257 00:19:26.320 --> 00:19:29.840 or at least higher than somebody who's cold, they collect this data upfront, and then that allows 258 00:19:29.840 --> 00:19:34.320 them to personalize the shopping experience every month thereafter, in addition to whatever they're 259 00:19:34.320 --> 00:19:38.400 buying on a regular basis, right? And I'm sure they have some algorithm that weights those preferences. 260 00:19:38.400 --> 00:19:44.960 Now, back to the credit. So they present this box of personalized goods, and they say, hey, 261 00:19:45.040 --> 00:19:49.520 would you like to buy some or all of these things? Now, somebody can look at that box and pick 262 00:19:49.520 --> 00:19:52.800 and choose what they want, and then they can also take that credit, and then buy other stuff. So 263 00:19:52.800 --> 00:19:56.480 you're not, you're not fixed to that box. It's almost like they give you an inspiration box 264 00:19:56.480 --> 00:20:00.160 to like kind of like wet your appetite to buy stuff, and it's almost just like a reminder, hey, 265 00:20:00.160 --> 00:20:04.480 buy from us, hey, buy from us. But from a logic perspective, if you figure that you're going to buy 266 00:20:04.480 --> 00:20:08.960 from her at any point, right, then you're probably going to want to discount. And so as long as you 267 00:20:08.960 --> 00:20:13.600 have the wherewithal to just hit skip every month, except for the months that you want to buy stuff, 268 00:20:13.600 --> 00:20:18.000 then you don't have to pay any more for being inside of this membership discount option. Now, 269 00:20:18.000 --> 00:20:22.320 there's, but wait, there's more, there's one more thing. So what are we on? We're on like 10 bonuses 270 00:20:22.320 --> 00:20:27.760 that she has here. So here's bonus 11, all right. So bonus 11 is that she has a community and an app 271 00:20:27.760 --> 00:20:32.960 online where she shares exclusive content behind the scenes, fashion shows to that hardcore following. 272 00:20:32.960 --> 00:20:38.560 She's actually combined in the element of community really thoughtfully into a physical product 273 00:20:38.560 --> 00:20:43.040 membership, which I still think is one of the most underutilized opportunities for any business 274 00:20:43.040 --> 00:20:49.360 owner, especially physical product. But like if you're a thank you page or your email that has 275 00:20:49.360 --> 00:20:52.400 the product doesn't say, hey, by the way, join our community where we have all these exclusive 276 00:20:52.400 --> 00:20:56.880 benefits, most times you would pay to get the feedback that you get from a community, right? You 277 00:20:56.880 --> 00:21:01.600 would pay to get that kind of brand loyalty. You would pay to find out what customers want, 278 00:21:01.600 --> 00:21:06.400 get feedback on how to make your products better, be able to have a hot audience where you can pull 279 00:21:06.400 --> 00:21:12.560 things and get immediate feedback on your ads, on your marketing, on the products itself, 280 00:21:12.560 --> 00:21:17.040 design layouts, anything that you can think of, you can get that and you can get it proactively, 281 00:21:17.040 --> 00:21:22.080 like how, like so valuable. And like obviously, I think every business should have community, 282 00:21:22.080 --> 00:21:26.240 but she's leveraging it really well within this business and their smart business owners, 283 00:21:26.240 --> 00:21:29.760 which is why they're doing it. She's leveraged media, which obviously costs nothing to distribute 284 00:21:29.760 --> 00:21:34.640 on top as yet another added benefit. And the cool part is if you skip, you still get the benefit, 285 00:21:34.640 --> 00:21:40.080 right? And so she has basically 11 benefits for being a member and it's so beneficial that they 286 00:21:40.080 --> 00:21:44.960 add it on the checkout page and underneath from a disclosing perspective, I'll just read it to you. 287 00:21:44.960 --> 00:21:50.320 She says, after your first purchase, you'll be billed $59.95 each month to unlock a member credit 288 00:21:50.320 --> 00:21:54.640 and other rewards unless you skip the month between the first and the fifth. Member credits never 289 00:21:54.640 --> 00:22:00.160 expire cancel any time and then you can learn more. They never expire, which I'm sure is a legal thing 290 00:22:00.160 --> 00:22:05.600 because she got dinged by regulators for that, which I won't get into regulators just creating 291 00:22:05.600 --> 00:22:12.720 alternative taxes for anybody who's just making more money. That is beyond the scope of this episode. 292 00:22:13.520 --> 00:22:20.320 But anyway, so they have those disclosures. And all in all, the big five that Rihanna did really 293 00:22:20.320 --> 00:22:24.880 well is that she partnered with someone who had already had the distribution, the retail knowledge, 294 00:22:25.120 --> 00:22:29.920 and the manufacturing knowledge. She picked a market that had a high cagger, so compounded 295 00:22:29.920 --> 00:22:34.560 in your growth rate and her messaging was aligned with it and authentic, which leaps the third, 296 00:22:34.560 --> 00:22:40.720 is that she overnight built 20 year brand of positive sentiment that was and she picked products 297 00:22:40.720 --> 00:22:45.520 that were authentic to her. Fourth, she leveraged affiliates exceptionally well to create even more 298 00:22:45.520 --> 00:22:51.120 leverage on her brand and create a brand to affiliate kind of positive reinforcing loop and made it 299 00:22:51.120 --> 00:22:56.000 brand accretive for them. So it was actually a gift to their audiences to make this association 300 00:22:56.000 --> 00:23:00.160 rather than an ask. And so they got to associate with them. So they got to associate with her, 301 00:23:00.160 --> 00:23:03.760 they got to associate with LVMH, they got to associate with the Emmys, they got to associate with 302 00:23:03.760 --> 00:23:08.320 high-five fashion. All of those things are brand accretive and she priced it in a way that I think 303 00:23:08.320 --> 00:23:12.000 catered to the vast majority of her audience and it was around a pain point that she well understood 304 00:23:12.000 --> 00:23:16.800 because she was a mom, she was pregnant, she did have different body sizes and her background 305 00:23:16.800 --> 00:23:20.400 is diverse and her audiences diverse and so she attracted affiliates kind of hit each of those 306 00:23:20.400 --> 00:23:26.960 verticals. And then finally I think she has a bang in offer in what would otherwise be a very 307 00:23:26.960 --> 00:23:32.960 non-traditional membership structure, but she stacked this thing full of 11 bonuses and a really 308 00:23:32.960 --> 00:23:39.120 unique monetization model that I think we can all learn something from. So that is a Mosy business 309 00:23:39.120 --> 00:23:43.440 breakdown. I hope you guys enjoyed this. If you did tag me because I'm going to do more of these 310 00:23:43.440 --> 00:23:47.840 because actually really I loved this. I loved making this for you guys. I think this is fun taking 311 00:23:48.320 --> 00:23:52.160 taking the theories, making it practical. There's many things I'm going to take some stuff from 312 00:23:52.160 --> 00:23:56.480 from this business, especially from that stack of like okay what elements of community can I add in 313 00:23:56.480 --> 00:24:01.360 here. What is there a way that I can add some sort of skip ability to any of my memberships 314 00:24:01.920 --> 00:24:07.200 to make it to increase the likelihood having some dramatic same-day discount. So she gives them that 315 00:24:07.200 --> 00:24:10.880 discount and they don't get billed that 59 up front. They get billed on the next month. So they 316 00:24:10.880 --> 00:24:15.520 get the discount today and they get to build the month later. Basically giving basically paying 317 00:24:15.520 --> 00:24:20.560 someone to enter your continuity. Like a lot of really clever things and obviously she has some 318 00:24:20.560 --> 00:24:25.200 smart people in her team and that's why they're I think well between both of her brands. I think 319 00:24:25.200 --> 00:24:31.760 she did 600 million last year. Mama don't create a almost three billion dollar brand without having 320 00:24:31.760 --> 00:24:41.920 some intelligent design.