WEBVTT 1 00:00:00.000 --> 00:00:02.720 So there's two ways to grow a business from a fundamental standpoint. 2 00:00:02.720 --> 00:00:04.080 Number one is you get more customers. 3 00:00:04.080 --> 00:00:05.760 Number two, you make those customers worth more. 4 00:00:05.760 --> 00:00:06.560 That's it. 5 00:00:06.560 --> 00:00:10.560 So it would behooves us as business owners who are trying to make more and grow our businesses 6 00:00:10.560 --> 00:00:14.080 that we should know all of the different ways to get more customers in B, make them worth more. 7 00:00:14.720 --> 00:00:17.040 Welcome to the game where we talk about how to get more customers, 8 00:00:17.040 --> 00:00:19.040 how to make more customers, how to keep them longer, 9 00:00:19.040 --> 00:00:21.520 than the many failures and lessons we have learned along the way. 10 00:00:21.520 --> 00:00:22.800 I hope you enjoy and subscribe. 11 00:00:23.760 --> 00:00:24.800 Good morning everyone. 12 00:00:24.800 --> 00:00:28.480 It is Alex Mosey here from gym launch prestige, 13 00:00:28.480 --> 00:00:31.280 Alan and the many other companies that we have in our portfolio. 14 00:00:31.280 --> 00:00:35.840 They did 110 million dollars in sales and I am going to tell you how we did that. 15 00:00:35.840 --> 00:00:40.240 That further ado, the purpose of this video is to show you the six ways to increase lifetime value. 16 00:00:40.240 --> 00:00:44.560 All right, and I'm going to show you my favorite one at the end of this that I think is the most powerful 17 00:00:44.560 --> 00:00:48.720 of the six. All right, and so first thing we have to do is define lifetime value. 18 00:00:48.720 --> 00:00:51.600 All right, so there's two ways to grow a business from a fundamental standpoint. 19 00:00:51.600 --> 00:00:52.960 Number one is you get more customers. 20 00:00:52.960 --> 00:00:54.720 Number two, you make those customers worth more. 21 00:00:54.720 --> 00:00:55.200 That's it. 22 00:00:56.800 --> 00:00:57.280 That's it. 23 00:00:57.920 --> 00:01:01.840 So it would behooves us as business owners who are trying to make more and grow our businesses 24 00:01:01.840 --> 00:01:05.680 that we should know all of the different ways to get more customers in B, make them worth more. 25 00:01:05.680 --> 00:01:10.480 All right, now when I say make them worth more, lifetime value is a very loosely defined term. 26 00:01:10.480 --> 00:01:11.520 You can look on the internet. 27 00:01:11.520 --> 00:01:13.040 There's lots of different definitions for it. 28 00:01:13.520 --> 00:01:17.040 And what I'm going to do is redefine this as lifetime gross profit. 29 00:01:17.040 --> 00:01:21.040 All right, so LTGP, which is what I care about. 30 00:01:21.040 --> 00:01:24.160 All right, because for example, if I'm selling a meal for $10, 31 00:01:24.240 --> 00:01:27.920 and I make, and it costs me $9 to deliver the meal, 32 00:01:27.920 --> 00:01:29.440 I means I make a dollar. 33 00:01:29.440 --> 00:01:33.920 So if I sell someone, and it costs me $5 to get somebody to buy a $10 meal, 34 00:01:33.920 --> 00:01:36.000 is that a good business proposition for me? 35 00:01:36.000 --> 00:01:38.800 Well, you're making $10, it costs you $5, you're getting $2 to $1. 36 00:01:38.800 --> 00:01:44.400 Well, my cost of delivering is $9 out of the $10, which means I spend $5 to make $1 of gross profit. 37 00:01:44.400 --> 00:01:46.560 All right, and so that is why it's GP. 38 00:01:46.560 --> 00:01:49.680 All right, that's why I don't like lifetime values and it's a very amorphous term. 39 00:01:49.680 --> 00:01:53.360 And so what we're looking for is how much juice, how much gross profit is there? 40 00:01:53.920 --> 00:01:56.640 Over the lifetime of the customer, for us. 41 00:01:56.640 --> 00:01:58.400 All right, now that's not net profit. 42 00:01:58.400 --> 00:02:01.520 Net profits after you've paid all of your, all the other expenses you rent, 43 00:02:01.520 --> 00:02:02.640 your payroll, all the other things. 44 00:02:04.000 --> 00:02:06.560 But this is just the gross margin that comes in. 45 00:02:06.560 --> 00:02:11.200 If it costs you $2 to buy a thing and you sell it for six, then the gross margins for. 46 00:02:11.200 --> 00:02:15.520 Now you still got to pay your warehouse and whatever other things you have going on. 47 00:02:15.520 --> 00:02:19.120 Now, hopefully you understand lifetime gross profit, so I can get into the goodies. 48 00:02:19.120 --> 00:02:22.320 All right, so there's six ways to increase LTV. 49 00:02:22.320 --> 00:02:25.200 The first one is increase the price. 50 00:02:26.240 --> 00:02:31.920 Sounds crazy, but believe it or not, price in and of itself is something that can actually 51 00:02:31.920 --> 00:02:33.680 draw alerts here, your products. 52 00:02:33.680 --> 00:02:35.680 Do you think of a Chanel personal for $20? 53 00:02:35.680 --> 00:02:37.120 People would think they're as cool. 54 00:02:37.120 --> 00:02:39.840 No price in and of itself can create alerts around a product. 55 00:02:39.840 --> 00:02:44.880 It can put you in another category so much that people say, this is so much more expensive. 56 00:02:44.880 --> 00:02:46.320 There must be something different about this. 57 00:02:46.320 --> 00:02:48.080 I'm going to look at this more closely, right? 58 00:02:49.040 --> 00:02:52.800 Number two, is that you can decrease the cost. 59 00:02:53.520 --> 00:02:57.360 If I can find a cheaper way to do the thing, I can invest in technology, 60 00:02:57.360 --> 00:02:59.520 invest in processes and invest in outsourcing. 61 00:02:59.520 --> 00:03:01.680 All these different ways that I can deliver the same thing, 62 00:03:02.320 --> 00:03:04.880 for less, I increase my gross profit. 63 00:03:04.880 --> 00:03:07.040 So if I had that meal thing that I was talking about earlier, 64 00:03:07.040 --> 00:03:10.320 and it cost me $9 to make the meal, but I found this new automated robotic process, 65 00:03:10.320 --> 00:03:14.800 that allows me to do the meals for $2, that very much increases the lifetime gross profit 66 00:03:15.440 --> 00:03:21.840 of my products and my business, but I didn't change anything besides decreasing the cost. 67 00:03:21.840 --> 00:03:22.160 All right? 68 00:03:23.920 --> 00:03:26.880 The next one is to increase purchase frequency. 69 00:03:26.880 --> 00:03:27.680 All right? 70 00:03:27.680 --> 00:03:32.320 So what this is, is getting people to buy again and again and again. 71 00:03:32.320 --> 00:03:35.280 If I can get someone to come to my restaurant today and tomorrow and then continue to come 72 00:03:35.280 --> 00:03:38.960 forever, then that's going to be a much more valuable client, right? 73 00:03:38.960 --> 00:03:42.800 And so that increases, if I can get all my clients to come into additional one time, 74 00:03:42.800 --> 00:03:46.800 right? That would increase my lifetime gross profit per customer across my entire business. 75 00:03:46.800 --> 00:03:49.600 All right? So if you're tracking with me, number one, you can increase the price. 76 00:03:49.600 --> 00:03:52.880 Number two, you can decrease how much it costs you to fulfill the thing, right? 77 00:03:52.880 --> 00:03:56.720 Number three, you can get people to buy more times, all right? 78 00:03:56.720 --> 00:04:00.000 And then four, five, and six are slightly related, but different. 79 00:04:00.000 --> 00:04:01.920 All right? The first is that you can upsell people. 80 00:04:02.720 --> 00:04:05.520 All right? Now, upsells, very important here. 81 00:04:06.880 --> 00:04:08.080 I'm going to define this for you. 82 00:04:09.040 --> 00:04:14.240 Is selling the same thing, but a more valuable version. 83 00:04:14.240 --> 00:04:20.080 So if you upgrade, right, from a Honda to a Lexus, then you are getting upsold, right? 84 00:04:20.560 --> 00:04:23.600 Important. And I think it's important to define these terms because they are different types of 85 00:04:23.600 --> 00:04:27.520 sales. And if you can be more nuanced than how you think, you will think better. 86 00:04:27.520 --> 00:04:29.360 All right? Especially when it comes to your business. 87 00:04:29.360 --> 00:04:33.120 So the next, so that's buying, so I'll give you a food example. 88 00:04:33.120 --> 00:04:38.320 So if I go from a, you know, 20 ounce soda to a 32 ounce soda, that is an upsell. 89 00:04:38.320 --> 00:04:41.280 It's more of the same. It's either better of the same or more of the same. 90 00:04:41.280 --> 00:04:43.760 But either way, it's the same category of stuff. 91 00:04:45.120 --> 00:04:48.400 I'm just, I'm just buying a bigger, better version of it, all right? 92 00:04:48.400 --> 00:04:51.280 The next is a cross sell, all right? 93 00:04:51.280 --> 00:04:55.840 A cross sell is an adjacent need that I am solving. 94 00:04:55.840 --> 00:04:58.720 All right? So in the burger, or sorry, in the, in the Coke example, 95 00:04:58.720 --> 00:05:02.640 if I sell a burger with the Coke, then that is a cross sell, right? 96 00:05:02.640 --> 00:05:09.520 So upsell is small Coke to big Coke or, you know, normal lemonade to, to organic, 97 00:05:09.520 --> 00:05:14.480 whatever lemonade, you know, espresso, sunkissed lemonade, whatever it is, right? 98 00:05:14.480 --> 00:05:17.680 That's an upsell. A cross sell would be, what do you want with that lemonade? 99 00:05:17.680 --> 00:05:18.960 Do you want a sandwich with that lemonade? 100 00:05:19.680 --> 00:05:21.200 What do you want with that soda? You want a burger with that soda? 101 00:05:21.200 --> 00:05:25.600 You want fries with that soda, right? That is a cross sell, all right? 102 00:05:25.600 --> 00:05:27.920 That's a cross sell. So you're selling an additional thing. 103 00:05:27.920 --> 00:05:31.680 This is usually the next natural need that the person's going to have as a result 104 00:05:31.680 --> 00:05:36.240 of their first purchasing decision. Oftentimes, these cross sells are actually where the majority 105 00:05:36.240 --> 00:05:39.840 of the profit happens. So sometimes there are strategies and businesses that are called 106 00:05:39.840 --> 00:05:43.520 loss leaders. Everyone needs this one thing, but the next thing they need is going to be the 107 00:05:43.520 --> 00:05:46.720 thing that has all the margin in it. And if you know your numbers, you can build a model 108 00:05:46.720 --> 00:05:48.720 around that very successfully, all right? 109 00:05:51.280 --> 00:05:54.080 Real quick guys, if you can think about how you found this podcast, 110 00:05:54.080 --> 00:05:58.720 somebody probably tweeted it, told you about it, shared it on Instagram, or something like that. 111 00:05:58.800 --> 00:06:02.400 The only way this grows is through word of mouth. And so I don't run ads. 112 00:06:02.400 --> 00:06:06.800 I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward. 113 00:06:06.800 --> 00:06:10.800 Do whoever showed you or however you found out about this podcast that you do the exact same thing. 114 00:06:10.800 --> 00:06:14.640 So if it was a review, if it was a post, if you do that, it would mean the world to me, 115 00:06:14.640 --> 00:06:16.560 and you'll throw some good karma out there for another entrepreneur. 116 00:06:18.960 --> 00:06:25.280 And then finally, this is one that's overlooked is down sales, right? So a lot of businesses that 117 00:06:25.280 --> 00:06:30.400 I'll talk to or that are consult with, they don't have any down sales. And so that means that 118 00:06:30.400 --> 00:06:34.000 there's all this traffic that's coming to their side or getting on the sales calls with them, 119 00:06:34.000 --> 00:06:40.560 but those people have needs too. And it might not fit in your primary category. This is especially 120 00:06:40.560 --> 00:06:46.240 true if you sell a higher level service or a more expensive service. A lot of times we're still 121 00:06:46.240 --> 00:06:50.640 paying for this traffic, right? This traffic, these eyeballs are still yours. And I like to think of 122 00:06:50.640 --> 00:06:54.480 this as one person's trash is another person's treasure. There's always a business that can do 123 00:06:54.480 --> 00:07:00.320 something with some of the kind of the sawdust, the excess capacity that we have that exists within 124 00:07:00.320 --> 00:07:04.720 our business, right? And so down sales, you can either down sell to someone else's product 125 00:07:04.720 --> 00:07:10.000 and get affiliate commissions, get a referral partner commissions for sending business their way. 126 00:07:10.000 --> 00:07:15.120 Or, right? And I like that a lot because you have a nice relationship with another business, 127 00:07:15.120 --> 00:07:18.160 you think they have a good product, they specialize in serving that type of customer. 128 00:07:19.120 --> 00:07:22.560 And you both benefit, you make money, they get free customers, everybody wins the customer 129 00:07:22.560 --> 00:07:25.280 gets solved, right? And they're going to thank you for making the introduction as long as you 130 00:07:25.280 --> 00:07:29.440 have good partners, which you obviously should. The other way to do this is to have lesser, 131 00:07:30.800 --> 00:07:36.720 you know, lesser, lesser cost of fulfillment, but it's solving the same need. So, 132 00:07:38.880 --> 00:07:43.040 trying to think an example of this. So yeah, if you had like a done-for-you service of some type, 133 00:07:43.520 --> 00:07:48.960 right? And the person couldn't afford your full suite of services, you could down sell a kind of 134 00:07:49.120 --> 00:07:54.320 done with you or do it yourself version of that, right? And so making those products, taking the 135 00:07:54.320 --> 00:07:59.600 one-time investment of making that product or making that done with you version of your primary 136 00:07:59.600 --> 00:08:04.880 done-for-you service or whatever it is, a lot of times can serve as a really good down sell, right? 137 00:08:04.880 --> 00:08:08.800 If someone walks into a facility for personal training and they can't afford personal training, 138 00:08:08.800 --> 00:08:11.920 obviously there's groups and things like that they could do that would be a natural down sell, 139 00:08:11.920 --> 00:08:15.280 but maybe they want to stay at home and you can add home version, right? So there's all these 140 00:08:15.280 --> 00:08:20.320 different ways that you can slice and dice this. But fundamentally, if we have people that were 141 00:08:20.320 --> 00:08:25.040 normally not giving us money because they would say no, but now we're able to monetize them in some 142 00:08:25.040 --> 00:08:30.400 way, we have now made more money per customer, all right? And it's really per person who walks into 143 00:08:30.400 --> 00:08:36.560 our business, all right? So six ways to increase lifetime value of a customer, lifetime gross profit. 144 00:08:36.560 --> 00:08:41.360 One is you can increase the price and automatically make more money. Number two is you can decrease how 145 00:08:41.360 --> 00:08:45.040 much it costs you to fulfill the thing that you're promising. Number three is you can increase 146 00:08:45.040 --> 00:08:48.960 purchase frequency or getting the amount of time someone buys from you, get them to buy more, 147 00:08:48.960 --> 00:08:54.640 right? Over time. Number four is upselling them. That means having structured upsells where they can get 148 00:08:54.640 --> 00:09:00.000 buy more of the same stuff or better versions of the same stuff, all right? Crosssells is selling the 149 00:09:00.000 --> 00:09:04.000 next adjacent needs. You have to think yourself, someone buys my service, what the next thing they're 150 00:09:04.000 --> 00:09:08.000 normally going to need? Well, I'm going to sell them that too, right? And it also makes their life 151 00:09:08.000 --> 00:09:11.920 easier because they can get all their stuff from one place, makes you more money, everyone waits. 152 00:09:11.920 --> 00:09:15.200 And then finally, what can I do with the sawdust? What are all these people who are coming to my 153 00:09:15.200 --> 00:09:20.160 business who can't necessarily afford my main thing? And how can I, how can I create something 154 00:09:20.160 --> 00:09:24.320 still going to solve their need, but doesn't cost me that much so I can still make a good, a good 155 00:09:24.320 --> 00:09:28.240 margin on this stuff? Or how can I refer the business out to someone else and still get a kickback 156 00:09:28.240 --> 00:09:34.000 from it? And so those are the six ways to increase lifetime gross profit. Now, I told you at the 157 00:09:34.000 --> 00:09:37.440 beginning I was going to tell you the thing that I think is the most powerful. It's this guy. 158 00:09:38.960 --> 00:09:45.600 Understanding price. Pricing is one of the most underutilized levers in the entirety of business. 159 00:09:45.600 --> 00:09:49.680 Most people figure out they're pricing by looking at the marketplace, taking an average thing, 160 00:09:49.680 --> 00:09:53.200 I guess I'll charge that. The secret that they don't know is that everyone else is broke. 161 00:09:55.120 --> 00:09:59.760 Think about it. Everyone else is broke. And especially if you're entering the small business 162 00:09:59.760 --> 00:10:03.600 ownership, the reason that small businesses are small is because they think like small business owners 163 00:10:03.600 --> 00:10:10.560 are not big business owners. That's why they stay small. And so don't model small businesses. 164 00:10:10.560 --> 00:10:16.640 Look at the pricing models of big businesses. Now, strong word of caution here. There are market 165 00:10:16.640 --> 00:10:20.560 penetration strategies that businesses can do because they have funding and things like that. 166 00:10:20.560 --> 00:10:24.240 But if you look at mature businesses, businesses that have gone through the rapid growth phase and 167 00:10:24.240 --> 00:10:28.880 then have sustained, look at the pricing model they have because what the model that they had, 168 00:10:28.880 --> 00:10:33.600 they have already tested and obviously has produced sufficient margins that they are able to 169 00:10:33.600 --> 00:10:38.480 continue to grow their company. And so don't look at the small guys. Don't look at the 170 00:10:38.480 --> 00:10:43.440 person who's out of shape and try and model what they're doing. That's probably fitness is a horrible 171 00:10:43.440 --> 00:10:47.360 example because people have great genetics or bad genetics. But point is don't look for the 172 00:10:47.360 --> 00:10:52.000 dentist who has bad teeth. Look for the somebody who's got nice teeth and I'm sure there's genetics 173 00:10:52.000 --> 00:10:56.160 there too. These are horrible examples. But hopefully you get the point. Is that pricing is the most 174 00:10:56.160 --> 00:11:00.880 important lever and I'll give you one quick example on this. If something costs me $10 to fulfill 175 00:11:00.880 --> 00:11:09.680 and I charge $20 for it. Cool. I'm making 50% gross margin. But if I say you know what, 176 00:11:09.680 --> 00:11:14.560 I'm going to charge $50 for this thing or you know what? We'll say 30. So I go from 20 to $30. 177 00:11:15.840 --> 00:11:22.400 I just doubled the lifetime gross profit of my business. Doubled. They're very few of these 178 00:11:22.400 --> 00:11:28.320 other mechanisms that can double or triple or quadruple the lifetime gross profit of your 179 00:11:28.320 --> 00:11:33.520 business or per client rather than price. Which is also why it's one of the ones that people 180 00:11:33.520 --> 00:11:38.240 have the biggest limiting beliefs around and the ones that most people struggle to increase. 181 00:11:38.240 --> 00:11:41.600 And the good thing is if lots of people struggle to do it, it means that there's plenty of 182 00:11:41.600 --> 00:11:47.200 opportunity for all of us. Six ways to increase lifetime gross profit. There's two ways to grow 183 00:11:47.200 --> 00:11:51.360 business. One of them is getting more customers. The other one is increasing how much those 184 00:11:51.360 --> 00:11:55.040 customers are worth. And here are six strategies that you can think about within your business 185 00:11:55.040 --> 00:12:00.720 of how you can apply these things to your client journey so that you can make those clients worth 186 00:12:00.720 --> 00:12:07.520 more without doing any extra work. Lots of love. Keep being awesome. Catch you guys soon. Bye.