How To Raise Your LTV | Ep 804

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth. Wanna scale your business? Click here. Follow Alex Hormozi’s Socials: LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Hi, thank you so much for all your content you make. My name is Loriann and I sell personal finance courses and coaching to women. We do 30 million.

• 0:08Alex Hormozi?

  For women.

• 0:09Speaker 00

  Pardon?

• 0:09Alex Hormozi?

  For women.

• 0:10Speaker 00

  For women.

• 0:11Alex Hormozi?

  Ah.

• 0:11Speaker 00

  With a plus sign at the end.

• 0:12Alex Hormozi?

  You're like, screw the guys, they don't need to save money.

• 0:14Speaker 00

  You know, they can learn from someone else.

• 0:15Alex Hormozi?

  I'm messing with you.

• 0:18Speaker 00

  So we do 30 million in revenue.

• 0:20Alex Hormozi?

  Badass.

• 0:21Speaker 00

  Thank you. I would like to be at, I don't know, revenue, which comes to my question.

• 0:25Alex Hormozi?

  Okay.

• 0:27Speaker 00

  And what is stopping me is our CAC to LTV ratio.

• 0:32Alex Hormozi?

  Okay.

• 0:32Speaker 00

  So both CAC is too high, got the team working on volume right now, LTV is too low.

• 0:39Alex Hormozi?

  Okay.

• 0:39Speaker 00

  And AOV is too low on our front end.

• 0:44Alex Hormozi?

  Okay.

• 0:44Speaker 00

  So I think it's actually a cash flow constraint potentially, but I'm a little confused on where exactly to go to work.

• 0:53Alex Hormozi?

  Okay. How do you acquire customers right now?

• 0:56Speaker 00

  Primarily Meta.

• 0:57Alex Hormozi?

  So it's all paid ads?

• 0:58Speaker 00

  Yeah.

• 0:59Alex Hormozi?

  Okay, so all paid ads and you're running to what?

• 1:01Speaker 00

  A webinar, 2K webinar.

• 1:03Alex Hormozi?

  Okay, you have a low ticket offer for the webinar?

• 1:06Speaker 00

  Before?

• 1:06Alex Hormozi?

  Are you charging something as like a self liquidating offer on the front end?

• 1:09Speaker 00

  Free webinar, no. Never done a self liquidating offer before.

• 1:11Alex Hormozi?

  Okay, so free webinar on the front end, you have a $2,000 offer, okay, then what?

• 1:15Speaker 00

  $2,000 or 12 month payment plan for $200 a month, which is why our AOV is like $900.

• 1:21Alex Hormozi?

  Got it.

• 1:24Speaker 00

  And then acquisition cost like 1,500 on the client and then we have a back end.

• 1:29Alex Hormozi?

  Okay.

• 1:30Speaker 00

  That's 10K, has a 7% upgrade rate.

• 1:34Alex Hormozi?

  That's your problem.

• 1:34Speaker 00

  Yeah, it's low. Outsourced sales team right now.

• 1:37Alex Hormozi?

  That's.

• 1:38Speaker 00

  And so LTV is like 2,400.

• 1:42Alex Hormozi?

  Yeah, that's a problem.

• 1:44Speaker 00

  Yes.

• 1:47Speaker 00

  That's why I'm here.

• 1:48Alex Hormozi?

  Your ascension, yeah, no, your ascension rate is too low.

• 1:51Alex Hormozi?

  You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the $2,000 thing, you have your onboarding call. The onboarding call, the finish of the onboarding call is they set their goal setting call with what would become a setter. And then that setter sets for a closer. So they actually get three calls. So they have webinar, buy, they have an actual onboarding call because you want them, like, you want to make sure you deliver.

• 2:21Speaker 00

  One-on-one or that's a group call?

• 2:22Alex Hormozi?

  One minute, you can do, well, you can start with.

• 2:27Alex Hormozi?

  You can start with group and then you will make more money if you go to one-on-one. It is more ops, but like we actually did this and I have a video that breaks down everything that you need to know.

• 2:37Speaker 00

  Yeah, I've seen it.

• 2:38Alex Hormozi?

  Okay, yeah, and so one-on-one is better, but if you're going to start, start with the group. And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call. So that way you have 100% through line to the next. Now they're customers, they're going to show up. The goal-setting call, basically SIFs for who, like what's your goal? Cool. What's that? Basically just do another sales call again and then you push people into the ones who can afford it, that makes sense, into a closed call with basically an invitation to join something that has more help or work associated.

• 3:15Speaker 00

  Yes, okay, great.

• 3:16Alex Hormozi?

  You'll probably need to get third-party financing in place.

• 3:19Speaker 00

  Oh.

• 3:20Alex Hormozi?

  Yeah.

• 3:21Speaker 00

  For the, for the sales calls.

• 3:22Alex Hormozi?

  Yeah, and, and front-end. Like you should definitely have some BNPL options, so buy now, pay later. You probably have a few.

• 3:28Speaker 00

  Okay. We have them on the back end, we don't have them on the front end.

• 3:31Alex Hormozi?

  Yeah. Also with the webinar, I would recommend split testing the first five minutes. So retest two or three different intros and look at LTV. That will make you money. But the biggest issue is that you're, you're upselling 7%. Like you need to be at, you want to be at at least 25 and you should shoot for 50.

• 3:53Speaker 00

  Okay, okay, and so just one more question as I'm, that's like a longer-term solution, right?

• 4:00Alex Hormozi?

  You mean bringing the sales team in-house?

• 4:01Speaker 00

  To bring the sales team in-house and really optimize that process.

• 4:04Alex Hormozi?

  Yeah. Why does it have to be long-term?

• 4:06Speaker 00

  Just a time it'll take to find a sales leader and recruit and like shift leads from the...

• 4:12Alex Hormozi?

  You need to hire one person, really good sales director, and then you hire six recruiting firms that do sales and say, I need 10 guys from each of you and you can get a 60-person team in four, like two weeks.

• 4:22Speaker 00

  Okay.

• 4:24Alex Hormozi?

  We just added 40 guys in two weeks to one of our companies. We just paid a bunch of, like, if we're doing that kind of volume, we're just gonna go to somebody who has a big network of people that they're, that's their full-time business recruiting sales guys. So it's like, great. These are requirements. Go get them.

• 4:39Speaker 00

  Yeah.

• 4:39Alex Hormozi?

  And I'm willing to pay for the speed.

• 4:41Speaker 00

  Yeah.

• 4:41Alex Hormozi?

  So if it's, and you can also negotiate if you're doing multiple, like, the same with multiple. So it's like, hey, normally, you know, it's 10 grand per, per head, but I'm gonna buy 20 from you. So I'll do it for five.

• 4:51Speaker 00

  Okay.

• 4:52Alex Hormozi?

  So you pay 100 grand, and all of a sudden you have a department.

• 4:54Speaker 00

  Okay, cool. So, action on that immediately, and then while we're doing the recruiting and getting that person up to speed, just keep spending, basically, as much as we can afford to spend on the front end to keep, like, lead flow coming into the back end?

• 5:08Alex Hormozi?

  Realistically, if you spend less, you will typically, ROAS will increase.

• 5:13Speaker 00

  Yeah.

• 5:13Alex Hormozi?

  Typically. YouTube's not that way, though. Kind of random. The more you spend, the more profitable it gets. It's wild. Yeah, it's the shit. Anyways, if you have a cash flow issue right now, or you're like, you know, it's like, it's self-inflicted. Like, you can just spend less and improve the, improve the returns, but your CAC is appropriate. $1,500 to acquire a customer in that space.

• 5:36Speaker 00

  Not get that much lower, is what you're saying?

• 5:37Alex Hormozi?

  Yeah. It's like, you're not gonna, like, you're not gonna get below 1,000.

• 5:41Speaker 00

  Yeah.

• 5:42Alex Hormozi?

  And so, this is a backend issue. Like, you just have to increase the ascension rate, and that's it.

• 5:48Speaker 00

  Okay, thank you.

• 5:49Alex Hormozi?

  You bet. Awesome.

• 5:50Speaker 02

  Hi, I'm Jaclyn. I know we talked-

• 5:53Alex Hormozi?

  Dentist, yes. 3 million, 5% profit margins. You have five different ones, three are part-time.

• 5:59Speaker 02

  Perfect. Wow. Great memory.

• 6:02Alex Hormozi?

  Yeah. You're in Dallas. This 30-year-old business is inherited from your father.

• 6:05Speaker 02

  Yes.

• 6:05Alex Hormozi?

  Yep.

• 6:06Speaker 02

  And my social security number, no, just kidding.

• 6:09Alex Hormozi?

  I can pull it up.

• 6:11Speaker 02

  So, I know we talked, yes, last night, which you obviously remember, and a couple other people from your team, we talked about this issue, that my number-one constraint probably isn't our cancellation rate, but it is something that I'm, like, really perplexed about and want to at least go back with a little bit of something to share with my team about.

• 6:31Alex Hormozi?

  Sure.

• 6:32Speaker 02

  So, our show rate, or our cancellation rate is a little over 30%, and this past year, we've lost, like, a million dollars because people made appointments, confirmed them, and they didn't show up. So if you have any insight on what we could do to start improving that, I would be really grateful.

• 6:52Alex Hormozi?

  Yes, I don't think it's the constraint of your business. So number one is you're going to want to make sure that the, obviously, that that time is the right time for them. And we ask questions like, is there anything that will possibly get in the way of you showing up for your meeting? And so we call this an integrity tie down. And so after you get a time slot, you want to ask that right afterwards. Because it like gets, like shakes them out of their like mind. For whatever reason, it works. So I could come up with some narrative for it, but it works.

• 7:24Alex Hormozi?

  Number two is, I think I mentioned this yesterday, but I think it might be worth considering pulling up appointments. Like to basically, can we bring them up sooner so that we have increased shop rates? The next one is, let's see here. You want to make sure that you have automated reminders, which you probably do. But then you want to have manual reminders on top of that. So if you have, I would have an office iPhone. And you want to send manual texts at three times. So you want to send the manual text at 24 hours. So basically think night before. Second text is going to be morning of. And then the third text is going to be 60 to 90 minutes prior. Basically when they have to like get your shit together, get in the car.

• 8:07Alex Hormozi?

  Now ideally, we like to have some sort of selection that they pick. That we have like some cost we have incurred. So this works exceptionally well for brick and mortar, which is why I'm sharing it with you. In the gym space, obviously, like we would say, hey, Sharon, I've got this shirt.

• 8:27Alex Hormozi?

  Tell me what size you're at. And I'll put it, pull it aside for you. And so when you come here, I'll give it to you. Or it's like, do you want red or do you want blue? Like just do some sort of A B ask for them. And so it could be as simple as like.

• 8:43Alex Hormozi?

  You're gonna pull, I mean, because it's a dentist office, right? And so you're like, okay, what can I give them? Well, I always get free shit when I go to the dentist's office. And so just like have them pick the free stuff that you put in their goodie bag. And then I would send them a picture with their name on it. So that they're like, oh, man, they incurred this cost just for me. I have to show up now, right? Because you're having the issue because someone books and like six months later is their cleaning or whatever, right? That's the problem here.

• 9:11Speaker 02

  Yeah, well, we call and confirm their appointment a week in advance. And then we call and remind them again three days in advance. And then we call them and text them again a day before. And they'll say, yeah, I'm gonna be there. And then 2 o'clock comes and they don't show up.

• 9:24Alex Hormozi?

  You're reminding too far out.

• 9:27Speaker 02

  Okay.

• 9:28Alex Hormozi?

  Like if I schedule an appointment on Saturday, Monday morning is a different universe for me.

• 9:33Speaker 02

  Yeah.

• 9:34Alex Hormozi?

  No, I'm just being like super real. And so I think a lot of people are that way. And so all of the manual reminders are like if you want to like I use the automated ones for the far out, like, hey, you're seven days away. Hey, you're three days away. But I would have the ones that you're putting the real effort in 24, morning and right before.

• 9:52Speaker 02

  Okay.

• 9:53Alex Hormozi?

  And then have the incentive, have the personalization. And I will bet you dollars to donuts that that on its own would work.

• 9:59Speaker 02

  Okay, awesome. Thank you so much. I really appreciate it.

• 10:01Alex Hormozi?

  No, you bet. Yes, sir.

• 10:05Speaker 03

  My name is Tyler. I sell roofs to residential homeowners or commercial building owners.

• 10:09Alex Hormozi?

  Sweet.

• 10:10Speaker 03

  We're about 10 months old, did 1.8 million in revenue this year.

• 10:13Alex Hormozi?

  Door knocking?

• 10:14Speaker 03

  Yeah, somewhat. A lot of the guys like I've been in the industry for a while, so I had a lot of return customers. Did about 1.1 from return. And then my four sales guys brought the rest of the business. Short term goal would be 8 million, go to that. And then long term would be around 70 and exit. The problem is we don't know what model to choose or how to do it. So like was it franchising?

• 10:37Alex Hormozi?

  Are you gonna go insurance and storm chase? Or are you gonna do private like cash pay like new?

• 10:41Speaker 03

  We haven't done any storm chasing.

• 10:43Alex Hormozi?

  So it's all new roofs and repair?

• 10:45Speaker 03

  So it's the market that we live in is we get storms every year. So, yeah.

• 10:52Alex Hormozi?

  It's insurance?

• 10:53Speaker 03

  95% is insurance.

• 10:54Alex Hormozi?

  Okay, it's insurance. Got it. Okay.

• 10:56Speaker 03

  Yeah, so I guess my question is like, how would you scale? Or what model would you choose? And then how would you go about building that?

• 11:03Alex Hormozi?

  Well, you already have 95% insurance. So I would probably keep doing that. So what stops you from doing that?

• 11:11Speaker 03

  Well, we're gonna stay with insurance. Well, insurance is changing a little bit. Deductibles are growing up. Homeowners don't want to get their roofs done as often. But would you scale to multiple locations, like different cities? Or would you do like a franchise model?

• 11:23Alex Hormozi?

  Do you feel like you've nailed the model?

• 11:25Speaker 03

  No.

• 11:26Alex Hormozi?

  I would, so right now, what I, what I wouldn't want to do is try and make a decision with incomplete information when it, when it, when it could be knowable. And so I think, once you nail the model, then the path will become really clear. And so if you nail the model, and then the returns on capital are really, like, interesting, and you can be more patient, then owning them all privately becomes more interesting. If it costs a ton of capital to open up, and let's say it requires a lot of, like, oversight, then sometimes a franchise model can be good. But fundamentally, I kind of see franchises as like, being impatient. Just being honest. Because like, all, basically, it's the most expensive form of capital. Is you say, hey, we're gonna partner, and you're gonna take, you're gonna put all the money in,

• 12:09Alex Hormozi?

  and I'm only, I'm gonna become a, you know, maybe you get 8% of top lines, and maybe figuratively, it's like 25% partner, or 30% partner location, which is okay. Like, nothing wrong with that. But I have seen such a graveyard of, you know, 20-location franchises that make no money. And the amount of work that it takes to maintain 20 is about the same amount of work as it takes to maintain 20 where you own them all. It just happens faster. But you make way less money. So I, I have a habit of flipping franchises back into let's own them all. Like the teeth widening chain that we bought. When we bought it, we had 14 corporate stores. We had 18 open franchisees. And so then, over the last 12 months, we bought out all 18 franchisees. And so now we own all 32.

• 12:54Alex Hormozi?

  But then, like, all of the administrative headache has just basically disappeared, because we just run them the way we want to run them, and we make more money.

• 13:02Alex Hormozi?

  Yeah, I think you need to nail it and then the scaling of path will become clearer. I know that's not the sexiest answer, but that's probably the truth.

• 13:09Speaker 03

  No, thank you.

• 13:10Alex Hormozi?

  Awesome. Yes, man.

• 13:12Speaker 04

  Hi, my name is Adam. I have a music lessons and recording studio in Atlanta, Georgia. And your, your content, you and Leila, what you, what you've done has profoundly changed my life because you've put me out of my comfort zone in how I think. And so I sell music lessons to neurodivergent kids between eight and 18. We have a half million dollars of revenue.

• 13:37Alex Hormozi?

  Awesome.

• 13:37Speaker 04

  I think we could be at $2 million of revenue. And what's stopping me is I've realized that the model is completely broken. I'm underpriced, overcompensating the staff. We're under utilizing capacity in terms of

• 13:52Alex Hormozi?

  Square footage.

• 13:53Speaker 04

  Time and, and physical space and time. And so my question is, how would you apply first principles thinking to what I should do now, next and later?

• 14:07Alex Hormozi?

  Sure.

• 14:07Speaker 04

  To run the business that I've got as we make the transition to one that becomes an asset.

• 14:13Alex Hormozi?

  Yeah. So basically the core, so there's, there's two, a chunked down version and chunked up version of the core economic engine that makes a business successful. So LTV to CAC is the, the most, the smallest version of that engine. You put some money in, you get more money out. That's the, the gross profit you run the entire business off of. At a higher level, it's return on invested capital, right? So it's like, okay, that's what the core machine is, but then there's also equipment. There's leases, there's build outs, there's all that stuff that goes into it. That's not typically included in LTV to CAC. And then how much does it cost us to build this machine again and again? So that's kind of how I think about it, like micro level, it's LTV to CAC. Return on invested capital is what it is at the macro level. When you're like opening more and more locations and saying, it costs me $500,000 to open a location. Location makes me $500,000 within the first six months.

• 14:58Alex Hormozi?

  Okay, cool. I've got a two to one, you know, return on, on capital within a year, which is awesome. Right? So let's tackle for you. So the nice thing about the music business is that it's actually identical to the gym business. So I know a lot about it.

• 15:12Alex Hormozi?

  And so the, the, the models that I have seen works unbelievably well have been semi-private models. Number one, or

• 15:22Alex Hormozi?

  The 30-minute, multiple times a week, much higher ticket. People stay three, four, or five years with music lessons with their person. I prefer semi-private because I think you get more loyalty to the brand and it's less about the music teacher who can then leave and then take all of those students to go private. And so I like semi-private in general. Also, I'm sure you could sell around the idea that they get a little bit more socialized and it's probably good for them and all that jazz. And in terms of pricing, I want my gross margins to be at least 80%, ideally 90. Now, you can do that when you're one-on-six, harder one-on-one.

• 16:03Alex Hormozi?

  And so, let's say you have six kids in a class, or four. I mean, you can level into it, but let's say it's one-on-four, keep the math simple. And you charge $200, sorry, $50 per session, times four kids, you make $200 per session, right? Well, for you to pay for an hour of a music teacher's time, what does that cost?

• 16:28Speaker 04

  Right now, that would be $40 to $50.

• 16:32Alex Hormozi?

  Okay, so that's 80% right there. So $240, so 80% gross margins right there. Now, if you charge 60 bucks a session, you'd be at $240, so then you'd be at like $84, whatever, in terms of gross margins, so you're above that. But that's my rule of thumb for brick-and-mortar service businesses, is I want it to be over 80, ideally over 90, but I will not do a business if it has lower than 80% gross margins. Some people do, I just don't like to. Because you don't have enough cash to do anything.

• 17:01Speaker 04

  Right.

• 17:02Alex Hormozi?

  And so then the question is, okay, how do we create the sales process and the positioning so that... Now, you already are working with a special class of customers, and so I would imagine that you would be able to, probably even more easily than a traditional music academy, sell at a premium price. Because if I'm a parent who had a neurodivergent kid, I would be willing to pay for a specialist. And so specialist prices are a premium. So I think that would work.

• 17:34Alex Hormozi?

  And in terms of the model, you can, I mean, it's just headcount divided by teachers, basically. But you have to get the core gross profit right in the business and then everything else kind of flows from there.

• 17:48Speaker 04

  I'm kind of in the same position that this guy over here was, and I don't have an operator, and so I'm kind of in that swamp too.

• 17:56Alex Hormozi?

  So we have to get more margin. You have to get more cash flow. Cash flow allows everybody to breathe better.

• 18:02Speaker 04

  So, okay, I guess that makes sense. We raise prices and get that, a different sort of client funding.

• 18:12Alex Hormozi?

  Sell one on four and say, and just sell around the fact that it's a better experience for them. Because you don't want them to be married to a teacher. You want them to be married to, like, this is how I would sell it. I would say, listen, Mrs. Whatever, like, if your child becomes really attached to a single teacher, then if that teacher leaves, then all of a sudden, this skill that they spend all this time on, they'll associate with the teacher, and then all of a sudden, they stop playing violin after five years. You don't want that. I don't want that. What we want is to create a positive relationship with the skill, so they just continue it for life. Right? Right. And so, we facilitate that by having other people in the sessions, and, so that the teachers sometimes do change, so that no one really goes too attached to anybody, but they really grow attached to

• 18:56Alex Hormozi?

  the craft. So if you are capacity constrained, so some of you guys are in that position, like, you, you're, you can't, you can barely handle the customers that you have right now, you have three solutions. The easiest solution is you just raise prices. Because if you have supply constrained, then that means that you have more demand than you have supply, prices go up. Right? And most people just don't do that and just suffer. So just raise the prices, make more money. That's solution number one. The second solution is change client delivery ratio, which we just covered. So, instead of going one to one, you go one to four. So you get more out of what you already have. This gives you leverage, and it gives you cash flow. It improves your gross margins. The third way is to bring other people in who can do what you do, which is then delegating, you know, the responsibility, right, to somebody else. So that's the ultimate leverage, so you don't

• 19:40Alex Hormozi?

  have to do any of it. Does that make sense? So there's a kind of like the three steps that I think about when I have somebody who's supply constrained, and they don't have any time, they can't grow the business, and they can't sell more customers, but they need to sell more customers to grow the business, and it's the rock and hard place. And the nice thing is we start with price, because it's the fastest and easiest one to do.

• 19:58Alex Hormozi?

  You have to do anything. You have to change anything. You just say a different word and then you'd make more money.

• 20:02Speaker 04

  So our, our primary thing when we opened was, it was 100% private lessons.

• 20:06Alex Hormozi?

  Yeah.

• 20:07Speaker 04

  Uh, and so that's where, that's basically the only difference in the, the hypothetical gym and gym launch, which I'd read the whole thing on the plane over here. I don't know how I didn't know that book didn't exist until.

• 20:18Alex Hormozi?

  It's a good book.

• 20:18Speaker 04

  It's awesome.

• 20:19Alex Hormozi?

  Yeah.

• 20:20Speaker 04

  So what would the, what would the, um.

• 20:22Alex Hormozi?

  You can still have one-on-one. You can still have one-on-one. Just, I would predominantly sell semi-private. And if someone's like, well, I want the special snowflake treatment, then you're like, awesome. I'll give you this special snowflake prize.

• 20:32Speaker 04

  Right. How would you design the, that, uh, the, the initial offer for that type of model? The six-week beginner challenge?

• 20:44Alex Hormozi?

  But it would be something, whatever, whatever the fast outcome that you can deliver to a kid who's neurodivergent, who picks up a violin, or whatever the instruments that you teach are, right? It's like, they'll be able to play this, like a song in this period of time, right? Now, it might not be good, but like, they'll be able, you'll, you'll recognize it kind of, right? But like, I would want some sort of discrete outcome. Um, and that would be like an outcome. You could also do some sort of, uh, subjective thing, which is that like they rate X or they, like you could have a survey at the beginning, serve at the end. That would be kind of more of an internal thing.

• 21:17Speaker 04

  Got it.

• 21:18Alex Hormozi?

  But yeah, typically you'll serve, you'll, you'll sell some sort of package upfront. I, I'm going to guess that the price point for what you're looking at is going to be between 600 and 2,000. Is what the upfront package would be. And then you'd upsell or at least let people go into continuity on the backend. And it'd probably be somewhere in the neighborhood of like six weeks to six months. You would know that range better in terms of how long this offer.

• 21:39Speaker 04

  Okay. Yeah. And the, the best thing, the, we're drowning in context. We're a recording studio. These kids are making songs all the time.

• 21:45Alex Hormozi?

  Yeah.

• 21:46Speaker 04

  And they should be feeding the marketing, but it's just so much, then there's that whole problem, but.

• 21:50Alex Hormozi?

  Yeah. You just need time, man. Like, I think what's interesting is that like, the more stressed you are, the lower, this is not me, this is not a slight, just to be clear, I'm saying in general. The more stressed anyone is, the lower your IQ is. And so, I'm saying this to say that, again, this isn't a use case. I'm saying that the problems that you struggle with when you are stressed, when you have a good night's sleep and a little bit of time, you solve in like five minutes. And so, if you want to increase your capacity, it's like, let's solve for capacity. And then a lot of these things that are keeping you up at night, you're like, oh, we'll just run a six-week thing, or run a 12-week thing, we'll solve for this, I can see how the margins work out. And like, we already have more demand than we can handle, so it's okay if people say no at our higher prices, because we'll make it up in profit anyways.

• 22:34Alex Hormozi?

  Other people do say yes. Does that make sense? That wasn't a slight, to be clear, I'm saying for anybody.

• 22:38Speaker 04

  That's fine. Yeah, no, it's, it's true, so.

• 22:42Alex Hormozi?

  Cool.

• 22:42Speaker 04

  I appreciate that.

• 22:43Alex Hormozi?

  Yeah, you're back.

• 22:44Speaker 00

  Hi, thank you so much for all your content you make. My name is Loriann, and I sell personal finance courses and coaching to women.

• 22:51Alex Hormozi?

  Four women?

• 22:53Speaker 00

  Pardon?

• 22:53Alex Hormozi?

  Four women?

• 22:54Speaker 00

  Four women.

• 22:55Alex Hormozi?

  Ah.

• 22:55Speaker 00

  With a plus sign at the end.

• 22:56Alex Hormozi?

  You're like, screw the guys, they don't need to save money.

• 22:58Speaker 00

  You know, they can learn from someone else.

• 22:59Alex Hormozi?

  I'm messing with you.

• 23:01Speaker 00

  So we do 30 million in revenue.

• 23:03Alex Hormozi?

  Badass.

• 23:04Speaker 00

  Thank you. I would like to be at, I don't know, revenue, which comes to my question.

• 23:09Alex Hormozi?

  Okay.

• 23:11Speaker 00

  And what is stopping me is our CAC to LTV ratio.

• 23:16Alex Hormozi?

  Okay.

• 23:16Speaker 00

  So both, CAC is too high, got the team working on volume right now, LTV is too low.

• 23:23Alex Hormozi?

  Okay.

• 23:23Speaker 00

  And AOV is too low on our front end.

• 23:28Alex Hormozi?

  Okay.

• 23:28Speaker 00

  I think it's actually a cash flow.

• 23:31Alex Hormozi?

  Maybe.

• 23:31Speaker 00

  Straight, potentially, but I'm a little, I'm a little confused on where like, exactly to go to work.

• 23:37Alex Hormozi?

  Okay. How do you acquire customers right now?

• 23:39Speaker 00

  Primarily Meta.

• 23:41Alex Hormozi?

  So it's all paid ads?

• 23:42Speaker 00

  Yeah.

• 23:43Alex Hormozi?

  Okay, so all paid ads, and you're running to what?

• 23:45Speaker 00

  A webinar, 2K webinar.

• 23:47Alex Hormozi?

  Okay, are you, are you have a low ticket offer for the webinar? Are you charging like, something as like a self-liquidating offer on the front end?

• 23:53Speaker 00

  Free webinar, no. Never done a self-liquidating offer before.

• 23:55Alex Hormozi?

  Okay, so free webinar on the front end, you have a $2,000 offer, okay, then what?

• 23:59Speaker 00

  $2,000 or 12-month payment plan for $200 a month.

• 24:02Alex Hormozi?

  Okay.

• 24:03Speaker 00

  Which is why our AOV is like $90.

• 24:05Alex Hormozi?

  Got it.

• 24:08Speaker 00

  And then acquisition cost like 1,500 on the client and then we have a backend.

• 24:13Alex Hormozi?

  Okay.

• 24:14Speaker 00

  That's 10K, has a 7% upgrade rate.

• 24:18Alex Hormozi?

  That's your problem.

• 24:19Speaker 00

  Yeah, it's low, outsourced, sales team right now.

• 24:21Alex Hormozi?

  That's.

• 24:22Speaker 00

  And so LTV is like 2,400.

• 24:26Alex Hormozi?

  Yeah, that's a problem.

• 24:28Speaker 00

  Yes.

• 24:31Speaker 00

  That's why I'm here.

• 24:32Alex Hormozi?

  Your ascension, yeah, no, your ascension rate is too low.

• 24:35Alex Hormozi?

  You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the 2,000 dollar thing, you have your onboarding call. The onboarding call, the finish of the onboarding call is they set their goal-setting call with what would become a setter. And then that setter sets for a closer. So they actually get three calls. So they have webinar, buy, they have an actual onboarding call because you want them like, you want to make sure you deliver.

• 25:05Speaker 00

  One-on-one or that's a group call?

• 25:06Alex Hormozi?

  One minute, you can do, well, you can start with.

• 25:12Speaker 00

  Group?

• 25:12Alex Hormozi?

  You can start with group and then you will make more money if you go to one-on-one. It is more ops, but like we actually did this and I have a video that breaks down everything that you need to know.

• 25:21Speaker 00

  Yeah, I've seen it.

• 25:22Alex Hormozi?

  Okay, yeah, and so one-on-one is better, but if you're going to start, start with the group. And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call. So that way you have 100% through line to the next. Now they're customers, they're going to show up. The goal-setting call basically sifts for who, like what's your goal? Cool, what's that? Basically just do another sales call again and then you push people into the ones who can afford it, that makes sense, into a closed call with basically an invitation to join something that has more help or work associated.

• 25:59Speaker 00

  Yes, okay, great.

• 26:00Alex Hormozi?

  You'll probably need to get third-party financing in place. Yeah.

• 26:04Speaker 00

  Oh, for the, for the sales calls.

• 26:06Alex Hormozi?

  Yeah, and, and front-end. Like you should definitely have some BNPL options, so buy now, pay later. You should probably have a few.

• 26:12Speaker 00

  Okay, we have them on the backend, we don't have them on the front-end.

• 26:14Alex Hormozi?

  Yeah.

• 26:16Alex Hormozi?

  Also with the webinar, I would recommend split testing the first five minutes. So retest two or three different intros and look at LTV. That will make you money. But the biggest issue is that you're up selling 7%. Like you need to be at, you want to be at at least 25 and you should shoot for 50.

• 26:37Speaker 00

  Okay, okay, and so just one more question. As I'm, that's like a longer term solution, right?

• 26:44Alex Hormozi?

  You mean bringing the sales team in house?

• 26:45Speaker 00

  To bring a sales team in house and really optimize that process?

• 26:48Alex Hormozi?

  Yeah. Why does it have to be long term?

• 26:50Speaker 00

  Just the time it'll take to find a sales leader and recruit and like shift leads from the...

• 26:55Alex Hormozi?

  You need to hire one person, really good sales director, and then you hire six recruiting firms that do sales and say, "I need 10 guys from each of you." And you can get a 60-person team in four, like, two weeks.

• 27:06Speaker 00

  Okay.

• 27:08Alex Hormozi?

  We just added 40 guys in two weeks to one of our companies. We just paid a bunch of recruits. Like, if we're doing that kind of volume, we're just going to go to somebody who has a big network of people that they're, that's their full-time business recruiting sales guys. So it's like, great, these are requirements, go get them.

• 27:22Speaker 00

  Yeah.

• 27:23Alex Hormozi?

  And I'm willing to pay for the speed.

• 27:24Speaker 00

  Yeah.

• 27:25Alex Hormozi?

  So if it's, and you can also negotiate if you're doing multiple, like the same with multiple. So it's like, hey, normally, you know, it's 10 grand per, per head, but I'm going to buy 20 from you. So I'll do it for five.

• 27:35Speaker 00

  Okay.

• 27:36Alex Hormozi?

  So you pay 100 grand, all of a sudden you have a department.

• 27:38Speaker 00

  Okay, cool. So action on that immediately and then while we're doing the recruiting and getting that person up to speed, just keep spending, basically, as much as we can afford to spend on the front end to keep like lead flow coming into the back end?

• 27:51Alex Hormozi?

  Realistically, if you spend less, you will typically ROAS will increase.

• 27:57Speaker 00

  Yeah.

• 27:57Alex Hormozi?

  Typically. YouTube's not that way, though. Kind of random. The more you spend, the more profitable it gets. It's wild. If you have a cash flow issue right now, or like, you know, it's like, it's self-inflicted. Like, you can just spend less and improve the, improve the returns, but your CAC is appropriate. $1,500 to acquire a customer in that space.

• 28:18Speaker 00

  Not going to get that much lower, is what you're saying?

• 28:19Alex Hormozi?

  Yeah. It's like, you're not going to like, you're not going to get below 1,000.

• 28:23Speaker 00

  Yeah.

• 28:24Alex Hormozi?

  And so this is a backend issue. Like, you just have to increase the ascension rate and that's it.

• 28:30Speaker 00

  Okay, thank you.

• 28:31Alex Hormozi?

  You bet. Awesome.