How To Get Customers So Fast It Feels ILLEGAL | Ep 795

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.

• 0:00Alex Hormozi?

  There are a few things that every founder has to learn at a basic level. You have to know the core business. You have to know how to get customers. You have to know how to deliver customers. Just about everything else you can outsource, but those two things are core to every business. And so if you don't know how to get new customers, you need to fix that.

• 0:18Alex Hormozi?

  Want to hear something insane? Every six seconds, acquisition.com or Philly companies get a new lead. So I'm going to show you how to get new customers so fast it feels illegal. And just while I was saying that, we got one lead in the first second, one at second six, a third at second 12, and we'll get one in just right now. And that's exactly what I'm going to show you how to do. So number one, every business wants more leads, but none of them want to give good stuff away for free. And so my favorite marketing strategy for getting tons of leads is, step one, look at what other people are charging for. Step two, look at the hard costs of what it would cost for you to deliver it.

• 1:00Alex Hormozi?

  Step three, give that thing away for free. Step four, see how many leads you get. Step five, see how many you convert. And then the hard cost divided by the percentage conversion equals how much it costs you to get a customer. Don't worry, I'll walk you through the math. So let's say that you have a competitor who's willing to do some sort of SEO service, whatever. Now, SEO services will typically have multiple components to it. And most businesses that either have products or services have many things that if you were to go zoom in on it, you could do for somebody. You could compress files on someone's page to increase the page lead time. You could change headlines around. You could redesign it. You could fix the metadata so that it ranks differently.

• 1:44Alex Hormozi?

  Whatever, you could create link backs. There's a number of different things that you could do. And so the question is, how many hours, let's say, would it take me to add 20 links, backlinks from someone else's site to the prospect's site? Okay, well, maybe that would take me, I don't know. Let's call it an hour. All right, now I think it would take less than that, but let's just say it's an hour. And let's say that it's an hour of one of your employee's time and you pay them $25 for that work. Okay. The question is, if you're trying to just give away an assessment, or something like that for free, which is what everyone else gives away, not that many people would be interested. And so, let's say that you spent $100 to get leads with your old way.

• 2:27Alex Hormozi?

  And then, you add this new thing that you give away for free that costs you $25, but all of a sudden, you get three times the amount of people who want that free thing per dollar of advertising. Meaning that your new lead cost is $33. But, for each one of those $33 people, we now have to give a $25 thing away. But at the end of the day, we still net less cost per lead from $100 to $58. And so fundamentally, this is the 101 of how giving stuff away works. Now, the 201 version of this is that you want to only give the $25 thing away, or $100 thing, or $1,000 thing, depending on the size of the ticket of the thing you sell, to qualified customers.

• 3:10Alex Hormozi?

  So it's no longer, "Oh, you want my SEO backlinks." It's, "Okay, well, I'm only gonna do that if you meet qualification 1, 2, 3." And then at that point, then I can look, I can sift through my leads and say, "Oh, well, I'm only gonna incur that $25 cost on one of the three leads." Which then brings my average lead cost down to probably around $40, right? And so this is the idea, is that you can give something significantly better away for free than everyone else does. Ideally, something that other people actually charge for. And if you really want to be a savage about it, which, why wouldn't you want to be a savage about it? You make it even better than what they have. This feeds into one of my favorite business models in the entire world, which is,

• 3:54Alex Hormozi?

  "Look what everyone else does, make it better, make it free, make money another way." And so, if you wanted to figure out what this would look like, your cost to acquire a customer, so you can either break it down to the cost per lead that increases, or you break it down to the cost per customer. Now, where this gets extra nasty is that maybe you closed one out of five leads before. But maybe with this new lead magnet where you provide value first, you close one out of four of the leads. Well, all of a sudden, not only are the leads that you're getting cheaper, you're also closing a higher percentage of them. And so now you have two things that help you get even more customers from one badass move.

• 4:35Alex Hormozi?

  Now, number two. These kind of bets are hard for an employee to make because they're going to be coming at you saying like, "Hey, I just want to give away a bunch of money." And maybe your gut response is to say, "No." But if you were the one who thought of it, you would have the authority to do that and actually make sure that the math worked. And so if you're a marketing founder, you want to stay as close to it as possible. So one of the stories that I love to think about this is my litmus test for knowing if I'm too far away from something is that I want to know where the bodies are buried. And so if I don't know what's wrong in an apartment, I don't know what could be better. It means that I'm too far away. It's the easiest way that I've found in my life for me to stay in touch at the appropriate level of distance.

• 5:18Alex Hormozi?

  Now, if you are somebody who's an awesome marketer, or that's your primary skills, you're good at promotion, you're good at advertising, then I have made this mistake before and I've gotten too far away. What happens is this distance basically dilutes down my marketing skills. And I end up basically having a department of people that are using their best skillset rather than mine. And so the business loses the biggest asset it has, which is me or you. I have been talking to our portfolio founders about this specific thing recently. And one of them, after a long conversation, was like, "This has completely changed my outlook," which is why I wanted to make this video.

• 6:01Alex Hormozi?

  I told him, "Your instinct is right. I think that traditional setups are dumb." He had, this particular founder, had a team of 18 people who were inside of his marketing vision. And I said to him, "Right now, if you had to get rid of everyone except for two people, do you think you could run the advertising for the business?" And he said, "Yeah, probably." And I said, "Okay, then it means that the other 16 people are just people that we brought on who are here for the ride." And so Keith Rabois has this really amazing analogy for this that I really like. He says, "Imagine a Civil War cannon." All right, so you've got your big cannon here. And he said, "Imagine that you've got this big ammo of all the cannonballs next to it."

• 6:46Alex Hormozi?

  He said, "Most people start a business and it starts working, right? So you start getting customers, you start getting leads, fine." Then you say, "Okay, well, I'll go from five people to 20 people, and that should 4X the size of the business." And then, of course, you find out quickly that when you 4X headcount, you don't necessarily 4X the business. And he said, "That's because most people are ammunition." And so, you still only have one barrel. There's only one cannon that's doing the firing. We just added potential here. He said, "But instead, what you need to find is more barrels." Because if you can double the barrels, you can double the rate output. And so, I see barrels, as Keith does, as incredibly rare.

• 7:30Alex Hormozi?

  But they are the ones who move the needle. And so, I was explaining to this founder, and this is something that I've... It's a mistake that I've made many times in my life, and it's one that's hard to not make, because as things grow, more things come up, and you get further away. But it's like, you have to make sure that you hold on to the things that matter most. Like, Mr. Beast is still involved in the creation of his videos. Steve Jobs still approved every final ad that went out for Apple, or at least, so legend says. And so, I think that the traditional setup is, for the most part, made by corporates who aren't founders, who aren't driving output. They're just like, meeting quarterly earnings. They're not really changing the world.

• 8:11Alex Hormozi?

  And so, I have put my big, kind of, words on this. Fewer, better. And what that means is that you're gonna have to back up your investment in talent with finances. And so, what I mean by that is, if you were to build a department and say, "Okay, I need to hire a few people for $75,000 a year." Okay? Just use it as simple math. Well, those may be A players, B players, C players, who knows? But an A player may be able to do, quite literally, five times, 10 times the output, 25 times the output of a B player. And so, marketing is one of these roles that has tremendous leverage.

• 8:56Alex Hormozi?

  And so, in thinking about this, I think I've changed the way that I see building marketing departments. Phenomenally. Which is, the most similar role in a business that I can think of that we have in the portfolio is actually a developer. So hear me out. Developers typically have technical career paths, which means that you can be a level one, level two, level three, level four, level five, all the way up. And as they go up, they make more money. And the reason for that is because one amazing developer can make something that millions of people see. So, one of the old legends of Google is that there's a particularly amazing coder. They had bought some old version of Google Maps as an acquisition. They kept trying to deal with the code. And then one really high-leverage coder remade the entire product over a weekend.

• 9:41Alex Hormozi?

  And then that is ultimately what became the codebase that we still use today as Google Maps. And so, one man made that. That's how much skill he was able to bring to the table. Now, here's where it makes sense from a business perspective. That one guy, maybe you have to pay him 10 times more than a traditional coder. But if that guy can make a million times the output of one guy, then it's still an amazing deal. And so, the thing is that there is outsized returns on talent at the top end. And there's a reason that the biggest technology companies, the biggest companies in the world are in a war for talent. I was thinking about this as it relates to marketing, because in many of the businesses

• 10:24Alex Hormozi?

  that I've started, marketing has been traditionally understaffed, or overstaffed, rarely appropriately staffed. It's understaffed when it's really just me and like a couple people. And when we do that, it's because I have a ton of skills in marketing. And so, we can get away with very few people. On the flip side, when I get too far away, I usually bring someone in and they just bring a lot of bodies. But what ends up happening is that the output goes down a lot. And so, at GymLaunch, there was a period of time where we had 17 people in marketing. And once I got rid of the leader, I moved in and I took the team from 17 to 5. And then, output tripled. And so, I say this because the people who have skills are the ones that are moving the needle. And so, if I have three guys for 75K...

• 11:11Alex Hormozi?

  And they create 3X output. One of the really interesting things about knowledge work, specifically marketing, coding is one of these, is that the difference between the best guy and the worst guy in marketing isn't like the best guy who can cut a lawn and the worst guy who can cut a lawn. The worst guy can cut a lawn, maybe it takes them an entire day, and the best guy, maybe it takes him, you know, a third of a day because he's sprinting the whole time. So maybe you get a 3X increase because somebody is better. And so you'd be limited by how much you'd be able to pay someone more for that quality and that speed. Whereas with somebody in marketing, somebody who's a zero marketer versus a 10 marketer,

• 11:54Alex Hormozi?

  the 10 marketer might literally be able to do 100 million times more the output. Because one guy with skill and an iPhone can get 100 million view video. And that kind of leverage is why it pays to pay better. And so this is something that I've been obsessed with of late, and I'm trying to relay this to each of the portfolio founders in making sure that we're keeping the marketing divisions tight so that we have the highest leveraged people in the highest leveraged positions with incentivized performance so that we access their discretionary effort to maximize their skill sets. Yeah, the most important thing that you can take away from this is that the best advertisers don't need many people.

• 12:40Alex Hormozi?

  And if you have no one who's in your quote "marketing apartment," that means you. And it's a game that you have to learn. There are a few things that every founder has to learn at a basic level. You have to know the core business. You have to know how to get customers. You have to know how to deliver customers. Just about everything else you can outsource, but those two things are core to every business. And so if you don't know how to get new customers, you need to fix that. So the next big one that can get you more outsized customers than anything else is answering a specific question, which I ask is a great thought exercise with our team, is what would it take to be number one?

• 13:21Alex Hormozi?

  And another way of asking this question is, what else would have to be true for us to be number one in our market? And so when we actually hypothesize about this, we think, okay, what would it look like for us to be number one? What else would have to be true? What else would have to have occurred? What's interesting about this question is that it circumvents the traditional incremental thinking. Meaning, instead of saying, okay, we're just going to do 10% more, we're going to do 10% better, we're going to do 20% better. When you start with the end in mind from a, what would it take for us to be number one? We assume the goal outcome. And the crazy thing about this question is that you might be 1/100 the size of the number one player in the market. But it assumes what it would take to be 100 times bigger. And then it gets reverse engineered into the present.

• 14:06Alex Hormozi?

  And so what happens oftentimes when I ask this question is they usually state one or two key big things that would have to happen for the business to be number one. And then I ask, what would it cost for us to do that? Do we have the resources in order to make that happen? And more times than not, we actually have the resources to make that happen. Then the next actual question is, then why are we not putting every one of the resources we have right now towards making that come true, rather than just continuing on the path that we're on? And so this is an order of magnitude increase in terms of business growth and ultimately what generates the most leads and customers. And so when I asked myself this question years ago,

• 14:49Alex Hormozi?

  it was, what would it take for me to be the number one business channel? Right? What would it take for that to happen? Now, the question beyond that was, what would it take for us to be able to have one of the best investment firms in the world? And I was like, well, I would have to have many, many, many more years of experience. It's like, I don't know if I can do that. I was like, okay, that would be harder. That would be, I can't make time happen faster. What else would it take? And so then it came to the number one. So I'm going to cut from there. So what would it? So then I followed with, okay, so for me to be the best investor, then what I would want is the most deal flow. So what are the different ways of creating deal flow? One of them is you can just go to broker networks. So you go to investment bankers, you get them to send you deals and then you bid on those deals.

• 15:32Alex Hormozi?

  But if I want to be the best investor in the world, then I need deals that only come to me. I was like, okay, well thankfully, I'm pretty good at marketing. And so I was like, why don't I, like, what would have to be true for me to get lots of inbound deal flow? I was like, okay, well, probably building a massive brand around business. And so then the question was, how do I build the number one brand and business online? And so it's the series of questions that I asked, and then it was, okay, well, I should probably start making content around this. And I should probably write a book or something that would do really well, that is in the business space, that business owners would read and then think, wow, this guy knows what he's talking about. And so by doing those things, by publishing the books, by making the content consistently,

• 16:15Alex Hormozi?

  and the moment I realized that that was what it would take, I basically put all of my resources towards doing that, despite the fact that in the moment, it basically meant nothing. It meant that I had to go write a book, and it meant that I had to start making content. But I did all of those things because I thought, for me to be number one, I need to have proprietary deal flow. For me to have proprietary deal flow, I need to have a big business brand. For me to have a big business brand, I need to make more content that's better than everybody else. And so that's what I'll start doing now. And that's where I'll allocate my resources. Even though I could have done a lot of different things, that was the one that I felt at the time would give me the most leverage. And so far, it has worked out. But asking that type of question, you don't get to that type of solution unless you ask the, what would it take to be number one? And then sometimes the answer surprises you because you do have the resources to do it, you just haven't yet.

• 16:59Alex Hormozi?

  And the reason this question is so powerful is actually from Stephen Schwarzman. So in his book, or his autobiography, I think it's What It Takes, I think it's what it's called. He has this really amazing opening couple of chapters, and he talks about this idea of thinking big. And he says, Building a really big business is hard. Building a small business is hard. So basically, it's just about as hard to do anything because hard is a constant. So you might as well go after something really big with the equivalent amounts of hardness. Now, we can get into difficulty levels or whatever, but basically, the upside of the incremental increase in hardness is outsized. If you want to build a really successful restaurant, it's going to take you a really long time if it manages lots of people,

• 17:44Alex Hormozi?

  and it's a tough business. And if you want to build one of the top software companies in the world, it's also going to take a long time and be really hard. But one of those could get you into the many billions, and one of them will probably cap at a million dollars or two million dollars a year. And so, in thinking about that, both of them required the same internal resources from you, but very different external resources. And so, it's like you might as well solve for the biggest thing, and this is about resourcefulness, not resources. All right, this next one is huge, which is pre is greater than post, where an ounce of pre is worth a pound of post. All right, so as I've advertised in many different ways and many different channels for different industries, I have seen this consistently be reinforced for me.

• 18:29Alex Hormozi?

  What happens for most people is they forget to advertise, and then they try and play catch-up, and they hop in front of the camera, they sit in front of the computer, they start typing these out, and then they hit post, they hit submit, they run the ad, they post content. This then gets propagated as the process, and so they hire more people, and then they more or less do the same thing. And then, when the stuff sucks, they say, "We'll fix it in post." But the problem is, is that post has very low leverage and very high cost, whereas pre has incredibly high leverage and very low cost, but it just takes more mental work. And so, I'll give you an idea. An idea for a video, for example, has tremendous leverage, more leverage than just about everything else.

• 19:11Alex Hormozi?

  If there is a video concept that more people would click and watch to see, that idea itself... Even poorly executed will get in order of magnitude greater amounts of people to watch the content or watch the ad than otherwise. And so putting more time into pre is the highest leverage activity that you can do. More of my time now, when I make ads, for example, for school, I will spend on the pre-production. That will be looking at past ads that performed well, looking at the hooks that continue to do well, making sure that we have some props and things like that that we can use as visual aids. And then when we actually do the recording, it's very short.

• 19:54Alex Hormozi?

  And the post-production, because all of the work is already in the video, there is very little that must be done afterwards. And so what happens is the rate of progress and output increases, to use a big word, tremendously. The only reason for post-production, especially in education, is to enhance comprehension, meaning to make it easier for people to get with the video is about. And this is different than in entertainment where a lot of the emphasis is on post. But for the vast majority of businesses, their advertising and marketing comes down to educating the customer or potential customer. And if education is the type of advertising you do, which is what most businesses do,

• 20:37Alex Hormozi?

  then you need to put more into, do people find this interesting? Can I make it simple? Rather than, I'm just gonna hit record and see what happens. Yeah, and the thing that shifted my perspective on this was, I think it's called Calculus Wallah, but it's this Indian channel where there's a guy who's like 20 million subscribers and he teaches like Physics Wallah and like Calculus and these different classes. And his videos get like 10, 20 million views, just like crazy, crazy numbers. And it's just a dude and a whiteboard. And when I saw that, I was like, I am, I am missing the boat here. Like, I am doing it all wrong. And so we have consistently stripped back more and more of this post-production and put more and more of it into pre.

• 21:19Alex Hormozi?

  So this video, for example, like I have notes rather than just kind of like winging it and then having the team just like cut everything that was not as good out. Instead, it's like, okay, let me be more purposeful about the points that I want to hit. Make sure that they actually make sense in sequence. So that afterwards, they don't have to reorder the video and then cut out this thing and then say, "Hey, could you re-say this part? It was unclear." It's like, I have examples, I have clear language that I've already thought about ahead of time. So that I can ultimately make a better video for you and also an easier video for my team to be able to produce so that we can make more faster. So this next one is a really high-leverage concept, which I overheard this for the first time from a marketer named Perry Belcher.

• 22:01Alex Hormozi?

  And it was, I don't think he even used this term, but need-to-believes. And so, need-to-believes are basically like, you want the fused amount of need-to-believes for a customer to make a purchasing decision. And so, I'll give you a bad example of a business that I had, and then I'll give you a good example. With Prestige Labs, one of the difficulties that I had was that I had to convince someone of two things. I had to convince gym owners that they should sell supplements. Not all gym owners want to sell supplements. Some gym owners are against supplements. But I had to convince them that selling supplements was not a bad thing. Then, I had a second thing that I had to convince them of, which is that Prestige Labs was a supplement company that they should use. And so, I had two need-to-believes. And so, it made it a very difficult sale to get someone

• 22:43Alex Hormozi?

  because it was just too much, basically, education in too short a period of time. Now, over the long haul, could you do something like that? Yes, knowing what I know now, I'd probably have a multi-layered campaign. One that basically gets the first big decision. And then, a second kind of campaign later for warmer audience, kind of like middle of funnel, that would then convert people into specifically Prestige Labs affiliates or sellers, retailers. But that's a lot of work, and you're definitely not going to make sales quickly. An alternative to that is that if you look at most of the, like, real estate investment space. So, anybody who has funds, who would invest in real estate, who flip real estate, who help people flip real estate, find their first properties, whatever.

• 23:27Alex Hormozi?

  There's this need to believe that doesn't really exist that real estate helps people make money. Most people generally agree that real estate is an asset class. Many people have made money in real estate. And so there's just not a lot that has to be believed for someone to say, okay, well, you are good at real estate. I will buy your thing to help me get good at real estate. And by buying it, it means either I give money to your fund and then you do it on my behalf, or you help me source deals, or whatever it is, right? And when we think about like the ultimate business opportunity of all time, which I think is Amazon. Amazon itself fundamentally had the proposition to anybody who wanted to sell anything. All you have to do is upload your product onto our site and you can make money.

• 24:10Alex Hormozi?

  There's almost no, like, you don't need to know how to market. You don't need to know how to sell. You don't need to handle customer service or customer support. They took away every conceivable reason for someone that they would have to believe in order to be successful. They were like, you just need to follow this tutorial and then just upload your product. Like, that's it. And so as a result, Amazon has made a tremendous amount of money. And so the only real need to believe is that someone else might buy my product on Amazon. And so people believe that and then they buy. So it's like, they barely even have a need to believe. It's like a half-belief, right? And so when I think about products and offers, I think, what must a customer believe in order to make this purchase? And do I have multiple humps or hills that I have to get over?

• 24:55Alex Hormozi?

  And ideally, I want to reposition or repackage the product and offer in such a way that there's either no beliefs they have to believe, or only one. And so if you're struggling to get more customers and you want to get crazy amounts of customers quickly, you want to limit the amount of things that they need to learn or need to believe in order to buy. The reason that giving away tons of free stuff, like I mentioned at the very beginning, is powerful is that it will basically move more people from someone who needs more information to someone who needs less information. And so fundamentally, this is what branding is on a large scale, is that you're educating a large percentage of the audience and conquering some of the need to believes before they make the purchase. If you try to go cradle to grave in one move, you will usually sell a smaller percentage of the marketplace, unless you have figured out how to make that six-inch putt a six-inch putt for everyone, like Amazon has.

• 25:40Alex Hormozi?

  Same thing with Uber. It's like, what do you have to believe in order to make money on Uber? You just have to be able to download an app, you know, upload your driver's license, not have DUIs, or whatever the requirements are, and you have to have a car. And so as long as you believe that when your phone dings, that you will get paid. It's not a huge hill that you have to get over in order to make money. This next one is nasty. So, I am a big fan of split testing, right? And you've probably seen it with my thumbnails on these YouTube videos. Because fundamentally, why would you not want to get more for what you put in? You take all this time to put together some notes, think about examples, make sure that it's easy to understand, put together a thumbnail. It's like, why would we not just like test the thumbnail image?

• 26:23Alex Hormozi?

  When we could have two things and one of the thumbnails could like 3X the views on the video? Like, that's a high leverage activity. And so, within the business that you have, in terms of getting more customers, I am all about thinking in terms of orders of magnitude. But, when you can get 10, 20, 30% boost, and you can do it in three or four parts of the funnel, you can double or triple the amount that you're getting from what you're already doing. And when that happens, your revenue will increase disproportionately to your revenue. So, if you double revenue and you keep your costs the same, you could very well 3 or 4X profit, because that additional revenue might not have nearly the cost of the first set of revenue that you had to incur with your fixed costs.

• 27:04Alex Hormozi?

  I want to rank for you the most important split tests that I do with a business. The first is going to be offers. Alright, that's the big obvious thing. Like, what's the thing that you're giving away or that you're givering them? The second is going to be the packaging, which is going to be the headlines and sub-headlines. The third is going to be the images associated with that headline and that packaging. Now, the fourth one, and this one's really... The biggest split test winners I've had have come from one and four. Now, the reason four is fourth is because it's actually really hard to do. But, the biggest personal gains that I've had have come from this, which is third-party integrations. You're like, what does that even mean? Well, a lot of businesses use other technology.

• 27:49Alex Hormozi?

  You have a software stack, you have a CRM, you have a scheduler, you have a form thing on your site. Like, all of these different pieces typically exist. But what those third-party apps and tools don't typically report on is what the conversion rate is of their UX or their user experience. And so I have found some unbelievable unlocks. Some of the biggest absolute split test winners have come from just saying like, "Oh, we're not going to use this software to capture this stuff. We're going to use this software." And even though the aesthetics were basically the same outside of the third-party integration,

• 28:31Alex Hormozi?

  I have had this happen four times in my career where this test was like a company explosion in terms of increase in sales and profit, like really big. The reason most people don't do this, though, is that it's hard. So if you have to split this different tools, it's like, okay, well, we got some customers here in this system, we got some customers here. It's kind of messy. But it's one of the most valuable things you can do. And what's interesting to me is that almost no third-party provider ever reports on conversion rate data, because honestly, how could they? Because everybody's different. But by having that and testing it for yourself, you'll see some of the biggest gains that you've ever had. Yeah, and one of the cool things with all of these is that when you implement these things, you get permanent lifts, for the most part.

• 29:15Alex Hormozi?

  So, meaning, like, if you change the offer and then everything crushes, it's like, great, that's the offer. If you change the headline, you find out that's the headline, and it's like, cool. Like, this just keeps converting for us. So it's like, it's one-time effort for ongoing gains. And like, those are my favorite types of things to do in the world, like, you know, build once, sell a thousand times. Like, those, I mean, fundamentally, like, a book, same idea. You write a book once, it's a lot of effort once, but then after that, you can just keep selling the book over and over and over again. And same thing when you give away free products. It's like, you build it once, and then that can get you unlimited amounts of leads. Last week for Black Friday, I spent 200-plus hours, not on that day, but leading up to it, to come up with a scaling roadmap, basically taking a company from zero to 100 million.

• 29:58Alex Hormozi?

  It's 14 hours that breaks 10 stages of growth for any company, and it divides it across eight different functions of the business. So, marketing, sales, customer success, product, IT, HR, recruiting, finance. And so, all of the functions of the business, what the problem that you're dealing with right now, and what you need to do to graduate. That whole thing took me a really long time to put together. But now that it's there, and everyone can just, like, fill out questions and get a personalized solution for them, and it's free, and it's better than other people charge for... Then that can just consistently get more businesses into my world. So it's worth it. If we wanted to be number one in the market, part of having proprietary flow comes with two big advantages. And this works the same if you're selling customers.

• 30:43Alex Hormozi?

  The same idea, selling in a vacuum. But there's, there's two different ways that you can sell in a vacuum. And the reason selling in a vacuum is so important is because when you sell in a vacuum, you no longer have to compete on price, or in my instance, terms. And so the first is you sell where no one else is selling. So that's you find the little pond where there are no other fishermen, and then you fish there. And you get all the fish you want. The second way is to sell something that no one else sells. And so one is a where thing, and the other is a what thing. So either you create something unique that you have some sort of feature or service that no one else can do because you have some sort of technological advantage. Fundamentally, this is what Elon does in every one of his businesses. He's happy to go where it's super competitive,

• 31:26Alex Hormozi?

  but he just sells something that no one else can sell. And then he can command a premium price for it. The alternative is to be good at providing value at scale to people so you get inbound demand. And then at that point, they're not choosing between you and six other people. They're saying, I'm either working with you or I'm not doing it. So the next big way of getting customers so fast it should feel legal is spend more. Wait, that's not what it is. It's be able to spend more. So let me explain the difference. So spending more is just cool. You increase your budget. Sure, and that can work. But most businesses, like if you ask businesses why they fail. So they, they do surveys in the Census Bureau. And I think the number one reason

• 32:10Alex Hormozi?

  that small businesses say that they can't succeed is because they have a lack of customers. They have a lack of leads. They have a lack of demand. And the reality, most of the time, is not that they have a lack of leads, but that they don't have a good enough business to be able to afford them. And so this is where you have to solve the business from back to front. And so there was a company not that long ago that that that came out here to the headquarters. And they're like, we need help scaling. And I said, so what do you think your constraint is? And their constraint was leads cost too much. By the way, leads costing too much is rarely ever an issue. The issue is usually that you don't make enough money per customer. And here's a fun factoid for you that I can share.

• 32:53Alex Hormozi?

  I look at a lot of different companies every single day. And that's because we sift through deals and we look for patterns between markets. And so right now, for example, I'm really interested in the med spa space and I would really like to get into a chain there. So if you are a med spa owner and you have, you know, call it five-ish million in EBITDA, hit us up. All right, one of the things that's not unique between different med spa chains is their cost to acquire customers. So the range of the cost of getting people in the door is usually actually not that different. So the benchmarks are usually maybe 1X, 2X of one another, not huge. But where the major differences that exist between chains in terms of their success is their LTV, which is how much customers are worth of that business over the long term. And this is usually where the rich get richer.

• 33:38Alex Hormozi?

  This is why the biggest companies in the world are the biggest companies in the world. Starbucks has a $14,000 LTV. Now, for Starbucks to acquire a coffee customer is probably not going to cost that much more. If anything, they're probably wildly inefficient because they're this massive corporate behemoth, right? Compared to the local coffee shop down the street. But if they're going to head to head from an actual per dollar per customer basis, usually the small local guy should be able to outcompete the big national guy. Where the big national guy gets them is that they've got 40 or 50 years of optimizing lifetime value per customer. So they know every single thing that gets customers to come back, what gets them addicted, what types of products on what seasons, what, you know, what pumps of flavors to give, what options to provide, which ones to cut. They know all of these things and that is how they outcompete.

• 34:23Alex Hormozi?

  And so right now, if your cost to acquire a customer is about the same as your industry, which by the way, you can totally just Google this, it's not that hard. You just say like, average cost to acquire a customer, insert industry, right? And you can find it very quickly in a couple of Google searches. That will then tell you, "Oh, maybe I'm not that far off." "Oh, my business is broken." And so this often happens a lot too, where a small business owner will be like, "Those guys overcharge. I'm gonna come into the market and charge less." It's like, well, there's a reason that they charge more and why they're bigger than you. Because they make more money, so they can charge more. Because they've already figured this out. In my opinion, the ability to spend more is LTV. And LTV is the arms race of advertising.

• 35:07Alex Hormozi?

  And if you can spend more than anyone else can, you can outlast them. Because here's a fact that will make a lot of you uncomfortable. Advertising only becomes more expensive over time. The cost to get a customer literally only goes up. The cost of impressions, the cost of eyeballs, only goes up over time. You need to have a force in your business that also concurrently goes up over time, which is your LTV. Customers should continue to pay for the services from you, continue to buy your products. And you should be continually expanding LTV so that as you go to colder and colder markets on more and more expensive media channels, that you can continue to outspend and earn a profit. And you might be wondering, "Why doesn't anyone do this?" Well, it's usually an entirely different skillset.

• 35:50Alex Hormozi?

  And there's usually fear associated with the actions that most strongly increase LTV. So changing or raising price is something that most business owners are terrified of. It's one of the strongest levers on lifetime value. And yet, no one does it. And so they instead are like, "How can I get cheaper leads?" Because they had this one campaign, this one time, that kind of worked. And then they're like, "I wish it was like that time." It's kind of like they're heroin addicts, where like the first time, they're chasing the first high. And every marketing campaign after that, they're trying to get lead costs at that low. It's never gonna happen again. Just get over it. The first time you send any kind of ad in a new market or you've got a new offer, it's always gonna do the best. That's not gonna be your stabilization point. It's gonna get worse. And so you have to build the business to accommodate that rather than stomp your feet and wish that leads were cheaper.

• 36:34Alex Hormozi?

  All right, so we're talking about getting customers stupid fast. All right. One of the highest leverage things you can do is go to somebody who's already spent years developing your audience and then just ask to be promoted in front of it. Now, there's no Number of ways of doing this. Of course, you can go for the mega influencers and things like that. The way that I have built every affiliate business that I have run has been not going after the super affiliates, but instead trying to aggregate many smaller businesses or nodes of new revenue. So there is a business right now that already has all the customers that you want, and they don't have your product, and you would both benefit from collaborating rather than competing. Here's the issue. If I were to get onstage in front of a thousand business owners and say,

• 37:18Alex Hormozi?

  "Raise your hand if you have a deal, or if someone refers you a customer, you give them 20%." Half the room would raise their hand. They'd be like, "Oh yeah, I do that." And I'd be like, "Okay, everybody is raising your hands. Why don't you go refer a customer to one another?" And then the hands go down. Because no one cares. No one's gonna say, "Okay, I spent all this effort, all this time, to build trust, advertise, sell, create a relationship, and I'm just gonna hand them to you for 20% of your ticket. What do I care, right? I'd rather just not even introduce the variable, just keep living my life." And so if you really want affiliates to work, you have to make it so good that it hurts, alright? And when I say that, I mean you gotta give the affiliate so much that you're like, "Man, they're gonna make a killing on this." Alright?

• 38:03Alex Hormozi?

  And this is how I like to do it. So let's say that you've got a product, and you've got kind of four components to it, alright? And you sell this thing for whatever, $1,000. So what we wanna do is we're gonna say, "We wanna take this corner, and we're gonna peel this thing off." Alright, so this is just gonna be a little side project that we have here. Just pretend that's a cube. And instead of saying, "Hey, man, I'll give you 20%." Give them 20% of your product and give them 100%. Hear what I'm saying? If I were a masseuse, and what are all the things that I do? Okay, I might do sports massage, I might have the lotions and the oils, I might do the hot stone thing, right?

• 38:46Alex Hormozi?

  Or I might be selling, you know, 10 massage packages or 20 massage packages, whatever. I would go to a business owner, and instead of saying, "Hey, I'll give you 20% if you send me somebody who gets a massage," I would say, "Hey, man, why don't you sell all your customers three massages? And you can sell it for whatever you want from me, and you can keep all the money."

• 39:11Alex Hormozi?

  Oh, wait, so this is like a, well, how much can I charge? Whatever you want, but it's got to be at least this. So that minimum is whatever your price is because you don't want to get cheap customers in. So let's say that your price is a hundred dollars. So you say you have to be able to sell those three massages for at least 300. You can sell for 500, you can sell for 300. You'll keep the whole 300. I just need to make sure the price is right, so it's the right people. So let's say these guys are like, oh my God, these guys are nuts. I'm gonna sell these three massage packages for $500 and I'm gonna keep all of it. You know what I would think to myself? What's my cost? So the cost of a massage, let's say that you pay your massage, maybe it's you, right? Let's say you pay $30 per massage and hard cost in terms of labor.

• 39:56Alex Hormozi?

  Okay, so would I pay $90 to get somebody to do three sessions with me? That paid $500 for those three sessions? Well, that sounds like an incredibly qualified lead to me. And not only is it $90, it's $90 and no other work. I'm not making ads, I'm not running them and buying media, I'm not building landing pages, I'm not working leads, calling them, sending them, I don't have any of that. They already paid, they're gonna show. And so all I have to do is just have an easy handoff where they can just schedule them onto my calendar and then they've already paid, so the likelihood they show is fine, and the rest of it's automated. When that happens and then you make this offer, hey man, and you do that to 100 businesses,

• 40:41Alex Hormozi?

  there's a lot of businesses who are like, oh, I'm down to sell something for $500 and do no work. And there's something mental about, you don't split it with me. Just take all the money. It's a very different vibe. And so what ends up happening is they either use it as an upsell or they include it in their $1,000 thing and they put your thing in and they charge the $1,000 and give them the three massages. You don't care. Either way, you have a $90 cost of getting somebody who spent a lot of money and is perfectly qualified for whatever your next thing is. And so then you just do the math and say, okay, well, I know that I convert one out of three of these people, one of three, into my $2,000 thing.

• 41:26Alex Hormozi?

  Which means that my cost to get a customer here would be three times 90, which is $270. So would I pay $270 to get 2,000? Hell yeah, I would. And without any of the work? Of course. And this is how you build an affiliate model that gets you customers stupid fast and gets you affiliates who are trying to fill up your calendars because it actually makes sense for them now. So if you're gonna have affiliates, do it like you mean it. It has to be enough, it has to be incentivizing enough to change their behavior or it's useless. It's kind of like these coupon codes that I see people give out to influencers. It's like 10% off. It's like, who cares?

• 42:11Alex Hormozi?

  Like, either I'm gonna buy the jacket or I'm not. 10% is probably not gonna move the needle for me at all. Now, for me, discounts have to be 50% or higher, in my opinion, for a real change in behavior. We get a massive increase in demand. And so I don't want to take that off my main thing. I want to peel my main thing and then give 100% of that. And so this next one is truth. And you're like, what does that even mean? How is this gonna get me customers really fast? Well, lies will certainly get you customers pretty quickly, but it also ruin your reputation. So you want truth to be your greatest ally, not your greatest liability. Because I will tell you a secret about advertising. Nothing sells like the truth. And so, one, people talk about being authentic.

• 42:56Alex Hormozi?

  Well, if you want your advertising to be authentic, just say what's true. And what's interesting is that a lot of people won't tell the truth about the things that actually could help them. So like, if you're a small business and you're getting started, say so. If you don't have a huge amount of capacity because you're small, say so. Not having a lot of capacity increases scarcity. It means that there's fewer slots available. Not having a lot of capacity indicates that there's probably a high level of personalization and personal touch. Being a small business for many people is a pro. There aren't as many people who are like, "Buy big corporate, buy big corporate." No, people are like, "Buy local, buy small business." Right? That supports small business. And so like, a lot of what people think are negatives are actually things that make their offer

• 43:40Alex Hormozi?

  or their business more compelling, especially to the right audience. You want to arm yourself with truth and think about how many different things are true. And if you want to get really nasty with it, You want to tell the truth that also isn't as exciting upfront, so that when you sell your second piece of truth, they will then believe you that much more. So I'll give you an example. So I remember we had a location that had bad parking. And so we would say stuff like, listen, we don't have the biggest parking lot, or we're not the biggest gym in the neighborhood. You know, we don't have more equipment than the guys down the street. But you know what? When you walk in this door, you're going to forget about all of that, because you're going to have so much fun,

• 44:24Alex Hormozi?

  you're not even going to care. And so if you know that you're going to tell the truth, and that people are going to find out about this anyways, you might as well be the one who controls the narrative, and you can frame it in a way that that bad truth helps amplify your good truth. I obviously come from the fitness space, and so the examples that I think of are there, which is sometimes, you know, like one of the gym owners was not like super in shape. They'd be like, hey, I'm not the most in shape guy. But we have more fun at our gym, and people get great results, even though I like donuts a lot still. What happens is people are like, man, this guy's so authentic. And if you don't say it, they're going to think it. So you might as well account for it upfront.

• 45:08Alex Hormozi?

  Answer the why should I listen to you? Or what about this big flaring problem that I can obviously see? You want to control the narrative and make that thing into a weapon for you. Make it into an asset that serves your purpose, rather than something that casts doubt in the prospect. Because if you claim it, they like, I don't know why this works this way, but it's kind of like Eminem, when he said all the negative things in Eight Mile that anyone else could say about him, so no one else could say anything bad. It's like if you claim them, then people can't hold it against you. And the hardest thing in all of marketing is getting someone to believe you. And so everything that you can do to increase trust Is one of the best investments you can make in an advertising campaign in general, and ultimately in building a brand.

• 45:52Alex Hormozi?

  The truth isn't just a good strategy. It's the only long-term strategy. And it just takes people a different amount of time to realize it. And once you've activated affiliates, once you've given away crazy amounts of stuff for free, once you've doubled down on the right people who are high leverage in the position, once you've made the truth your ally and you put your negatives out in the marketing so that people believe the good stuff that you say, and you focused on doing more and doing better, you're going to start getting more customers than you can handle. And at that point, you're going to want to have a playbook for making so much money that it should feel illegal. If you want that scaling roadmap, it's personalized, it's free. You can just hit the link in the description and you'll find it. Hey, real quick, guys. I have no paid sponsors for my podcast, so be a bro and share the show,

• 46:36Alex Hormozi?

  or be a pal and tell your gals. Thank you.