From Alex Hormozi’s “100M Offers”
“As entrepreneurs, we make bets everyday. We are gamblers ― gambling our hard-earned money on labor, inventory, rent, marketing, etc., all with the hopes of a higher pay out. Oftentimes, we lose. But, sometimes, we win and win BIG. However, there is a difference between gambling in business and gambling in a casino. In a casino, the odds are stacked against you. With skill, you can improve them, but never beat them. In contrast, in business, you can improve your skills to shift the odds in your favor. Simply stated, with enough skill, you can become the house.” (p. 11)
“The greatest hitters of all time also have many strike outs, just as there are many failed offers in the track record of great marketers. We learn skills through failure and practice. We do this knowing that nine out of ten times we will be wrong. We still act boldly, hoping for that offer we connect with so well that it results in our big payoff. The good news is that in business, you only need to hit one Grand Slam Offer to retire forever. I have done this four or five times in my life. As for my track record, I have a 36:1 lifetime return on my advertising dollars over my business career. Consider this my lifetime “batting average,” if you will. That means for every $1 I spend on advertising I get $36 back, a 3600% return. That is my average over eight years. And I continue to improve.” (p. 13)
“No offer? No business. No life. Bad offer? Negative profit. No business. Miserable life. Decent offer? No profit. Stagnating business. Stagnating life. Good offer? Some profit. Okay business. Okay life. Grand Slam Offer? Fantastic profit. Insane business. Freedom.” (p. 30)
“The two main problems most entrepreneurs face and how this book solves them although you can make the list of problems you face a mile long, which is a great way to stress yourself out, all these problems typically stem from two big kahunas: 1) Not enough clients 2) Not enough cash (excess profit at the end of the month) Seems obvious, right? It costs more money and time to get more clients, thereby solving issue one, and that money is coming from the profit margins, which creates problem two! What’s more annoying, prospects savagely compare and belittle our services in favor of cheaper and crappier alternatives — with the cheapest one “winning.” This, of course, when “winning” means getting to work more for even less (sad face). Let’s say you’ve slashed prices to get more customers. You may even have a full client load. But here you are, barely making it because profit margins are too thin. “Competition” becomes a race to the bottom. If you’re struggling with one or both of these issues, you’re not alone. I’ve been there. Heck, I think every entrepreneur has these same challenges.” (p. 31)
“We use this offer model for every niche we work with (chiros, dentists, gyms, agencies, plumbers, roofers, dog walkers, physical products, software, brick and mortar stores, and so many more), and it’s amazing how fast things can improve with each and every one of them when they use this framework.” (p. 32)
“So, then, what does it take to grow? Thankfully, just three simple things: 1) Get more customers 2) Increase their average purchase value 3) Get them to buy more times That’s it.” (p. 39)
“Having a Grand Slam offer makes it almost impossible to lose. But why? What gives it such an impact? In short, having a Grand Slam Offer helps with all three of the requirements for growth: getting more customers, getting them to pay more, and getting them to do so more times.” (p. 42)
“Alright, let’s start by defining a Grand Slam Offer. It’s an offer you present to the marketplace that cannot be compared to any other product or service available, combining an attractive promotion, an unmatchable value proposition, a premium price, and an unbeatable guarantee with a money model (payment terms) that allows you to get paid to get new customers . . . forever removing the cash constraint on business growth.” (p. 43)
“Here’s the key takeaway from all this: a business does the same work in both cases (with a commoditized or a Grand Slam Offer). The fulfillment is the same. But if one business uses a Grand Slam Offer and another uses a “commodity” offer, the Grand Slam Offer makes that business appear as if it has a totally different product — and that means a value-driven, versus price-driven, purchase.” (p. 44)
“If you have a “commodity” offer, you will compete on price (having a price-driven purchase versus a value-driven purchase). Your Grand Slam Offer, however, forces a prospect to stop and think differently to assess the value of your differentiated product. Doing this establishes you as your own category, which means it’s too difficult to compare prices, which means you re-calibrate the prospect’s value-meter.” (p. 44).
“This is an example of a commoditized service — normal agency work. There’s a million of them, and they all look the same. Commoditized businesses and offers have a harder time getting responses from ads because all their marketing looks the same as everyone else’s. It’s reasonable, but it’s easily duplicated (and subject to commoditization). This commoditization creates a price-driven purchase . . . You are forced to be priced “competitively” to get clients and to stay that way to keep them. If the client sees a cheaper version of the “same thing,” then the value discrepancy will cause them to swap providers. This is a dilemma . . . lose this client, the rest of your clients, and potential clients, or stay “competitive.” Your margins become so thin they vanish. Furthermore, it’s hard to get prospects to say yes (and keep them saying yes) unless you’re hypervigilant about clients commoditizing your business by staying “competitive.” And that’s the problem with the old, commoditized way. They’re able to compare. Unless you switch to a Grand Slam Offer, your prices will keep getting beaten down. The business eventually dies, or the entrepreneur throws in the towel. No bueno.
We want to make an offer that’s so different that you can skip the awkward explanation of why your product is different from everyone else’s (which, if they have to ask, then they are probably too ignorant to understand the explanation) and instead just have the offer do that work for you. That’s the Grand Slam Offer way.” (p. 45)
“New Grand Slam Offer Way (Differentiated, Incomparable) (Value-Driven) Grand Slam Offer: Pay one time. (No recurring fee. No retainer.) Just cover ad spend. I’ll generate leads and work your leads for you. And only pay me if people show up. And I’ll guarantee you get 20 people in your first month, or you get your next month free. I’ll also provide all the best practices from the other businesses like yours. ● Daily sales coaching for your staff ● Tested scripts ● Tested price points and offers to swipe and deploy ● Sales recordings . . . and everything else you need to sell and fulfill your customers. I’ll give you the entire play book for (insert industry), absolutely free just for becoming a client.
In a nutshell, I’m feeding people into your business, showing you, exactly, how to sell them so that you can get the highest prices, which means that you make the most money possible . . . sound fair enough?” (p. 47)
“This is the exact Grand Slam Offer we used with our software business that serves agencies. The numbers can become wild . . . fast. I know 22.4x better sounds unreasonable, but that’s the point. If you play the same game everyone else does, you’ll get the same results everyone else does (mediocre). You hit singles and doubles, keep the lights on, but never get ahead. But remember the opening passage of this book: that when you align all the pieces, you can knock it out of the park so well that you win for good. In my first 18 months in business, we went from $500k/year to $28,000,000/yr off of less than $1M in ad spend. So, when I say 20:1 . . . 50:1 . . . 100:1 returns, I mean it.” (p. 49)
Pricing: Finding the Right Market- A Starving Crowd
“A marketing professor asked his students, “If you were going to open a hotdog stand, and you could only have one advantage over your competitors . . . which would it be . . . ?” “Location! ….Quality! …. Low prices! ….Best taste!” The students kept going until eventually they had run out of answers. They looked at each other waiting for the professor to speak. The room finally fell quiet. The professor smiled and replied, “A starving crowd.” You could have the worst hot dogs, terrible prices, and be in a terrible location, but if you’re the only hot dog stand in town and the local college football game breaks out, you’re going to sell out. That’s the value of a starving crowd. At the end of the day, if there is a ton of demand for a solution, you can be mediocre at business, have a terrible offer, and have no ability to persuade people, and you can still make money.” (p. 51)
“Let’s break it down. It wasn’t his product — that was great. It wasn’t his offer — he had a zero risk revshare model. It wasn’t his sales skills — he was a natural salesman. So, then what was the problem? He was selling to newspapers! His market was shrinking by 25 percent every year! He had looked at all the angles, except for the most obvious one. Finally, after years of fighting an uphill battle in his market, he realized his market was the source of his problems and decided to downsize his company.” (p. 52)
“There is a market in desperate need of your abilities. You need to find it. And when you do, you will capitalize, all while wondering what took you so long. Don’t be romantic about your audience. Serve the people who can pay you what you’re worth. And remember that picking a market, like anything, is always our choice, so choose wisely.” (p. 53)
“For example Lloyd, from the above newspaper story, could have gone through this entire book and nothing in here would have worked for him. Why? Because he would be targeting newspapers, a dying market. That being said, having a great market is an advantage. But you can be in a normal market that’s growing at an average rate and still make crazy money. Every market I have been in has been a normal market. You just don’t actually want to be selling ice to eskimos.” (p. 54)
“He just forgot a crucial point: your audience needs to be able to afford the service you’re charging them for. Make sure your targets have the money, or access to the amount of money, needed to buy your services at the prices you require to make it worth your time.” (p. 56)
“For instance, you may want to serve rich doctors. But if your ads are being displayed to nursing students, your offer will fall on deaf ears, no matter how good it is. Main point: you want to make sure you can target your ideal audience easily. (Clarifying point – there is no issue wanting to serve rich doctors, they are easy to find. This is just illustrative that your promotions must be served to the right audience).” (p. 56)
“Example #1: Even if you have a bad offer and are bad at persuasion, you’re going to make money if you’re in a great market. If you’re on the corner hocking hot dogs when the bars close up at 2am, with mobs of starving drunk folks, you’re gonna sell out your hotdogs. Example #2 (most of us): If you are in a normal market and have a Grand Slam Offer (great), you can make tons of money even if you’re bad at persuasion. This is most people reading this book. That’s why I wrote it — to help you maximize your success by learning to really build a Grand Slam Offer. Example #3: Let’s say you’re in a normal market and have a normal offer. In order to be massively successful, you would have to be exceptionally good at persuasion. Then and only then will you succeed, with your persuasive skills serving as the fulcrum of your success. Heck, many empires have been built by exceptional persuaders. It’s just the hardest path to follow and requires the most effort and learning. Nailing your offer helps you shortcut this path to success. Otherwise, you will just have a normal business that takes exceptional skill to be successful (nothing wrong with that, but probably not what you signed up for).” (p. 59)
“When I truly grasped how much more profit I was leaving on the table, it changed my life. It was what took me from doing acquisition for anyone to teaching it to a specific avatar. In my instance, I decided on a microgym owner with ~100 members, a signed lease, at least one employee, and wanted to help clients lose weight. That’s pretty specific compared to “small business owners” or “anyone who will pay me” which is common. And I was very specific. In that business (Gym Launch) – we turned down – and still do – anyone who is not that avatar. That means no personal trainers, no online coaches, etc.” (p. 61)
“Dan Kennedy taught me this (and it changed my life forever). Let’s say you sold a generic course on Time Management. Unless you were some massive time management guru with a compelling or unique story, it would be unlikely it would turn into anything significant. What do you think “yet another” time management course is valued at? $19, $29? Sure. Nothing to write home about. Let’s just say $19 for illustration sake. Now we shall unleash the power of niche pricing in various stages on your product So let’s imagine you make the product more specific, keeping the same principles, and call it “Time Management For Sales Professionals.” All of a sudden, this course is for a more specific type of person. We could tie their increase to even one more sale or one more deal and it would be worth more. But there are a lot of sales people. So this might be a $99 product. Neat, but we can do better. So let’s go down another level of niching and call our product…. “Time Management for B2B Outbound Sales Reps.” Following the same principles of specificity, now we know our sales people probably have very experienced deals and commissions. A single sale would easily net this salesman $500 (or more), so it would be easy to justify a $499 price tag. This is already a 25x increase in price for almost an identical product. I could stop here, but I’m going to go one step further.
Let’s just niche down one last level…. “Time Management for B2B Outbound Power Tools & Gardening Sales Reps.” Boom. Think about it for a second, if you were a power tools outbound sales rep, you would think to yourself “This is made exactly for me” and would happily fork over maybe $1000 to $2000 for a time management program that could help you achieve your goal. The actual pieces of the program may be the same as the generic $19 course, but since they have been applied, and the sales messaging could speak so much to this avatar, they will find it more compelling and get more value from it in a real way. This concept applies to anything you decide to do. You want to be ‘the guy’ who services ‘this type of person’ or solves ‘this type of problem.’ And even more niched ‘I solve this type of problem for this specific type of person in this unique counter-intuitive way that reverses their deepest fear.” That’s why a fitness program for generic weight loss might be priced at only $19 while a fitness program designed and marketed only to shift-nurses might be priced at $1997….(even though the core of the program is likely similar – eat less, move more). End Result: The market matters. Your niche matters. And if you can sell the same product for 100x the price, should you? I’ll let you decide.” (p. 62)
“If you try one hundred offers, I promise you will succeed. Most people never try anything. Others fail once, then give up. It takes resilience to succeed. Stop personalizing! It’s not about you! If your offer doesn’t work, it doesn’t mean you suck. It means your offer sucks. Big difference. You only suck if you stop trying. So, try again. You’ll never become world class if you stop after a failed attempt.” (p. 64)
“If I made you $239,000 extra this year, would you pay me $42,000?” I asked, using “$239,000” because it was the average increase in topline revenue of a gym using our systems for 11 months. “For sure,” he said, “I mean if I knew I was going to make that back. But what would I have to do?” “About 15 hours a week of work” “And how long would it take me to make the $239,000?” “Eleven months” “And how much of the $42,000 would I have to pay you up front?” “Nothing. Just pay me as you start making the money using the system” I watched it click. My dad got it. “Oh,” he said, “well then, yeah, I would do it.” (p. 68)
“In order to understand how to make a compelling offer, you must understand value. The reason people buy anything is to get a deal. They believe what they are getting (VALUE) is worth more than what they are giving in exchange for it (PRICE). The moment the value they receive dips below what they are paying, they stop buying from you. This price to value discrepancy is what you need to avoid at all costs. After all, as Warren Buffet said, “Price is what you pay. Value is what you get.” (p. 69)
“The simplest way to increase the gap between price to value is by lowering the price. It’s also, most of the time, the wrong decision for the business. Getting people to buy is NOT the objective of a business. Making money is. And lowering price is a one-way road to destruction for most — you can only go down to $0, but you can go infinitely high in the other direction. So, unless you have a revolutionary way of decreasing your costs to 1/10th compared to your competition, don’t compete on price. As Dan Kennedy said, “There is no strategic benefit to being the second cheapest in the marketplace, but there is for being the most expensive.” So the goal of our Grand Slam Offer will be to get more people to say yes at a higher price by increasing our value to price discrepancy. In other words, we will raise our price only after we have sufficiently increased our value. This way, they still get a great deal (think buying $100,000 of value for $10,000). It’s ‘money at a discount.’” (p. 70)
“But I know this isn’t easy, and it shouldn’t be. Your product must deliver. So many wish to shortcut the real work. Do that and you will fail. In the real world, to have the “gonads” to charge big ticket prices, you must outwork your self doubt. You must be so confident in your delivery, because you have done it so many times, that you know that this person will succeed. Experience is what gives you the conviction to ask for someone’s entire year’s salary as payment. You must believe so deeply in your solution that when you look at yourself in the mirror at night, alone, your conviction remains unshakable. So let me bring this section home with my personal experience.” (p. 76)
“First and foremost, charge a premium. It will allow you to do things no one else can to make your clients successful. We were able to charge a premium because we provided more value than anyone else in the industry. In a real way, we were charging on a fraction of what our clients made using our system. This is important. Our clients still got a deal. The gap between what they paid (price) and what they got (value) was massive. As a result, the virtuous cycle continued to spin. We charged the most money. We provided the most value. Our gyms remained the most competitive, made the most money, always had the latest and best acquisition systems, and had the support to implement them at lightning speed.” (p. 79)
How do you give someone value?
“the goal should be to charge as much money for your products or services as humanly possible. I’m talking heinous amounts of money. That being said, anyone can raise their prices, but only a select few can charge these rates and get people to say yes.” (p. 81)
“Those who understand value are the ones who will be able to charge the most money for their services. The good news is that there is a repeatable formula that I have created (I’ve never seen it displayed elsewhere) to help quantify the variables that create value for any offer. I call it The Value Equation. Once you see it, you can never unsee it. It will operate in your subconscious, running in the background, calling out to you. It’s a new lens through which to see the world.
Here is the formula:
Dream outcome x Perceived likelihood of achievement/Time delay x Effort and Sacrifice= Value”
(p. 82)
“The best companies in the world focus all their attention on the bottom side of the equation. Making things immediate, seamless, and effortless. Apple made the iPhone effortless compared to other phones at the time. Amazon made purchases with a single click of a button and made purchases arrive almost immediately (maybe by the time you read this, they’ll be sending drones to our doors within 60 minutes). Netflix made consuming television immediate and effortless. So, the older I get, the more I have shifted my focus to “the hard stuff” — decreasing the bottom side of the equation. And I believe the better you do this, the more you will be rewarded by the marketplace.” (p. 84)
“That being said, when comparing two products or services that satisfy the same desire, the value from the dream outcomes will cancel out (since they are the same). It will be the other three variables that drive the difference in perceived value, and ultimately price. For example, if we have two products or services that both help make someone beautiful, it will be the likelihood of achievement, time delay, and effort required that will differentiate the perceived value of each offer. Simply put: if two things make someone beautiful, what makes one worth $50,000 and another $5? Answer: The extent of the other three value variables.” (p. 90)
“Math problems are convergent. There are lots of variables and a single answer. We are taught all our lives in school to think this way. That is because it’s easy to grade. But life will pay you for your ability to solve using a divergent thought process. In other words, think of many solutions to a single problem. Not only that, convergent answers are binary. They are either right or they are wrong. With divergent thinking, you can have multiple right answers, and one answer that is way more right than the others. Cool right? Here’s what life presents us for divergent thinking: Multiple Variables, Known & Unknown, Dynamic Conditions, Multiple Answers.” (p. 104)
“Every offer has building blocks, the pieces that when combined make an offer irresistible. Our goal is to use a divergent thought process to think of as many easy ways to combine these elements to provide value.” (p. 107)
“I even tried getting people to start for free. They said they wouldn’t bother because $99/mo afterwards was still too much, and they didn’t want to start something they wouldn’t continue with. It’s a new level of frustration when you can’t even give your services away for free to people. I felt worthless, and I didn’t know what to do.” (p. 108)
“Again, this theme of “making an offer so good people would feel stupid to say no” kept re-appearing. But this time, remembering what TJ had told me, I decided to go all in on this concept, rather than just do what everyone else was doing. But how? Everyone else was selling $99/mo bootcamps. How was I going to compete? So I decided to look at what we did differently. I thought — what do they really want? No one wants a membership; they want to lose weight.” (p. 109)
Step #1: Identify Dream Outcome
“I had heard of weight loss challenges, so I started there.
Lose 20lbs in 6 weeks. Big dream outcome – lose 20lbs. With a decreased time delay – 6 weeks. Note: I wasn’t selling my membership anymore. I wasn’t selling the plane flight. I was selling the vacation. When you are thinking about your dream outcome, it has to be them arriving at their destination and what they would like to experience.” (p. 108)
Step #2: List Problems
Next, I wrote down all the things people struggled with and their limiting thoughts around them. When listing out problems, think about what happens immediately before and immediately after someone uses your product/service. What’s the “next” thing they need help with? These are all the problems. Think about it in insane detail. If you do, you will create a more valuable and compelling offer as you’ll continually be answering people’s next problem as it manifests.. So, let’s go ahead and list out the problems from a prospect’s perspective as you think about them. What points of friction exist for them? I like to think in the sequence that the customer will experience each of these obstacles. Again, channel insane detail (the more problems the better!) (p. 109)
“So, to recap, just list out each core thing that someone has to do. Then think of all the reasons they wouldn’t be able to do it or keep doing it (using the four value drivers as a guide). Now we get to the fun part: turning problems into solutions.” (p. 112)
Step #3: Solutions List
“Now that we have our dream outcome and all the obstacles that will get in someone’s way, it’s time to define our solutions and list them out.” (p. 112)
“Once we have our list of solutions, we will operationalize how we are actually going to solve these problems (create value) in the next step. And I want to be 100 percent clear. You will solve every problem. We’ll explore how together, in the next step.” (p. 113)
How to make your Grand Slam Offer.
“That being said, if this is your first Grand Slam Offer, it’s important to over-deliver like crazy. Maybe flying out isn’t such a bad idea in the beginning. Make some sales, then think about how to make it easier for your clients. You want them to think to themselves, “I get all this, for only that?” In essence, you want them to perceive tremendous value.” (p. 118)
“I have always lived by the mantra, “Create flow. Monetize flow. Then add friction.” This means I generate demand first. Then, with my offer, I get them to say yes. Once I have people saying yes, then, and only then, will I add friction in my marketing, or decide to offer less for the same price.” (p. 119)
“Practicality drives this practice. If you can’t get demand flowing in, then you have no idea whether what you have is good. I’d rather do more for every customer and have cash flow coming in, then optimize my business but have zero cash flow coming in after (and zero idea about what I need to adjust to better serve my customers).”
“Here’s a perfect example to drive this home. When I started Gym Launch, gym owners reached out asking me to help. They needed so much help, I didn’t know where to start. But I wanted to make sure they got way more than they paid me. So here’s what I ended up doing to fill their gyms: I would fly out to their gym for 21 days, spend my own money on hotels, car rentals, eating out, advertising, generate the leads, work the leads, then sell for them. I would even do the first onboarding meeting with clients to get them started. In short, I did everything. I took on all the risk. They only had to put down $500 to “reserve” their date, which I made refundable at the end of their launch. So they had 0 financial risk, 0 time risk, 0 effort, and the deal was, I got to keep all the up front cash collected from selling their services, and they got clients for free. You can imagine how this was a pretty compelling offer. On my own, I was able to sell about $100,000/mo in upfront cash for myself. So these deals were very lucrative for me. Over time, I scaled that to a team of 8 guys selling every month. But this began to wear on me and the team. It was at that point that I realized that if I were to simply teach them how to do what I did, I could charge maybe a third of what I would normally make, but I would be able to help hundreds of gyms a month instead of eight. And, I could do it all sleeping in my own bed every night. My promise was fundamentally the same: I will fill your gym in 30 days. It was simply the how and what I did that changed. The how and what is what we are breaking apart.” (p. 119)
“When talking to business owners about their model, I tell them to create cash flow by over-delivering like crazy at first. Then use the cash flow to fix your operations and make your business more efficient. This revision process can be pretty seamless. You may not even have to change what you offer. You may just end up creating systems that create the same value for the customer but cost you significantly less resources.” (p. 119)
“For the purposes of keeping creativity high (divergent thinking), think about anything you could possibly do. Think of all the things that might enhance the value of your offer. So much so that they would be stupid to say no. What could you do that someone would immediately say, “All that? Seriously? Yes, I’m in.” (p.121)
“Example: Let’s say I moved in with someone and did their shopping, exercising, and cooking for them. They would probably believe they would definitely lose weight. But I am not willing to do that for any amount of money short of a gazillion dollars. The next question becomes, is there a lesser version of this experience that I can deliver at scale? Just take one step back at a time until you arrive at something that has a time commitment or cost you are willing to live with (or, obviously, massively increase your price so it becomes worth it for you — i.e., the gazillion dollars to live with someone). If there’s one type of delivery vehicle to focus on, it’s creating high value, “one to many” solutions. These will be the ones that typically have the biggest discrepancy between cost and value.
For example, before I started my first gym, I had an online training business. I created a small excel sheet application that after inputting all of someone’s goals, automatically generated over 100 meals perfectly suited to their macronutrient and calorie needs. Better yet, depending which meals they selected, would tell them what they needed to buy at the grocery store in exact amounts, and how to prepare them in bulk for their exact amounts. It took me about 100 hours to put the whole thing together. But from that point going forward I sold truly personalized eating plans for very expensive prices, but they only took me about 15 minutes to make. High value. Low cost. These types of solutions require a high, one-time cost of creation, but infinitely low additional effort after. (FYI – This is exactly why software becomes so valuable). That doesn’t mean you don’t ever want to do something in a small group or one-on-one model. After all, I do 1-on-1 with all of my portfolio company CEOs that we help scale past $30m+. You just want to make sure you save those high cost items for big value adds only. If you think you can accomplish the same value with a lower cost alternative, then do that instead.” (p. 127)
Step #1: We figured out our prospective client’s dream outcome.
Step #2: We listed out all the obstacles they’re likely to encounter on their way (our opportunities for value).
Step #3: We listed all those obstacles as solutions.
Step #4: We figured out all the different ways we could deliver those solutions.
Step #5a: We trimmed those ways down to only the things that were the highest value and lowest cost to us. All we have to do now is…
Step #5b: Put all the bundles together into the ultimate high value deliverable.” (p. 129)
“We went through this entire process to accomplish one objective: to create a valuable offer that is differentiated and unable to be compared to anything else in the marketplace. We are selling something unique. As such, we are no longer bound by the normal pricing forces of commoditization. Prospects will now only make a value-based rather than a price-based decision on whether they should buy from us. Hoorah!” (p. 133)
How to use Scarcity to sell.
“Scenario one: We sell 10 units at $500 each (sell entire pyramid at price all say yes) Scenario two: We sell two one-day workshops 1-on-1 for $5000 each. (skim top of pyramid, with 80 percent not purchasing) (p. 141)
“1) Use scarcity to decrease supply to raise prices (and indirectly increase demand through perceived exclusiveness) 2) Use urgency to increase demand by decreasing the action threshold of a prospect. 3) Use bonuses to increase demand (and increase perceived exclusivity). 4) Use guarantees to increase demand by reversing risk. 5) Use names to re-stimulate demand and expand awareness of my offer to my target audience.” (p. 144)
“So there are two components to the value: first, how rare the sources are; second, the actual value being provided. The value and rarity compound to create some truly breathtaking profits. Specialized consultants are paid millions of dollars to solve problems worth tens of millions to clients. The client pays for all the experience and expertise the expert has and avoids the cost of errors (time and money). In short, they skip the bad stuff and go straight to the good stuff more quickly and for less money than it would cost to figure it out on their own . . . a beautiful economic exchange.” (p. 147)
“I’ll start with the buyer. If I have a rare problem, and I must solve this problem for my own pursuit of happiness, it will consume all of my attention. By the nature of my problem being specialized, there will be very few people who can solve it. This means there is not a large supply of solvers. In many cases, I will perceive only one possible “solver” (Supply = 1).” (p. 147)
“Beyond that, if solving this problem speeds up my achievement of a goal by a year or two, or immediately results in me making hundreds of thousands of dollars, or millions of dollars, that solution becomes far more valuable, does it not? Of course it does. And so, it would follow, if I can pay someone $50,000 for a day of their time, and see an increase of $500,000 per month in revenue within three months because of the insights and strategies revealed, that would be a helluva return on investment, right?” (p. 147)
“I personally experienced this for the first time when I had two different people offer me $50,000 for a day of my time after speaking at an event. They were scaling an education business in a niche (not too dissimilar from my own) and could not get past the $1M per month mark. As someone who was doing $1M per week in the same business type (at the time), I was a very specific type of person with the keys to their problem. So what happened, you ask? Drum roll . . . I didn’t accept their offers. Why? Because I was making more than $50,000 per day in profit from my business and didn’t want the distraction.” (p. 148)
“Having limited releases is a tried and true method of using this psychological bias to your advantage. You can have limited releases for flavors, colors, designs, sizes, etc. “This month, we are releasing 100 boxes of mint chocolate cookie flavored protein bars.” Important point: to properly utilize this method you should always sell out. Here’s why: it’s better to sell out consistently than over order and fail at creating that scarcity. This method stacks in effectiveness if it is done repeatedly over time (just not too often). Once a month seems to be the sweet spot for most of the companies that I know who do this with regularity. Second Important Note: When using this tactic, you must also let everyone know that you sold out. That is part of what makes it work so well. This way, even people who were on the fence, when they see that it was sold out, it gives social proof that other people thought it was worth it. And now that the choice has been made for them, they desire it more because there is no way they can get it. So the next time you make the offer they will be far more likely to take you up on it.” (p. 150)
a) This is like saying “My agency only will service twenty-five customers total. Period.” Over time you can increase your prices and squeeze the lower performing accounts out and bring in new more profitable accounts, or, you can periodically ‘open slots’ as your capacity allows (always leaving some demand unmet).” (p. 152)
“We only accept 5 new clients per week and we already have the first 3 spots taken. I have 6 more calls this week, so you can take the spot or one of my next calls can and you can wait until we reopen.” (p. 152)
“Example: “We take on 100 clients 4 times a year. We open the doors then close them.” Etc.” (p. 152)
“The easiest scarcity strategy is honesty. Wait, what? Let me explain. I’m sure right now, you probably couldn’t handle 1,000 clients tomorrow right? But how many could you handle? 5? 10? 25? Well, you might as well define a number that you are willing to take on in a given time period, then advertise that. Simply letting people know that you are three-fourths of the way to capacity this week will move people over the edge to buying from you. Or letting people know that you are 81% to capacity in your total business, will make people more likely to sign up with you “before they lose the chance.” (p. 153)
How to give Guarantees.
“From an overarching perspective there are four types of guarantees: 1) Unconditional 2) Conditional 3) Anti-Guarantee 4) Implied Guarantees. You must always hit your guarantee hard, even if you don’t have one. Say it boldly and give the reason why.” (p. 172)
“Bad Example: We will get you 20 clients guaranteed. Better example: You will get 20 clients in your first 30 days, or we give you your money back + your advertising dollars spent with us. This is a simple, but strong guarantee.” (p. 174)
“You can also stack two conditional guarantees around different (or sequential) outcomes. For example, you’ll make $10,000 by 60 days, $30,000 by 90 days as long as you do things 1, 2, and 3. This future paces the prospect into an outcome they now believe is far more likely (since you will be deliberately spelling it out in a conditional guarantee with a timeline for achievement). Doing this shows the prospect you are serious about getting them results and convinced that they will achieve what they want. This shifts the burden of risk back from them onto us…a very powerful strategy.” (p. 176)
“What the Client Gets: If at any time they’re not satisfied with the level of service they’re receiving from you, they can request a refund (at any time) for the program. My Take: Believe it or not, this was my guarantee when I sold weight-loss programs. Besides being an irresistible offer, I guaranteed satisfaction. I used the strength of my guarantee to close a lot of deals. “Do you think I’d still be in business if I gave a crazy guarantee like that and wasn’t good at what I did? Now I’m not guaranteeing you’re going to hit this goal in six weeks, after all, because I can’t eat the food for you. But I am guaranteeing that you will get $500 worth of value and service from us to support you. If you don’t feel like we gave you that level of service, I’ll write you a check the day you tell me we suck.” (p. 178)
“Satisfaction/No questions asked is the highest form of guarantee. It means we could do everything right and you could still ask for your money back. As long as you know the math, you will typically make up for the refunds in spaces with higher and faster closing on the sales side. But you have to be good at fulfilling your promises. If not, steer clear. I believe this offer works much better in lower-ticket situations. It becomes very risky as you go into higher-ticket services with higher costs of fulfillment.” (p 179)
“A world class affiliate marketer Jason Fladlien (who did $27M in a single day) recently used an amazing guarantee for a course he sold. He said “if you buy this course and spend $X on advertising your ecommerce store using the methods herein, and don’t make money, I will buy your store from you for $25,000 no questions asked.” He claimed that an additional $3M in sales came from this crazy guarantee on a $2997 course. What’s more, he only gave 10 of these $25,000 refunds out. So the refund generated $2.75M in extra sales. That’s what a crazy guarantee does for you.” (p. 180)
“[Conditional] Service Guarantee What the Client Gets: You keep working for them free of charge until X is achieved. My Take: This is probably my personal favorite guarantee of all time. It essentially guarantees they will achieve their goal, but it eliminates the element of time. You are never at risk for losing the money. The guarantee is around the outcome. To add further flavor to it, you can make this guarantee conditional on them doing key actions linked with success: setting up a web page, attending calls, showing up to workouts, weighing in, reporting data, etc. Real Talk: Since I have been advising businesses to use this particular guarantee, I have yet to have a single person say a client took them up on it. Realistically, if someone actually does everything you asked them to do and doesn’t achieve the result by the time you had said, one of two things usually happens: 1) Seeing your client’s commitment, you happily keep working with them until they achieve the desired result 2) It gets dropped. Your client is likely very close to the goal, which means satisfied. Also, it’s likely the sales conversation with the guarantee was months earlier. What may have been important in the sales conversation is a distant memory now, replaced by their affection towards you/your business.” (p. 181)
“What The Client Gets: If you do not perform, they do not have to pay. If you perform, your compensation has been determined based on an agreement decided upon before you begin working.” (p. 186)
“I have personally used all the guarantees listed above (except for the hotel and phone call one, which I just saw and liked). But you can come up with your own! The key is to identify a client’s biggest fears, pain, and perceived obstacles. “What do they not want to have happen if they pay you? What are they most afraid of?” Reverse their fears into a guarantee. Think of the time, emotion, and outside costs associated with any program or service. The more specific and creative the guarantee is, the better. That being said, guarantees are enhancers. They can enhance the magnetism or attraction of any offer, but they cannot make a business. If a guarantee is used to cover up a poor sales team or a poor product, it will backfire into lots of refunds. No bueno.” (p. 187)
How to create bonuses.
“You’ll also notice that if you watch those old infomercials, they would sell one knife for $38.95 then include 37 other knives, sharpeners, pans, and guarantees to beat the prospect into submission. They establish the price, then they expand upon it until you feel it’s such a good deal it would be stupid to pass it up. The reason this works is we are increasing the prospect’s price-to-value discrepancy by increasing the value delivered instead of cutting the price. We anchor the price we tell them to the core offer. Then with each increasingly valuable bonus, that discrepancy grows wider and wider until it’s too big to bear and we snap the rubber band in their mind that is holding their wallet in their pocket.” (p. 163)
“You can get other businesses to give you their services and products as a part of your bonuses in exchange for exposure to your clients for free. This is free marketing for them, and high value products for you at no cost.” (p. 167)
“Now if my offer was $400, then the value of these free bonuses ALONE is worth more than the $400. As if that weren’t already awesome enough, if you really want to be a jedi, negotiate a group discount and a commission to yourself.” (p. 168)