Marketing Secrets with Russell Brunson - How To Increase Your Tips (And Your Profit Margins)

Episode Date: June 30, 2017

What was going through my mind when tipping at IHOP. On today's episode Russell talks about going out to breakfast with his daughter for her birthday and how watching the server work so hard to make a small wage made Russell wonder why he didn't work somewhere that he could make more money, and how that relates to being an entrepreneur. Here are a few interesting things in this episode: How Russell would increase his ticket sales if he were still a server. How waiters increasing ticket sales relates to being an entrepreneur. And why if you can't be the cheapest in your industry, you should be the most expensive. So listen to Russell's awesome advice on how to increase your ticket sales and make more profit for yourself. Transcript - https://marketingsecrets.com/blog/how-to-increase-your-tips-and-your-profit-margins Learn more about your ad choices. Visit megaphone.fm/adchoices

So, the big question is this, how are entrepreneurs like us, who didn't cheat and take on venture capital, who are spending money from our own pockets, how do we market in a way that lets us get our products and our services and the things that we believe in out to the world and yet still remain profitable? That is the question and this podcast will give you the answers. My name is Russell Brunson, and welcome to Marketing Secrets. What's up, everybody? This is Russell, and welcome to Marketing Secrets.

While I'm in my car. Oh, this is a flashback from podcasts earlier. Anyway, I'm doing this right now because, well, first off, I hung out with Justin Williams last week, and he yelled at me saying, you used to do podcasts every single week and now that are like three, four times a week, but now you're not in your car, you're not doing them very often. So I was like, crap, that's right. Anyway, I'm driving to get my haircut today cause it's huge and

I figured out how to mount this thing on my car so I can do it while driving so nobody yells at me. This is what actually happened. I had all a bunch of you guys, I was doing the podcast with the phone, with the camera. When I'm parking a car with just my phone, nobody ever yelled at me, but they saw me on video. I got yelled at by everybody. So I stopped doing it that way. But now that's mounted up, I can just drive and talk and not even pay attention to you guys. So no yelling at me. All right. That's the deal. All right. So that said, today's a cool day for a couple of reasons. Number one, it's my daughter's 10 year old birthday, which is insanely cool. Uh, and so, uh, this morning I'm actually flying out today. So this morning I had a chance to go and, um, actually take her out to breakfast. And so

her, her breakfast of choice was IHOP. And I was like, come on, we can take you to like waffle me up or any of these like really cool places. And she's like, no, I want IHOP. And I was like, anyways, we're driving there. It's funny. I'm like, there's only two kinds of people that like IHOP, Ellie. She's like, well, who are they? I'm like, grandmas and little kids. And I was like, watch when we get there how many grandmas are there. So we got in there and we counted. And there was like, I don't know, like 13 or 14 grandmas in there.

And then me and her. So I was like, that's it. Anyway, it was kind of funny. So anyway, that was really fun. And then she had a birthday party. So I went and we got her a bike this morning. And then she went back to the birthday party. And then I'm actually getting my hair cut because I'm about to fly out to Utah.

Because I got two cool things happening in Utah. Number one is the Harmon Brothers are making our viral video. And they actually started filming it today. And to be completely honest, it's kind of killing me. I wish I was there. I want to be watching it. But I couldn't today. So I'm flying down there tomorrow to catch some behind the scenes

footage and all that kind of stuff for our Funnel Hacker TV show. So I'll be flying down there, which is going to be really cool. And the second cool thing is I'm actually going to a meeting with Timothy Ballard, who is the dude who runs Operation Underground Railroad, which is I guess it's a charity

or organization, I don't know exactly what it is, but they help save kids who have been abducted and put into sex slavery. And so we're going to be helping build funnels and helping grow that whole mission. So I'm really, it's a passion project I'm really excited for.

So that's what's happening on this trip. So if you're watching Funnel Hacker TV, you'll see behind the scenes of that stuff. If not, go to funnelhacker.tv and go hang out with us over there too. There's a lot of fun stuff happening. So, all right, my message though for you guys today. And this is something that I don't know why more people don't think about this.

But it's important. So, we went to IHOP today. As you know. As you now know. And my daughter ordered the pancake with the fluffies and the sprinkles. There's sprinkles on it and bacon and an egg, right? Her cost is like three bucks or something like that. And then I go and I ordered, um, scrambled eggs, side of bacon, side of avocado, cause that fits in my macros for all you healthy

nerds. And, uh, so our, our bill was like 12 bucks, you know? And I look at the server and servers running around, I grabbed our stuff and his and grabbing waters grabbing A1, because I love putting A1 on eggs. If you haven't tried it yet, it's insanely good. I did it one time because I had bacon and eggs, or excuse me, steak and eggs, and I put A1 on the steak, and some of it spilled on the eggs, and I ate it that way, and I was like, this is an egg topping, not for steak, so if you haven't had steak and A1 on your scrambled eggs yet,

you should totally try it, it's amazing. Anyway, I digress. So, where was I going with this whole thing? Oh yeah. So the server's running out of frantic. Uh, I get the bill at the end of it and I look at it and it's like, well, 1243 or something. And I was like, all right. So as someone who tips and I'm a good tipper, so I didn't tip him that much. I left a lot more money than that. But if I was to say, okay, well 10% of that means you're in a buck, what, $25? $1.25 was what he made from me for all his efforts. Or if I do 15%, it's like, what, two bucks? If I do 30%, it's

like three. And so that's what most people do, especially the grandmas that are IHOP. They have their little calculators out. They're figuring out, okay, I owe him $1.13. And they give you exactly the tip. And if you're bad, they're going to give you 5%. If you're okay, I owe them $1.13, and they give you exactly the tip. And if you're bad, they're going to give you 5%. If you're okay, you get 10. If you're great, you get 15. But that's how it works. And I'm looking at this, and the server was a young dude. I'm like, man, he's killing himself for this little thing, right?

And I was just in the office before I headed to get my haircut, which is why I'm stuck in traffic. My haircut's in three minutes, and I missed it. I'm going to go crazy. Anyway, so I was just talking to them. I was like, look, if that dude, instead of getting a job at IHOP where the average ticket is like 12 bucks, if you're doing the same work but got a job at a steakhouse or sushi place where the average ticket's like 50 or 100 bucks, he'd do the exact same amount of work and get way more money, right? Because it's just

people tip off of a percentage. So if my bill is 12 bucks, you're getting $1.20, if it's 10%, right? If it's 112 bucks, you're getting $10, whatever math is on that, right? By doing the exact same amount of effort. So the moral of the story is like, if you're serving tables, like go and sell more expensive stuff because you're getting paid a percentage of, of the, the, of the, the ticket price. Right. So you got to sell the most expensive thing. That's why, um, as a Mormon, like when I go and I go to restaurants and they always, uh, they always try to sell you alcohol, right? Cause alcohol is huge, huge profit margins, big ticket. And, um, they get you to buy a lot more stuff. And so we never buy the alcohol. And so they, and those other Mormons are out there know that like, if you're in a nice

restaurant and you don't order alcohol, they don't treat you as good because they're like, ah, crap. So I always tell people when they ask me, they ask me, what do you want to drink? I'm like, oh, we don't drink, but don't worry. We tip really, really good because I want them to know. Cause I don't want them to be like, treat me like crap because I didn't drink because my ticket price is going to be smaller. Right?

Like good servers understand that. And so I warned them ahead of time, like I'm a really, really good tipper. Like I tip 30, 40, 50%, sometimes a hundred percent. Like I'm a great tipper as long as you treat me good. If you treat me bad, like I'm still a good tipper, but like I'm a great tipper if you treat me good. Right. And so, um, uh, anyway, so, so kind of the, the thought is like for, if you're serving tables, it's like you gotta be selling the highest ticket thing. And if I was serving tables again, which the only job I is like if you're serving tables, it's like you got to be selling the highest ticket thing. And if I was serving tables again, which the only job I've ever had for real was serving tables, and I really, really, really liked it, right? But it's all about like that, like ticket price, right?

So if I was a server today, I would have people order dessert first because most of the time at the end of the meal, you're not hungry anymore, right? So you're not hungry anymore. You're not going to buy dessert. And so my ticket price went down. So my tip just shrunk. So I'd be going ahead time. Like, look, um, you know, a lot of people, um, in the middle, they're, they're full or whatever. Like I'm gonna give you 10% discount if you order dessert first. And I would do that because it would increase my ticket price. Right. Cause everyone wants dessert when you go in, but when you're, when you're offered it, it's hard to eat it because you're typically so full. Right. Number two, think about, um, uh, Olive Garden started

doing this a little while ago and it was brilliant. Um, after you get an eating, right? Number two, think about Olive Garden started doing this a little while ago and it was brilliant. After you get done eating, they say, hey, what would you like to order for tomorrow? And they had a second meal, so you order a second meal to take home and eat the next day. Like now you just doubled your ticket price

because you sold them two meals instead of one. Like if I was serving tables today, that's the first thing I would be doing is offering them dessert, then I take their meal, and then at the end of the meal, I'm like, that was good, huh? How'd you, like, I know you guys aren't gonna come back tomorrow, but if you want, you can order off

the menu right now, and I'll go package it up, and then you can have this tomorrow as well. And I don't know what percentage would take it, but I know there's a big percentage that take the second meal. And so now I just double my ticket price, and the tip of me, based on the ticket price, not on what I ate while I was sitting there. And so I'd be thinking, like, increased value, increased value, how can I increase my ticket, right?

So that's if I was serving tables again. Now, obviously I'm not serving tables. I'm serving entrepreneurs and a lot of them. But guess what? I'm thinking the same thing. It's the same stuff, right? I know I get paid based on a percentage of what our growth is.

Like as the entrepreneur in the company, the way that I make my money, I do have a salary because I think you legally have to do that and however that works so that you can do all the W-2s and all that techie nerdy tax stuff. But then the rest of my payment comes from a percentage of profit share, right? So the more profit, the more I get to share. So I'm always thinking like, well, how can I increase my profit share? How can I decrease costs? How can

I increase the ticket values? How can I sell more expensive stuff? How can I sell more things? And that's what my mindset is because I know that I get paid a percentage of what I get people to consume. So I need to get people to consume, right? Uh, same way you do if you're a restaurant. And what's interesting is a lot of times speaking to you right now, probably, um, most of us, we undervalue what we do, right? We start, we try to be like the discount leader because, um, because that's what, that's what, uh, we're used to doing. And so like a lot of times, like we, sometimes we put like our own pricing values on other people.

So like, Oh, I wouldn't pay a thousand dollars for this. So you won't sell for a thousand. It's like, no, you don't understand. Like that's worth that to somebody else. Like don't, don't try to discount your prices. Um, and so a lot of times that's what we do is we try to discount our prices. We try to like lower ticket. And so like, we're trying to like go back to IHOP and sell, even though we know that the money that we make as entrepreneurs is based on the ticket price,

right? So the bigger the ticket price, the bigger money you make. I've said this before, and I'll say it again. Dan Kennedy once told me this. He said, he said that, um, there's no strategic advantage to be the second, uh, second lowest price leader, um, in your market, right? So if you can't be Walmart, there's no strategic advantage of being like, Hey, Walmart's the cheapest. We're number two. We're the second cheapest. Cause then you're like an idiot. There's no strategic advantage whatsoever, but there is a huge strategic advantage being like, I am the most expensive guy in the market. Okay. So if you can't be the lowest, then be the most, don't be the dudes in

the middle. Uh, because there's no, like, it just doesn't work that way. So I want you guys thinking about that, okay? Because you as entrepreneurs, you're just like a server. You're serving customers, serving audiences, and you get paid based on the ticket price of what people are spending. That's why funnels are important, okay? If I just sold people my free book and that was it, guess what I would be right now? I'd be broke, okay? I did a Facebook live yesterday showing the three funnels we had inside of our book launch. Now when all of a sudden done, our book launch is over, we did over $3 million in, in collected revenue. Now obviously it wasn't net, but that was collected gross.

What was funny is I look at all these people do these big, huge product launches, like two, three, $5,000 product launches. And most of them are happy to make a million to $3 million. I'm like, we did the same thing and we were giving away a free book. Okay. How it's because I'm just like the server, right? Like I offered dessert first and I had upsells. I offered him a second meal. I did all these kinds of things, um, because I'm trying to increase the ticket price. Cause that's how I get fed as an entrepreneur. Plus it gives me the ability to serve, um, that audience better. Okay. The, the waiter that brings you, lets you order dessert ahead of time. So you still get it. The server lets you order food and take it home, he's serving you at a higher level.

That's why he gets paid more. He knows how to increase the ticket price, but he's able to, first off, make the restaurant more revenue, but second off, he gives you a better experience. You now have a great meal twice. Your wife doesn't have to cook tomorrow, or whatever that might be, or maybe it's you cooking, whatever. But it all comes down to that.

So, anyway, that's the moral of today's story. I hope that helps some of you guys. I'm sure some of you guys are all freaking out, trying to be the cheapest possible person, and it doesn't always work that way. Obviously, you've got to look at what the market will bear, but like I said, it's way better, typically, to be the most expensive than the cheapest.

So there you go. All right, I'm here, I'm getting my haircut, I'm only four minutes late. Hopefully she didn't cancel my appointment because I gotta get rid of this thing before I jump on the plane. I'm gonna be super embarrassed. So, thanks everybody for listening.

If you would like to see the video version of this, go to marketingsecrets.com and you can watch the videos there. Or if you're watching the video version, go over to iTunes, subscribe to the podcast and you can get, what, like 360 or 70 episodes now. So come hang out with us there. A lot of fun stuff happening, a lot of things you missed. I want to make sure you get. So that said, thanks everybody. And we'll talk to you soon. Bye.

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