The Game with Alex Hormozi - 3 Questions To Ask Yourself For Product And Service | Ep 561

Episode Date: July 11, 2023

"If it's not going to grow on its own over time, it's not worth doing." Today, Alex (@AlexHormozi) talks about the importance of creating a product or service that is valuable enough to generate word-of-mouth referrals and compound growth over time. He suggests three questions to ask oneself when evaluating a product or service in order to improve its value, profitability, and customer experience.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 on his path from $100M to $1B in net worth.Timestamps:(1:11) - Small entrepreneurs get customers to make sales(2:44) - Q1: How to create the most value in the product itself?(4:13) - Q2: If it were one-tenth the cost, what else to make it better?(4:26) - Q3: What experience makes the customer a raving fan?(6:40) - Word of mouth is the most powerful and compounds(8:13) - The ultra-wealthy compounding everything they doFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was August 19, 2021)

That is what creates an enduring thing. And that is what, when you spend the extra time to make the product so good that people have to tell their friends about it, then that's where you get the ending scale. And also is where all the profit is, right? Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with Acquisition.com. I always wished Bezos, Musk, and Buffett had documented their journey. So I'm doing it for the rest of us.

Please share and enjoy. Right now, if you're not making the amount of money that you want to make, it's because the product that you have is not good enough. And it's really hard to confront that fact. But if you really do and sit here, I can't tell you the amount of times I talk to entrepreneurs. And they're like, man, if I just had more people, if more people would just find out about my product, then all my problems will be solved. But the reality is that if you have any amount of customers, then people already have found out about your product. And for one reason or another, they have chosen not to tell anyone else about it. And you have to sit with that for a second. You have to realize

that people have found out about your product and they're not referring people. And you have to ask why. why are these people not sending me business? And so one of the first times I heard a statement that I really liked about this was from Dan Kennedy and he said, most small entrepreneurs try and get customers to make sales. Bigger entrepreneurs try to make sales to get customers. And the difference is one person is all about trying to get to the money as fast as possible. What do I need to say to get this person to say yes? What do I need to say to get this person to buy, right?

How do I get the money, right? the other way is how do I make some sort of exchange so that I can now create a long-time relationship with this customer and continue to provide value over time. One has a compounding view and perspective on time and value and the other is short-sighted. And I can tell you the difference between the people who are millioners that I have that I'm friends with and people who are billionaires that I am friends with. This is probably one of the most fundamental differences. And so I was talking to a friend of mine who's worth a rebellion and he was saying, he said, if it's not going to grow on its own over time, it's not worth doing. And I really sat with that for a

second. And it was like if you put in a one-time effort, like this is what, this is how people who are the ultra wealthy think. If you put one-time effort into something and it compounds over time, then that is an enterprise or product that they want to continue to invest in. On the flip side, if you have to consistently show up and consistently promote and consistently get out there and sell and sell and do all this stuff, then what ends up happening is that the product itself is not good enough, right? Because people in and of themselves are not referring business. And so let me, let me give you three questions that really changed and hopefully will alter your perspective like they did mine around product and service. And so the first is if I have an existing product or service

and I were to make it 10 times more expensive. So really think about the price. Or you can say $100,000 or a million dollars, whatever it is, right? Just huge number. And if that's how much I were charging for it. What would I need to do? What would the experience need to be? What would the product need to deliver in order for it to be worth that much? Hey guys, love that you're listening to the podcast. If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff. Sometimes it can help hit the brain centers in different ways. You can check on my YouTube channel. It's absolutely free. Go check that out if that's what you are into. And if not, keep enjoying the show. What happens, you start thinking in a very different

type of mindset about how much value you have to create, right? And so that is the first question that I ask. There's two more. And the third one's my favorite. And I'll get to in a second. The second question I ask is if this product that I have cost one-tenth as much as it does right now, but I had to make it better than it currently is, what would I need to do? What one-time assets would create that would consistently provide value that I could do at scale, that I could do profitably, right so first question if this were 10 times expensive or 100,000 or a million dollars is what I charge for my product what would it need to be what would the experience need to be and what value would I need to deliver in order for it to be worth that much the second question is if it were

one-tenth the cost but I had to make it better than my current product or service what else would I create or do or make in order to facilitate that outcome and the third question which is probably my favorite, which I think underpins the entire ideology that I'm hitting on here, is if I had a business and I were only allowed to sell one more customer, and the rest of the growth of my business had to come from that customer without me asking, as in that that customer's experience was so remarkable, was so positive, was so amazing that they, they alone had to, on their own volition, tell other people about my service. What would need to happen? What would happen to create that experience. And when thinking about all three of these product frames, I like them

because they kind of hit on different aspects of the product. The first question, which is a hundred thousand or a million dollar question, hits on value, which is how do I create the most value in the product itself? The second question hits on the profit of the product, because if it's one-tenth cost and I have to make it better, this means that I don't have to do high margin, one-time investment type things to make the entire product more valuable. Right? So that hits on profit. So first is the value of the product. The second is the profit to me, right, as a business owner. And then the third question hits on the experience, which is, what's the customer experience, which is everything else that surrounds the product that we're selling or service that we're selling, right? What is the

experience that has to occur in order for this customer to become a raving fan? That it's so good that they remark about it. They cannot help themselves but remark about it. And what's interesting is that every super wealthy person that I know pretty much exclusively talks about product. And And usually the really small people that I know only talk about promotion. And promotion should really only exist to get your product right. And then once it is right, then you can juice it and then let it go and take care of itself. And the reason that it's so important, at least in my opinion, is that if you think about the six ways of getting customers, right?

And if you don't know what those are, it's paid media, earned media. So paid media is advertising, right, in promotions. Earned media is followings, right? If you have any kind of organic following. The third is through your contact. lists, so people on your phone and your email list, etc. that you already own their contact information. The fourth is through manual outbound. So that's DMs, cold emails, cold calls, cold all of that stuff where you reach out to people. The fifth is through affiliates of partners

who can promote your stuff. And the sixth, which is the most powerful and the only one that compounds is word of mouth. So think about that for a second. Every of the other five ways of acquire our customers is not compounding. Those are linearly scaled. It means if you double the amount of outbound people you have, you double the amount of customers that you get. If you double your ad spend, you might be able to double the amount of customers you get. Sometimes it's less than that. But you get the idea. They scale relatively linearly, right? Whereas word of mouth, referrals, which is the sixth way of getting customers is the only one that compounds. It multiplies rather than is additive. All right. If you get two people to tell two people and those people,

tell two people, then it continues to compound. And that is what creates enterprise value. That is what creates an enduring thing. And that is what, when you spend the extra time to make the product so good that people have to tell their friends about it, then that's where you get the unending scale. And also is where all the profit is, right?

You don't have to worry about the turn as much because the product's so good. You don't have to worry about the negative reviews because the product's so good. You don't have to worry about customers bad method because instead they're telling their friends about how good you are. And this has been one of the shifts that

has been most helpful for me. And honestly, when I look back on my own trajectory, how much I talk about promotion in the beginning of my career versus now I talk so much more about people and product. And anyways, I wanted to share this with you because it was, I could tell you how good I am about this kind of stuff. Anyways, the real nuts of this is that everything that the ultra wealthy do is compounding.

It grows with time where time becomes an asset instead of a liability. And if everything you do, you have to go out and get more business, go out and get more business, go out and get more business, right? It means that it requires effort every single day. Whereas if you put a lot of front-end effort, which is the investment, which is the patience, right, to make the thing that much better in the beginning, then it will pay you in dividends over time. And most people skip that step because they just want to make the first sale. They're just trying to get a customer to make a sale rather than trying to make a sale to get a customer.