The Game with Alex Hormozi - Guest Spot on Franchise Secrets

Episode Date: July 10, 2020

Listen in as Alex guest stars on the "Franchise Secrets" podcast. 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.Follow Alex Hormozi’s Socials:LinkedIn  | Instagram | Facebook | YouTube  | Twitter | Acquisition

Most of the times when businesses are looking for more customers, it's not that they need more customers. It means that they need a better business. Welcome to the Jim Secrets podcast where you talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe. Welcome to Franchise Secrets with your host, Eric Van Horn, and today's guest is Alex Hormosy. He's with Jim Launch. I've seen this guy around for a while, Mark, doing all kinds of cool marketing and stuff, helping a lot of health fitness franchises out there, and probably even a lot more

people that are not in the franchising space. And I've been wanting to get to know him and get him on the podcast. And we did that a couple weeks ago. So I begged him to get on the podcast and here we are. So Alex, welcome to the show. Thanks for having me. Honor to be here. Absolutely. So how many franchises do you actually work with? Like if you had to give us the mix, of franchises versus like regular gym owners? 30% of our, I think actually it was higher than 30 because I asked my team. It's over 30 less than half. I'll say that of the gyms that we work with are with an existing franchise.

So I want to get into your story, but I want to give everybody the context of who you work with and kind of what you do. So you're not the normal Facebook ad agency. You probably don't even like the word agency. No, not at all. So give the idea. It's a little bit of like who. you are what you do and then I want to dive into like how you got there.

Yeah. So I would just for everyone who's listening or just destroy the word agency because it anchors what we do in a totally wrong way. For the last four years, we've never done any done for you services. In the last eight weeks, we started a done for you service side. But I would say the vast majority of my business experience has been teaching people how to fish, not fishing for them. And so that has been kind of the rallying call that we built our business off of. And so I would say that most of the times when businesses are looking for more customers, it's not that they need more customers. It means that they need a better business.

And so that's why they struggle with marketing is because the rest of their business is broken. And so they cannot pay the cost of acquisitions. They're always looking for ways to get cheaper leads rather than how to make more per lead. And so everything that we've ever done has been based around the same three ways of growing a business, getting more customers, making more money per customer and getting them to stay longer and buy more times, within the context of a gym is staying longer. And so that's what we focus on is kind of building the profit levers around

the client. And so we start with the offers that we're going to make them, the services that we can provide, the upsells that we're going to have along the way. And then we back into what we can get per click. And from there, we're able to build acquisition systems pretty much in any vertical. And we've done that,

obviously, specifically within the fitness niche, but we have a software that we do B2B for, it's B2B SaaS. we have a physical product company. And so we've started four companies that have done over 10. Three that did over 20 million and one that did over 10 million in 36 months, in the last 36 months. In the last, how long were you, before you, 36 months ago, was it just Jim launch? And then you've really grown exponentially?

Yeah, 36 months ago, it was Jim launch in a different way. So we actually used to be kind of like a turnaround company. So I had a chain of six gyms of my own. I joined Russell's inner circle. So Russell's inner circle for the people that don't know, Russell Brunson, the founder of ClickFunnels, and I don't think he has an inner circle anymore if I'm not mistaken. Maybe it's the inner inner circle now. Yeah, but he's got this inner circle, which is almost like a mastermind as well.

And it's a, so go ahead and give like the audience. Yeah. Russell is and what the inner circle is. Russell started ClickFunnels. I think he's one of the best internet marketers in the world. I mean, he's fantastic at all components of that. That's his level of mastery. I joined his group before he was Russell Brunson.

When I joined, they had just on $10 million in a year. I mean, they were just Alex. Yeah. Just Alex. And so I think that's when we joined. I was sold into the inner circle. I really had no business being sold into it because it was an internet marketing group, and I had six gybs.

I really had no purpose to be there. And it ended up being one of the best decisions that I ever made. Because as soon as I got there, I had my first call with Russell, and he followed up with me after the call, and he was like, you shouldn't be in gyms. He's like, so first off, can you speak at my event? I never normally do this, but can you speak there? And I was sure. And so after I ended up speaking the event, and I was not, I wasn't a guru.

I was not, I was teaching B2B. I was still in weight loss and dubs, you know? And so I went up there and had nothing to sell. So I was like, this is what we do. Does that we make money? So I would turn to clicks on customers. This is our whole day. And I had never been, and still to this day, never been more barraged after a presentation.

And I did not, I wasn't selling anything. And I had so many gym owners who were like, how can I work with you? How can I give you money? And I was like, I'm not accepting. Like go make your own businesses. Like, I don't want to be involved in this. And so anyways, one guy was like, here's my credit card, charge me $5,000. Just tell me what I get me.

And I was like, this is very strange. I'm in my young, like mid-20s at this point. And so I called the guy up and he's like, you're sure, he's like, just do it. I was like, okay. You know, I was like, well, what do I get? And I was like, I don't know yet. But I promise I'll make you more than five grand.

And he was like, okay, fair enough. And it turned out he was actually opening a gym. I was like, so you're not opening it. He's like, no. I was like, well, why don't I go and launch your gym? Because the thing that Russell had me talk about was how we filled up five out of the last six facilities. We opened them at full capacity

and first day. And I thought that was normal. I thought that's how you were supposed to open a gym. I was like, well, why would you open one of the other? Sounds right. And it turns out that that wasn't as common of a practice. And so anyways,

I went out there and ended up doing 191, any customer sales at 600 ahead in 19 days launching his gym. And so I made whatever, 120 grand in that time period. And I looked around and I was like, this is pretty chill.

I didn't have to do anything else. I was like, this is actually not a bad business model. And so, you know, word started to spread that I was just doing these launches where I'd fly out and fill a gym up in 21 days. That's what I did. So I'll take your gym from wherever you're at to full capacity in less than a month. And so that's what I would do. I was doing it for free.

Free with quotes. They didn't have to pay anything. I would take 100% of the upfront revenue that I was able to generate and then they would get the customers on the back. At that point, you weren't teaching them. to do it. That was a done for you. 100% done for you, yes. And then you were, then you came into Russell's group and he, and wait a second,

where did Russell's group fit into this? I met Russell. I spoke his event. This guy then, then was like, hey, and I was like, maybe I'll give us a shot this new thing, you know? And then that started to started to work. And so we scaled our sales team to eight guys within

two or three months and we were to eight gyms a month. We were flying out. So eight guys, eight gyms a month. You were flying them out there. They were spending 21 days to launch the gym. The gym owners, all they wanted was customers. They didn't care how they got them. And you were taking all the upfront risk on it, but you were getting 100% of the reward.

They are left with figuring out retention. Well, I would teach them that. I did the acquisition, but then I taught them. I was like, here's how you're going to upsell them in the back. Here's you can sell supplements. Here's how you're going to convert them into members. Use the price points. And then this became an iterative process that now is we, you know,

we wrote a book on it, like how to step. by step how to turn the levers in the gym to make it more profitable. Because this is like, also when you interact with all these gym owners, I'd find so many little things, that's really cool that you do there. Like the rest of your shit's wrong, but that's really good. And so I ended up picking like none of these things that I did were original. I just was able to aggregate all of these best practices into like kind of a playbook of this is how you make a profitable gym.

Basically, when I'd go there, I would say, this is what you should do. You're a grown-in-sman. You can make your own decisions. But this is what would make you more money if you chose to do it. And usually they would adopt. Because at that point, I was just some kids from the internet that promised them clients. And this was part of the problem with the model is that they're like, okay, you're going to sign up 150 people. Like, sure, right?

And then they would have, they would go from 70 members to 270 members in 21 days. And their shit broke. Yep. And it was ugly. And they were not happy. And I was like, I'm fulfilling my promise here. Even though you tell them about that on the front end. And that's a real issue.

I mean, anybody growing that fast or you think you want a lot of customers, you may not want a lot of customers right away. No. And they couldn't. I mean, and typically, and unfortunately, a lot of the guys were reaching out to me were not operationally strong, which was why they were struggling. And so they were looking for a $0 down, you know, totally done for, like, no risk out of pocket.

And be like, and that's what you get. It's you're going to have somebody who's going to come in and sell their assets off. And so that's what we did. And we were doing $300,000 a month. very slim margins though because we had I had flights hotels

a lot of time out there daily for their car I had the food like there's just a lot of stuff that I had to cover and so when I did it it was super profitable when I had

when I had to scale the team it was less so and then it kind of started to have hair it was three or four months into like when we were like really scaling and had eight guys going out but I had two gym owners

in a week get up in the middle of every class for a day tell all the clients to refund because they weren't holding the money. They were like, I can't deal with this. Just go home and refund. And I'd already paid for, I'd already covered everything. Like we were gone.

And so we ended up getting this huge weight. I did like $100,000 in refunds like a week. And I was like, and at that time for me, that was a big amount of money. And I was just like. With slim margin. That's big. That's why rational design doesn't work. Like I was planning on getting, I was planning getting out of the gym industry.

I was like, you know what? And I had sold my gyms at this point. You know, I sold the six. And I was like, okay, you know what? We're really good at marketing in sales. Layla, who's my wife now, I was like, she lost 85 pounds of fitness competitions, all that stuff.

And I was like, why don't you be the face? And then I'll run the sales of the marketing behind it. And we'll just make a fitness brand. And that started to work. And so we started doing a thousand a day within 14 days online. And I was like, cool. I take my guys. What's the timeline on that?

So you meet Russell, you speak on stage. someone gives you $5,000, all of a sudden you have a bunch of people out helping people get a bunch of customers. This was one year. So I joined Russell's thing end of January. I spoke in February. I got my first $5,000 deposit in March. I went out and launched my first three gyms myself back to back to back in the same area.

It just worked out that way in June, July, August. And then at that point, I decided this is. what I'm going to do, sold my gyms, all of them within 90 days of that point. I was 100% out. I decided in August and I was 100% out by first week in November of the gyms. And then at that point, I took a pause on the launches because I was dealing with selling gyms. I took a pause in October and November. And then December, I started with six guys. So I was like, cool, this is the model. And we got six sales guys.

We started in December. They all started the day after Christmas. That was one calendar year. And then the next three months of the next year, four months of the next year is when we were really kind of scaling, and doing eight gyms a month or whatever. And then April, end of March, beginning of April's when I was like, I saw the writing of the wall.

I don't like this model. Like this is like the revenue was great. And I was just like, but it just had too much hair on it. And I had people being upset with me for filling their gym up. And if I, if they're like, well, I can only take. 50 customers. I'm like, well, I'm not going to, it's not worth it for me unless I can sell a hundred or more. Like, you have to be able to take 100 or more clients, which is, you know,

50 or 60 grand, you know, for us to cover everything and make a profit. So anyways, at this point now, this is March, April. I was like, Layla, why don't we start selling your thing? Let's just try that. And then we can take the eight sales guys, bring them in, do a thousand a day each and do, you know, 250 a month, but it's a higher margin. Great. This model works. Like, we can do this. And so I actually had eight gyms that were supposed to lunch in May. And so I called them up and I was like, hey, because I had to plan them out, you know, because you can't like immediately need, you know, which is another operational pain in the ass. But you have to be the exact amount of gyms as you do salespeople or you have a guy on the bench.

It doesn't work. The eight guys. And so I called them up and they were like, dude, I need you to come. Like, I'm maxed out my credit cards. I bring mortgage my front as my house, but all my life facing to this. Like, you have to come. Like we're going to go out of business. And I was like, well, I don't have to come. Like, first off. But that makes me sound like a dick. But I just, like, I can't. But we talked about, I mean, at least you're not a liar.

Yeah, right. And so finally, this, you know, the phone call, I was like, you know what, man, I'll show you how to do this. Consider this my going out of business sale. Like, I'm getting out of the gym industry. I'm just going to focus on fitness. I'll show you everything I've got. They were like, okay.

well how much and I at the time picked the highest number I could think of which was $6,000. That was like the highest this is ridiculous and I was like I'm giving you the thing that I'm doing 400,000 a month with them and we give you everything like everything. I was almost feeling

a guy was getting ripped off on it. And they were like the first guy was like yeah and I was like really? And I picked a big number because I also didn't want to do it. Because I didn't want to have to go make a court. I was just like let me just get him to say no so I can move on to the next call.

And he said yes, and I was like, and so I had seven more calls, and they all said yes. And the first one said six, the next one I was like, eight, he was like, okay. And the next one I was like,

it's 10. They were like, okay. And so, anyways, we went up to 12 by the end of the day, and then the next 100 we sold at 12, and the next 2,900,

we sold at 16,000. It's interesting. It's so, I mean, when we think about prices, these stuff, the stuff is just pulled out of thin air and with the market demands, right? It's how much someone's willing to pay. Yeah, Dan Kennedy, your price is whatever you can say without cracking a smile.

That's it. And so I looked at Layla after we did $60,000 in a day. And I looked at it and I was like, babe, we're still in the gym industry. I was like, we were just doing it. And so for me, I think that was one of the biggest lessons was there's different ways to monetize a skill set. Right. Like we had this skill set. And I had it in a gym opportunity vehicle, like me running locations.

I had it in a done for you sales team opportunity vehicle, which is different. And then I had it in a information package kind of done with you version. And that is when that's when everything just took off. And we did $180,000 in our first month. We went from there. We did $10 million in our first 10 months of business in total revenue. It was a rocket ride. And I mean, a big part is the first guys who signed on,

the lowest guy made $38,000 in their first 30 days. Right? So, I mean, like, and they called me up and they were like, what do you have? What else do you have? What's next? I was like, I have this other program called Jim Legacy. So in reality, like, so, you know, I started a mastermind for franchisees, real low ticket, not very expensive for franchisees to come in because they're not,

franchisees aren't used to the mastermind thing. So I just started that up a couple weeks ago. Franchisee mastermind for anyone that wants to take a look at that. But you were in Russell's inner circle. It was a mastermind. As you're going through this process, how much, and he's a brilliant guy, how much did he help you unpackage some of this stuff or think differently? Because I see so many people struggle because they're in the gym industry.

They think that's what they're good at, but they just don't have the practice or the mental ability to think differently. So I'll say two things. I've been a part of multiple masterminds. I think the best masterminds, well, I won't say that. There's different types of masterminds that will give you different things. And so if you're in an industry-specific mastermind, those almost always pay for themselves.

It's almost impossible to not know what all the best practices are, what's working right now, new plays, new hooks, new offers that are working today from a group that's working together. And in an industry, typically, they're separated geographically. So there's not a lot of, I mean, some people are always scarcity mindset, but most people are very giving, and in our community, we give a lot, so they give a lot. I think those are really, like, incredibly valuable. On the flip side, when you go across industries, that's also very valuable, but in different ways,

because you have people in, like, hotels charging deposits, you know, like, I wonder if I could use that in the fitness world? Like, how could I, how could I use that in my, you know what I mean? And so I think you get more creative input, and I come out with more ideas from a more general mastermind than I do from a specific one. but the specific one aren't ideas like, all right, when we go home, we're going to do these 10 things.

You know, that's the back and forth. It's very tactical. Industry specific is very tactical. You're going to get stuff there that's super tactical, relevant, like you said, to today. You make money tomorrow. Yeah, exactly.

Then you're in some of these that are not industry specific where you might even feel like a fish out of water because it's so different. But I like being a part of those at different times because it does, it challenges the way you think, and people are taking what they know in their industry

and giving you ideas and vice versa. I mean, that forces you to get better, but you have to be intentional on doing it and getting something out of it, right? Yeah. The doers are the, you know, they're only 20% of the people that are there. Like 60% are there because they just want to brag

and the other 20% sign up and no one knows why, but they just want friends. I mean, so I talked to Russell about this, and he was like, Bill Glazer had told him that the way Mash Brines breakdown is like he's got, I think, I can't remember the exact numbers, but it was like you've got 10% that just always want more

are just like massive executors and just like want to rip as much value out and then just execute. Yep. It's like, and then a lot of people just want to brag. They want a place that they can. Bragg's a strong word.

They just want a place that they can like be candid about what they're doing and have people say like, dude, that's awesome. Because a lot of us, especially business owners is really lonely. You can't be like, dude,

we fucking crush this one because your customers don't. No, they really don't care. How much money did you make? And a lot of friends, of your friends and your circle of friends wherever you are, really don't care. Yeah, especially if you're doing better than them.

It's like, it just makes that. And also, it doesn't make them free either. No. Anyways, so there's that. Unless they're really good friends, in which case it does make them feel good. 100%. That's exactly it. That's how we just found out how you have really good friends.

That's the lip-ist test. Did you ever get concerned? I know you're not a scarcity mindset type guy, but you're teaching people the playbook. How do you reconcile teaching people what to do, kind of giving them the secret sauce? and having people rip you off because that's what happens. Yeah. If you're learning from me, you're inherently admitting that you're not better than me.

True. Or at least if you're copying my shit. You know what I mean? Like you're inherently back. And so the other thing is the best move to make would be to copy our stuff, right? And once you're the industry leader, my strategic best move is to buy everyone's courses who's new,

rip out anything that's good, immediately distribute, and then make you irrelevant. That's how you just defend the top. the guys who can't stay on top don't do that. Yep. And then they become irrelevant over time, right? And it's usually because of ego.

It's like, oh, our stuff's better. I'm like, I don't care where it comes from. Like if messenger, some guys got a good messenger course, cool. Go find it. Information is information, right? It is what it is. So I'm also not immune to the fact that like, I know what industry we're in. Information is very high margin, but has massively declining value.

It has an expiration date on it. And so the information always has to be fresh, always has to be cutting edge in order to have the value that you're charging for it. And so we provide ourselves on, we release new plays every 14 days in our community. Most guys have like quarterly things that they'll maybe do. And most of the times recycled content. And so that's how we've been able to continue to provide value.

Basically, I built our highest level, taking out everything I hated about masterminds for myself. I don't want to do hot seat, right? because I don't care what nine of these, nine and ten of these guys are, because they're not making as much money. You know, you're like, I just did. So I was like, I want, just give me the best stuff.

And so we just would rip out all the best practices, stack them in terms of, is it lead generation? Is it lead nurtures? It's sales? Is it fulfillment or ascension? And then we'd be like, cool, who's struggling with these things? All right, this is your, these are the things that are working right now. This is what you need to do it.

So we cycle through what we're releasing and it keeps our content very fresh. But yeah, in terms of. So what I'm hearing, so part of what you have is you have a community of people that are paying you for the stuff that you're providing them. But out of that community, you're extracting the best stuff that they're learning out there as well. And then you packaged it up, give it back to them based off of what you're getting it from the community. Is that right? Yeah. And we run usually about two tests a month, two big tests.

I mean, we run zillions of split tests and stuff from a marketing standpoint, but like conceptual tests of like, let's try this. new upsell. Let's try this new offer. Let's try this new back end thing or whatever it is. Do you know what I mean? And that's stuff that will regularly release. Like we have another one that's kicking off on Wednesday, which is super cool and fun for online stuff. So like we're always just trying things. And I would say, you know, two out of three, don't demonstrate a market improvement. And so sometimes people just release things because it's new. And so when we do our beta test, we call on beta test, we'll take 20 gyms minimum, which by the way,

bigger than most of the competitors that like their entire business, but that's okay. So we'll take 20 gyms and we'll take it from representative markets. I'll take winners. I'll also take losers. And when I say that,

I say that nicely, but I'll take my bottom 30% and my top. Because a lot of times, if you just do tests for their top 10%, it's not good data because they just execute anyways. Yep.

Right? So it's like, I need a good idea of whether this is representative. And then I have to make a training and deliver that, training the same way I would to everyone at scale. Because if I do a different delivery mechanism, if I do one-on-one coaching for all these 20 guys, again, it's not going to be the same as what everyone else is going to consume. So I have to make that again, provide it for them and then say,

good luck. Let's track the stats in 30 days. Most times, most tests don't make a big difference. And I think that's one thing that most markers never would admit. It's like, you split test the two buttons? Most times, nothing happens. So it's really trying to figure out which of these, which of levers are the ones that really move the needle. And a lot of times you just don't even pick the right lever to try and move, which is just a fun thing for us. But when we do find one, we'll take it up, we'll package it, and then we'll just distribute it through the entire network. Hey, it's Eric here. I hear from a lot of people that they're looking to buy their first brand or maybe their second or third brand, and they're not sure where to start or they're not sure if they're

looking in the right places. Well, that's where I come in. I help people find really good brands. and if you're thinking about your second or third or maybe your first brand, let's set up a time of talk. You can go to talk witheric.com. That's E-R-I-K-Talkwitheric.com. Now back to the show. Now, a lot of franchisees out there, they are used to using the traditional agencies,

and this is kind of in my mind, this has given them an inside look into Facebook ads and any type of advertising and copy, which is the words on a page. or words on a Facebook ad. And you're kind of getting the inside scoop here. This is the stuff that most franchisors don't know about and don't care about. They have a CMO that is used to placing ads somewhere,

hiring an agency to do it. And usually it's a big agency, and usually things are done in just plug and play. And then you can get into more boutique agencies, or even bigger agencies that really understand what's going on in the industry. And I think that's what we're talking about here. There's a big difference between an agency that places an ad, and they really don't know what goes on behind it,

and they're dealing with a franchisor who doesn't understand the social world, the digital world. They don't understand copy. They don't understand video. They don't understand any of that stuff. And that combined with a bad agency is a recipe for very mediocre results. And so when you get a franchisor that has a really good CMO that understands the current digital world environment and they work with people like Alex and some of the other guests that I've had on that really understand marketing, that's when you have a very powerful combination. And I know that you've seen it with different franchise out there.

And sometimes, you know, this is a franchising show. I love franchising. Franchises are great. but it's also that double-edged sword. You are restricted in some of these areas. And so can you just give a little bit of what you see? And talk to new people that are thinking about starting a franchise as a franchisor. What kind of mindset should they have in terms of marketing to help their franchisees with this type of stuff?

We're talking about Zores, right? Franchisors. Because of franchisees, they're stuck right now, whether they have something really good or really bad. they're stuck. But there are people out there, because I help people, Bejaro's Kulin and I, we have a group where we help young franchiseors or people that want to buy a franchise,

we help them start and scale their franchise. So talk to that person that's just getting started in franchising as a franchisor. You have to know acquisition. I mean, that's my strong. What if they don't even know what acquisition means?

Because acquisition is so common to you and I, but to the average person out there, what do you mean acquisition? lead gen, show gen, appointment gen, everything that gets from click to show or whatever your vehicle is for conversion, like for your sale, whether it's a phone sale or an in-person sale, you have to know the numbers inside and out for your model.

You should have already squeezed all of the juice out of your model before trying to put it together. I can't say the amount of gym specifically where I know somebody who's got a struggling gym and says, I think I want to franchise. I'm like, you can barely run one location profitably. and do you want to franchise and sell this bag? Really?

They also have to understand that the business model has to be unique in some way. Otherwise, you're just going to get, like, why would they buy yours? But it has to be unique in a certain way in order for people to buy into it. And also for the general population to want to have a, like, for you to make a disproportionate amount of money compared to other franchises in the same space. I think the fitness franchise world is very saturated. And I think there's going to be a nice consolidation that's happening right now. there absolutely is and there's there's always opportunity within within all of this but yeah 100

and understanding that what your level of execution is cut that into maybe 35% of what you're doing and that's what the level of execution you get from a franchisee and the moment you start pointing blame and saying you're not doing enough is the moment you lose the power in your business yep because the moment you start blaming franchisees is the moment you stop innovating to try and solve their problems yep and so it's just not good enough to say they just didn't do it. There's nothing you can do about that. Right. There's nothing to do about that. So what, like, what can we control? Like, what condition did I create that tolerated this level of performance? How can I make the training better? How can I make the onboarding and screening better? How can

make the qualifications higher? How can I, you know, whatever it is is we have to ask better questions. So because ultimately at the end of the day, especially with a franchise, it's all about unit production, right? They have to make money. Now, if you, like, it's easy to sell your first 10 friends that you know that senior quote business success, first 10 locations. Everyone can do it. That's why there's a zillion 10 to 20 location franchises up, right? And they can never make it past that because their actual business model sucks. Yep. And that's what it is. You know, and so you have to make sure the actual, like, this is just fundamentals baseball. This is blockling and tackling. Like, is the training for every

position dialed in. Is it like, do you have a culture that you, like, Chick-fil-A has done it. Well, they don't even really have a franchise. They don't know. We'll use that as an example. because they're a kind of a franchise. But yeah, I mean, the culture, holy cow. Right. And they know exactly who their avatar is. So it's like, unless you have a unique avatar, right, or unique way of reaching it,

or unique monetization model, or unique acquisition model. Now, the hard part with acquisition is it's easy to copy. It's very easy to copy, which means I think that you need to be on top of it because I had a conversation with a franchisor last week, I went 22 locations, kind of a smaller franchisor.

And I was like, well, give me your numbers on this, this. And he's like, I honestly don't know any of them. I was like, how do you have a business? You know, it was like, well, we don't know anything of the lead done stuff. And I was like, okay, then what do you do? It's like, you know, he literally said, we pretty much do the same thing as everyone else. Like the, you know, the fitness, nutrition account about like I said. It was like, I mean, I didn't say this.

And if you are listening to this, the person I was, this was months ago, this conversation. Yeah, years ago. 10 years ago, I had the conversation. And how can you make decisions? People know me who know me well enough, know that we're data pores. You know, like, all we do is track everything. And then all of a sudden, people think you make great calls when you have good decisions.

But good decisions are based on good data. And then I'll, like, you know what? The pandemic we have right now is a perfect example. I'm not going to go in that direction, but I'm just saying it's a perfect example of how not having good quality data leads to poor decisions. And so different people are coming to different conclusions. based on what they perceive the value and the validity of the data to be. Yep.

That was the middle street. That was the middle of the road. No, it's true. It's true. Whatever it is, whatever side, if you're like extreme on both sides, that's right. It's based on the data that you believe to be true. Yeah. Most people think that people dying is bad.

Like, most people agree with that. Most people also think killing the economy is also bad. And so if given the correct information, most people's values are pretty much aligned. It's just to what degree are we waiting these metrics? What's the truth on that? We don't need to go there. Yeah, I'll reel it back. But the big thing is if you don't know your, like,

if you're starting a franchise and you don't know your lifetime value, cost of acquisition, your monthly churn, your different levels of your value letters, your different upsells, the way that you, I mean, there's just, there's so many things that if you don't like, like even your page conversion measure, like if you don't know these things, if you don't have another way,

and on the flip side of that, There are some acquisition-only franchisors that just learned how to run Facebook ads. Yep. And then they're like, cool, I just run Facebook ads to a gym. I own a franchise. Again, and they usually are not good operators. They don't know how to build culture. They don't know how to lead teams.

They don't have unique backends. They typically don't make enough per customer, right? And then there was a point that I was going to make here. I can't remember what it was. Well, this is all system. This is all knowing your numbers. This is all knowing what you should really be. That was my point.

You got to know with backends. Yeah. Because you don't, in franchise, and again, we're speaking to when we're going to get back to franchisees, but franchisees, you can, I mean, you can dial this in yourself if your franchise or doesn't. But if you're starting to, if you're mom and pop wanting to franchise your business, you don't have to have something that is proprietary. You don't have to have something that is super unique.

What you need to have is a good model itself that you're working on right now that makes money that does well. And then you need to understand that you are not just scaling what you have now, but now you're in the business of helping other people franchise their get into franchising. And you're now their coach. You're their cheerleader. And you're the one that should have all the answers. So if you don't know it for your own business right now, spend a year, get that dialed in, know in the ins and outs of your business so that you can help somebody else do the same thing. One of the other things along with generating leads is I see franchisors and franchisees. They don't have really solid systems on consumer facing the follow-up, the nurturing to help

a lead become an actual customer. And I know that you're a beast at that. So talk about that for a little bit. This problem has been a problem for since I had my first gym. When I worked the leads, I get three times as many people in the gym as one of my employees did. And it's because it just takes a lot, it's just hustle. There's no secret to getting Lisa show besides just work and repetition. So there's four, I'm going to go real quick on this because there's a lot I can cover.

So there's four pillars to lead nurtured to get the highest mental Lisa show. We got volume of outreach, so the number of times you reach out to them, the personalization behind the outreach, which is how catered to the messaging, is it for that specific avatar in their goal. The speed, which has two components,

the speed of from opt-in to first contact, and also the speed of response at any point between then and their appointment. So someone messages you. They opted in. You message them, but then they ask you a question of like, am I need to bring my kid or do you take adults or whatever, right? If they don't get a response and not a timely response,

they're going to already, that's going to be an indicator of the level of service they're going to get before when they come in. And so that will decrease show rate. So speed is two parts there. And then the fourth one is availability, which is probably the secret weapon of what we've been able to figure out with the data science team that we have on our SaaS company, which does all lead nurture, which Eric was alluding to.

availability is the single greatest predictor for throughput on a campaign. If you do not have time to meet with prospects, you will not get prospects to show. If 7-11 were only open from 7 a.m. to 9 a.m., there would not be a lot of customer. It doesn't mean you have to sell all day. Who wouldn't want to sell a day? But it does mean you have to be available to someone.

And that is kind of the big difference. And the people who crush and the ones who don't are the ones who are like, ah, I'm available two hours, Tuesday, Wednesday, and Fridays. How do you think you're going to hit your goal if you only have six hours of 160 that you're selling? In what world does that make sense for you when you say you want to hit this extra 100 members in 90 days? Show me logistically how that could even work if you're only closing one out of three and you have two hours three days a week. That's six hours. That's two hours of closes that you're going to have per week.

How are you going to grow? It doesn't make any sense. And a lot of people don't even do that math. That's the theoretical side of lead nurture. But the story for how this started was, I won't go too far back, but basically it was the biggest problem that we saw between the highest performers and lowest performers. I can double someone's closer rate going from 30% to 60%.

That takes time and effort, but we can do it, right? But my lowest performers on elite nurture side were at 5% of their leads showing up versus my highest guys were at 45% or 50%. So I'm talking about a 10x differential in throughput compared to a 2x differential and improving someone's closing percentage of skills. And so when I saw that, and I saw pickup rates going down over time, I was like, I'll bet you. And with machine learning where it's continuing to improve and get better and the aggregate mass is going towards messaging, I was like, I'll bet you that we could put something here

that could take care of this. And so it took us two years to put the software together and we ran, I'm a data guy, lots of data throw. It's a million and a half text in the last eight weeks. So we have a lot of data that we work off. By doing that, we were able to take the biggest pain point or bottleneck in acquisition out of the way. And so now, especially if your franchisor, we're listening to this, for me, I function very similar to you, right? So if I've got 500 facility, we have 600 now, right, that are working with us actively.

And I know my bottom third are the ones who are going to churn. They're the ones who are going to struggle. My top guys always win, right? Because they're winners. But if I could just get all of my bottom third to above average or even just at average, that would change the game for me. And that's pretty much what we did with Allen, which is the software. So we just plug it right into their website.

And then it functions as that lead nurture specialist. And it does it for less and it does it better. So lead nurturing, it is, it's email follow-up. It's phone calls and its text messaging. Yeah, 100%. And so, I mean, honestly, we even looked at the difference. We don't even email anymore. Not to say that email isn't work, but if you can get someone via SMS,

they're giving me the most response. I mean, really, I mean, that's smart. I mean, of course it's smart. A lot of people still don't even know that that's smart, though, Alex. I mean, what's the number? Like, what percentage of people open up a text or view a text versus an email? So there's industry averages and there's new people. Like, on a list, it's 10%.

If it's a new person who opted in for something, you can get 30 to 40% to 40% opting on the offer, right? Sorry, not open rates, excuse me, open rates depending on the offer. On a text, it's virtually across, we're independent of what you're doing. It's 98% plus of text are open. So right off the bat, you're getting three times as many people to even see the nurturing process that you're doing. And the likelihood that they respond is also much higher via SMS compared to an email. And so because of that, the speed of response and the communication cycle,

it just makes way more sense for us to just get people booked in two minutes rather than email. Two hours later, email, and then they forget and it goes down in the inbox, etc. And we have to say this. If you're new to all of this or you're trying just to test some of the stuff out on your own and you're sending text messages, you can get in big trouble doing that. Right? You have to make sure that anyone who's opting in is opting in for pre-recorded phone calls and SMS.

There has to be a disclaimer box and we have to check it before they opt in. Otherwise, you can find $150 in SMS, which is, it's like a DUI. It's an egregious amount of money on my design to make sure that people actually do it. So we've covered a lot of stuff right now. Today, you're doing something that I've never really seen before.

So tell the audience, and I know we're running up against a deadline with our time together, what are you doing and how are you helping and who are you helping? I'll just talk about the software in general because that probably makes more sense, is that we plug the gap that virtually every brick and mortar business has because almost every brick and mortar is based on the old model of acquisition, which means most people used to 10 years ago call the phone number that they saw from an ad or they saw on a website or they saw from a flyer or radio or TV or whatever, or direct mail to get booked for an appointment.

And then all Jenny at the front desk had to do is pick up the phone and then schedule them. Very simple. The problem is marketing shifted and now it's based on digital opt-ins. You got name phone or email. And then something has to happen to get them to A schedule and then B shut.

Right. And so that position is a wildly inefficient position because that person no longer has the skill set to do this new thing. You have to have somebody who's really an outbound salesperson to work the leads and work them hard to be heavily incentivized because it's not fun work to get someone to do it. And so based on what we see, we've been able to cut the manual labor associated with getting

the leads to show, which is actually higher than the cost of the lead itself. So people are spending $99 to $150 in manual labor to work their leads compared to their $10 lead. So even if you get one out of five leads in the door and you cost $10 leads, that's $50 in ad spend, but it cost you $150 in labor to get them to show. And so what we do is we have a performance-based business because I'm a big performance guy for how good we are. And so we get on average twice as many leads to show on average.

Our top 20% are three or four times the average, which means for every dollar you spend, if you're concerned with your lead costs and getting more people in the door, if you can get changing this one piece of the pipeline, could three or four, the amount of customers you see per month simply by working the shit out of the lead the right way. And that's not dialing 100 times a day. It's messaging that's been split tested 100 times to get the highest

engagement rates and response rates. And if you don't have a franchise award that's compiling all that data from all of their franchisees, you don't have enough data to actually split test it well yourself based on your one launch or a couple locations that you're running.

Yeah. How do they find you? I mean, finish that, and I want to share with the audience where they can find you as well. You just go to use Allen.com. That's the that's the URL if you want to go there and opt in for stuff. But that's how we do it. If you're a gym, ULX is, are done for your acquisition system. So we just, for the first time ever, basically are doing all demand gen.

So we're marketing and working the leads. And so our clients only pay us for human beings who walk in the door. or pick up a phone call for an appointment depending on the type of businesses. And that's it. So that way, you're not paying a retainer. There's no risk. It's just if you know that a client is worth $500,

are you willing to pay the cost of the ad plus $40 or $50, whatever it is, a little bit different for a home to get that person on the phone, which costs you one third or what it would cost to pay someone else. And none of the management, none of the HR, none of the hiring and firing that you have to do. That's our value profit. It's been growing along.