The Game with Alex Hormozi - How I Upsold $30M of Recurring Revenue by Reversing the Price | Ep 320

Episode Date: July 29, 2021

Value over price. Today, Alex (@AlexHormozi) talks about how his method to “downsell your upsell” can drive more sales of your products, trust with your customers, and build a strong foundation of continuity.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: (1:33) - People want outcome, not recurring membership. Sell continuity.(2:55) - Cash flow noticed more than price. Give more for less.(4:25) - Onboarding costs: raise prospect quality, raise product quality.(5:37) - Goal: create upfront program that generates more customersFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Welcome to the game where we 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 we have learned along the way. I hope you enjoy and subscribe. In this video, I'm going to show you how we've structured our offer flow to ascend customers. So if you're in a service business, you're at a brick-and-water business, you're an online business, any type of business that sells service or coaching or whatever, of any kind, where you actually have to do something that provides a service to a customer, and you ultimately want to get that person to come back again and again.

So one of the things that I've been touted as, you know, has been mine is down. sell your upsell and that's because you know our current companies make just under a hundred million dollars a year and the reason I make this channel is because lots of people are broken I don't want you to be one of them so if you're an entrepreneur right now and you sell a service of some kind it is standard and normal and to be expected that you would just have a recurring fee of some sort and you sign people up and they go right into that fee here's why you're making a mistake and this is why I've never done that model because I think it's horrible but let me

give you a couple reasons for that so if you have a defined end program on the front end, what you'll be able to do is sell more easily because people don't want a membership or recurring service. They want an outcome. And so ideally what we're going to do is think about what is the outcome that our customer wants to experience and then how can we sell that rather than a recurring membership service, et cetera, right? Some sort of continuity. And so the first thing we do is we package that as an upfront program that sells the promise. Now when we do that, we're able to increase the price because it's a defined period of time and because it has a promise that we're delivering on.

So people will perceive it as more valuable than a recurring service and because people are always willing to spend more one time than they are on a recurring basis because it's not a commitment for perpetuity. So one, it's an easier sale. Number two is that you actually are able to acquire more customers this way because you have cash flow from this higher price point to spend more on marketing. So you can actually use this upfront program or whatever, you know, thing as a way to cash flow your acquisition.

So you can even break even on all of the money that you make on this because you want to eventually sell the continuity, but you use this sale first because it's easier to sell, it's more profitable, et cetera. The next thing is that if you raise the price on this front end defined period, it will actually anchor the value of your services in the mind of your prospect so that when you do sell your continuity, it feels like a downsell, even though you're actually selling a bigger ticket. And so one of the beauties of this is that this is kind of this number three point goes into this, which is that people will always notice the cash flow more than the price. So for example, if I say, hey, it's $18,000, so I'm going to go, whoa, but if I say, hey, it's $1,500 a month,

and it's like, oh, that's not so bad, right? People will weigh the cash flow more than they will weigh the price. It's probably easier. It will, I guarantee you this. It is easier and you will sell more people at $1,500 a month than you would buy $10,000 one time up front, right? And that's because people are more mindful of their cash flow than of the over. overarching price. And so we can use this high cash up front service or to find in program of some

kind that executes on a promise because it also feeds into our continuity more naturally because it's a downsell of the upsell. So we might sell this thing for $6,000 and this thing for $18,000, but this was six and this only feels like $1,500 a month. So people will be like, oh, wow, this is a steal, especially if you actually give them more than what they currently just got for less. So think about that. So it's like $6,000 for XYZ service. And then you now qualify to be XYZWV SRT service after this, and it's less. Hey guys, real quick for those of you guys who are $100 million offers fans, I love you. I added in a lost chapter that has never been released.

I'm releasing it now. Transparently, I'm doing that to build hype for $100 million leads. But you will have the unreleased chapter. It talks about your first avatar and how to segment customers to make more money. You can get it by going to acquisition.com forward slash leads. It's a free in exchange for your email so that I can email you when we launch $100 million leads and so that you cannot miss out on it because last time I sold out for like eight straight weeks really fast.

So that is my way of making sure that y'all get first dips. That is how you build continuity. Now, the next one is onboarding costs. So the reason that I like the Supfront things is that we can also over deliver like crazy because it costs more to onboard a new customer. New customers require more attention. They require more effort. You have to get them up to speed, higher systems.

You have to teach them how to be a customer. And so the way to do that and cover the cost, which most businesses just go negative for, I'd rather make money getting customers and get paid to onboard them and teach them how to be a customer for my business. And then finally, you'll actually get more committed customers because the more you raise the price, the more committed they will be to executing it. And also, if you can raise the quality of your prospects, you will raise the quality of your product. Let me say that again. If you raise the quality of your prospects, you raise the quality of your product.

Because if I had an identical product or identical service and I had a very able person go through, it and a very unable person go through it or a disabled person go through it, the likelihood of achievement of the outcome for the high quality prospect is much higher. And so by raising the barrier, we increase the likelihood of achieving the outcome that we're shooting for, which means that by its very nature, our service becomes more valuable. And so by raising the bar, we actually raise the quality of our deliverable, which is crazy and counterintuitive, but that's why most people don't make money. All right?

So I'm going to bring us home here. So right now, in your current service, if you sell some sort of continuity, I'd highly recommend you not do that and instead create the upfront program that creates customers all right this becomes the program that you sell in order to acquire customers because it's easier to sell because they understand it's the fine end it will cover your cost of acquisition and probably profit from it you will have a price anchor for your continuity that will make it more valuable the perception of that more valuable and you'll actually be able to raise the price

on your continuity because the cash flow on that continuity be less than what they are required to pay upfront you'll be able to cover your onboarding costs and create an amazing customer experience so that you get them Super up to speed, really believing that your business is amazing, and can deliver on the promise you've made. And then finally, you'll have more committed customers that are higher quality that will ultimately mean that you're providing more value in the marketplace

and you will be rewarded by dollars in your pocket. And so if you found this interesting or you found this valuable in your business, click the subscribe button. I have absolutely nothing to sell you. I just want you to make money in your business and I'll see you in the next video. Bye.