The Game with Alex Hormozi - How to Focus Your Team on What Matters: FOUR Key Metrics to Scale | Ep 133

Episode Date: June 26, 2019

"Ask those questions to your team as well so that they feel included; it's not just you always feeling you're driving the boat.” Today, Alex (@AlexHormozi) discusses the importance of focusing on four key metrics to grow a business: increasing opportunities, closing percentages, decreasing churn, and increasing profit. By prioritizing actions that directly impact these metrics, businesses can cut out unnecessary tasks and increase growth.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:(3:50) - Increase closing percentage and keep churn low(6:52) - Increase profit margin by reducing unnecessary costs(9:44) - Prioritize actions that are directly linked to growth metrics(12:09) - Those who prioritize growth metrics advance faster.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Everyone, happy Tuesday. Turned down Tuesday, TAC for Tuesday, whatever your Tuesdays are for you. That is what they are for us here at gym launch. I wanted to take today. It's been a hot second since I've made a podcast. We've just been busy in Santa's Workshop, putting together hybrid and all the cool stuff that's coming out soon. But coming off our quarterly meetup, which is where we have all of our directors fly out so that we can meet in person. there were some really interesting things that I kind of wanted to, I feel like that they crystallized over the, over the span of the week that we were together, kind of planning everything that needed to happen. And I thought I would share it with you for when you're either doing your quarterlies or

you were deciding on what to do with your teams. And this also sprung from several conversations I had with some Jim Lurch you reached out, unrelated, just business stuff. And they were like, man, I've got so much stuff. I'm trying to figure out what to do. And so after everyone had kind of given their presentation, for our quarterly, I kind of just wrote up on the board because I typically don't have goals because most of the goals get taken by the team.

And so I said, listen, guys, like, these are the only four numbers that I care about, right? And everyone after me saying these four numbers, I was like, I wish you had said that in the beginning because we would have routed our goals that way and I probably would have reprioritized things. And so hopefully I can share, I can save you guys some time. and maybe you can think about what your four numbers are, but I'll tell you what ours were, or what mine were, and then how you can help use those to cut out the noise and make decisions.

So, for example, I get tons of retards of like, I think I should do this, right? Or I think, you know, I've got this trainer issue, or I've got this manager issue, or I've got this client who's annoying, or I've got this, whatever it is, right? Or I've got this prior, you know, I've got 10 things I need to do and only have time to do two of them, right?

And that's like every entrepreneur's dilemma we always do it since the beginning of time. And so basically, if you understand what the four lenses are, then you can make all these decisions and you can have absolute peace about it. And then also your staff can use those as their kind of guiding light. So this isn't the core tenants in terms of how we make decisions promote and fire people. But how do we, how do we zoom in on what needs to happen and cut out everything else? Okay. And so the four numbers that I'm looking at and all of the activities that I'm tracking our team and myself towards are, One, increasing opportunities.

How can we increase opportunities? Right? And if you think about that from every aspect of your business, right? This is where it's going to get good. So if you're thinking about this from every aspect of your business, so you've got your trainers, you've got your front desk, you've got your sales managers, all that stuff, right? If each one of them can answer you how they increase opportunities for the business,

then everyone is, A, focused on doing one thing, which is growing in. But B, knowing what they can specifically do to get more, get more opportunities for the business. And it gets really interesting when you ask people who are not in, you know, the sales world, because sales is easy. Okay, I can ask for referrals, right? Okay, great. What else can you do?

You know what I mean? I guess I could be posting. Okay, cool. What else can we do? Right. I should always put the link there. Great. We always have a call to action for all the posts we do as a community, right?

Okay, great. And so when you start asking the questions directed towards the KPIs that you have as the owner, a lot of people don't even know what your KPIs are. And it seems obvious to you because it's all you think about, right? But for people who are in your team, it won't be obvious, right? And so just not only saying it once, but saying repeatedly and then having them tie their goals to them will just make a huge amount of difference for you and then because for you, you're like, great. Now everyone's doing the stuff that I want so that they can grow the business and then you're happy and they're happy because you're happy. Because most people in the team just want to do a good job, right?

When people don't do a good job, it's usually not because they have malicious intent or lazy. It's just because they just don't know what you want. So first one is increasing opportunities. The second one is increasing closing percentage, right? Now, that factors in lead nurture and sales, but it's just kind of one percentage number that you can focus on, right? And so how do I increase the closing percentages that we have, right? What are all the things that we can do?

Now, when you look at that, that's like, how do we do this, you know, how do we greet people the moment they enter the door? How do we set up our sales room? Like, what are the offers? What are the price points? How can we drill this, right? All of these types of things, you know, what's our nurture process? We can get more people to schedule, more people to show.

All of those things should be the things that are going to increase closing percentage, right? And so you can see just from the first two, it's like, how do we increase the amount of inflow? And then how do we capture more of that inflow? Makes sense, right? The third one is how do we keep churn below X, right? So for the gyms, it's below 3%. Okay? So how do we get it there and keep it there indefinitely, right?

What are all the things that we can do in order to do that? And then once you think of all of the things from every different perspective in the business, not just your perspective as the owner, but how can the trainer cut churn, right? How can the front desk person cut churn? How can the billing person cut churn? How can all of these roles that you have in your business? How can they specifically cut churn from their angle, right? And so when you get people thinking about that, honestly, A, you get tons of creative

responses from a team that you probably didn't even know existed. And you're like, oh, wow, this is super, super useful, right? But having that, this is as the third number, if you think about the flow of the business, if you can increase the amount of people, you know, signing up, you know, opting in to do stuff with you and then increase the percentage that you capture, then the only thing that you're looking at after that is like, okay, cool, I turned on a flood, but if we're not keeping them, then it doesn't matter. But if I can increase opportunities, increase closing percentage, and then keep my churn below

X, then we can scale to the moon, right? And so those become your three kind of KPIs that you want to track and then also make sure that you're tracking your team towards. And that when they make their goals for the quarter, when they make their goals for the month, it's not just like, oh, this would be nice. Wouldn't this be cool? I think we should do why. But you can be at you can ask targeted questions of like, how is that going to increase these four numbers? Right. How's it going to do that?

And if they can't answer it well, right? Or convincingly, then you can just say, we're not going to do that. Hey, Mosin, an issue. quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it. If there's anyone you think that we should be connected with, tag them in one of my or layless posts and I will give you all the love in the world. All right, so let's get back to the show. Right. And that's it. And then it takes things off of your to do list that never ends

because you're like, that's just not going to do it nearly as much as this is. If you had to bet your child's life on which one of these things is going to increase, which one would you do? Right. then people prioritize the things that actually matter and are actually going to grow those KPI's, right? So those are the first three. The last one is finance related, which is just profits, which is how can we increase our profit margin? What are the things that we can do to decrease costs in the business, right? And ideally, decreasing costs from things that don't provide value or don't provide asymmetric returns in value, right? So an example of that might be something that you put a dollar of time and attention

into but only yields 50 cents of value, right? That's where you get uneven exchanges where you're like maybe there's a return, but maybe it's not a proportional return to the amount of time and effort that you're putting into it. And that's a really, really big one because there's a ton of things that we can do to increase the business, right? Tons, there's a million things. You can stay on the sidewalk with the sun.

I mean, it's not going to hurt your business, right? But in terms of the time and attention that it takes to do that, what other things could we do with that same time and attention? And could we get disproportionate returns on that using that method? Right. And so when you're analyzing all of the goals, and this is because this is kind of like my big summary of our quarterly meetup, and I hope it's useful for you. But those are my four numbers that I told our team. I was like everything that we do as a company, everything that your departments do, whether

it's HR, whether it's billing, whether it's finance, whatever it is, right? It should be going around these four numbers. and all of the goals that you guys have all written down of the things that you want to do in this company should track back to these four things. If you can't demonstrably show me how it's going to increase one of these four things or improve one of these key metrics, then cross it off. I'm sure it might be nice, but cross it off because it's not going to grow the business, right? And so it gives you laser-like focus.

And you'll also notice that if you're looking at your own day-to-day tasks, you're going to think, hmm, what of the things that I have are not going to grow these first? four things, maybe, you know, lamenting that your trainer left, right? Or being upset that, I mean, there's a million things that take up our attention as business owners that do nothing for us, right? And this kind of just takes the emotion out of it. It says, which are these things is going to relate to the four KPIs, right? And a follow-up, the two follow-up questions are, once you have something that you think, yes, it relates to that KPI, the follow-up is, okay, how much will that cost me in time and attention? And what else could I do with that same amount of

time and attention, that might increase it more. And that gets you really creatively thinking because it gives you a tangible amount of time and attention that you can then reallocate your creative juices towards not like, let me solve this problem, but what else could I do with $5,000 and 40 hours of someone's time to increase this more, right? And so it allows you to think creatively, allows the team to think creatively. And I mean, for me, at least most importantly, it just allows you to cut out the noise, right? Because there's so many things that you feel like you should do. That's why there's always more work to do, right? Because things can always get better. Nothing's ever perfect. My business will never be perfect. And so there's always things to do, but the question is always

which one should I focus on first, right? And so figuring out what your four key metrics are, those are mine right now. And in priority for me, I have, because of the stage of growth that we're in, right now profitability is not as important to me. It's just top line revenue and growth is because I've reinvested more of it into growing. And that was the decision. made after we had enough money that I was like, we're good. But that being said, for the first seven years of business for me, it was 100% focused on profit. And so that's why I have in context in terms of how you're making decisions, you don't always want to take mine. You don't know what I mean? Because I might be doing something with different priorities than you.

But for the most part, most people, most of the time, prioritizing profit over growth is going to be a good idea most times for a small business. And for me, small business isn't a shot. It's like if you have less than 100 employees, that's the U.S. terms technicality of less than, that's not a medium-sized business, a small business less than 100. So I say all this to say, if you are not sure which of the many things you should do, look at your big four, increasing opportunities, increasing closing percentages, decreasing turn, and increasing profit. Look at those four, track back all of the activities to those four.

And then specifically, if you know that there's one of them that is lagging, on your metrics, then just laser focus on that and have everyone on your team just focus on that one thing and go maintain on the other ones so that you can have a massive lever of growth. Right. And so that's all you do in these quarterly meetups. This is all you do in your team meetings is assess where we're at, assess where the weak points are, and then focus everyone's attention on increasing that one thing. And when everyone has a clear scoreboard of what they need to do to win and the activities that are associated with them moving that big metric forward, you're going to be happy. They're going to be happy. And you can cut out all the rest of the shit that is bugging you that you don't need.

So that is how to only do what matters. And I think that this is like one of the most underrated aspects of being a business owner is being able to prioritize and decide what to do. Everyone is given the same amount of time, right? Everyone's given the same amount of time and the same amount of resources that we start with for the most part, right? Not everyone, but a lot of people are given. Most people that are listening to this started with nothing, right?

are nothing significant. And so if everyone is given the same things to start, then why is it that some people advance faster than others? The only reason is because those people prioritize actions that are more linked, more directly linked, to the key metrics that grow the business, right? I can't tell you the amount of times I see people who message in and I'm like, what's taking all your time,

what's taking all your attention? And they list out 10 things that they're doing. And I'm like, none of these things are going to grow your business, right? If you took this 30 hours a week, what else do you think you could do with it? I'm like, well, I guess we would put it like that. I'm like, yeah, I am putting it like that because that's ultimately what grows everything. And so ask those questions to your team as well so that they feel included in.

It's not just you always feeling you're driving the boat. It's like, does everyone see why these four metrics are the only thing that are going to grow our business? Right. And then once you have those four metrics, what of all the things that we came up with today are they going to be the ones that most move these metrics forward, like if we had to bet our child on it, which is the real one that we should focus on, and then cut everything else away. And if you have three of the four that you're doing while on or two of the four, then just focus your attention on the other two, right?

And I know this sounds simple, but simple is the types of things. It's so easy to do and it's even easier not to do, right? I think that's Jim Ron. The easiest things to do in life that are like so easy to be successful are the things that are even easier not to do. So anyways, I hope you guys have a terrific Tuesday, taxable Tuesday, turn down Tuesday, get shit done Tuesday. And if you are thinking about what to do, maybe figure out what your four metrics are.

Those are mine for right now. And that's what I'm driving our whole company towards. So anyways, lots of love, keeping amazing, and I'll get you guys on the food sign. Bye.