The Game with Alex Hormozi - Pain is the Pitch - Business Logical Fallacy | Ep 175

Episode Date: January 31, 2020

"Talk about in terms of pain avoidance (…) people tend to be more responsive to it." Today, Alex (@AlexHormozi) discusses the importance of availability for making sales and the difference between talking in terms of pain avoidance versus opportunity for gain. He shares a story about reframing his message to gym owners and seeing a huge response as a result, and emphasizes the importance of using math to guide business decisions instead of emotions.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:(0:37) - Importance of availability for sales; availability impacts marketing throughput.(2:56) - Wasting two-thirds of ad spend.(4:09) - People focus on avoiding pain instead of seeking opportunity for gain.(7:11) - Opportunity for gain and pain avoidance as math.(8:14) - Let the math guide you, not your emotions.(11:10) - Gym owners need availability for business success.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

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. I want to tell you a story about something that happened recently that was impactful for me and was just another one of the we need to be reminded more than we need to be taught lessons. And it happened this Friday on our legacy release call. And so for those you don't know, like every other Friday or something. so I kind of release new stuff, trainings, information, whatever to our Jimmler's community. And for the last, I would say, a month and a half,

maybe two months, I've been trying to get across this one point, which is the importance of availability for making sales. Simply put, I mean, right now, because we have so much data to support this, like the number of hours and number of time slots per day that you have and the number of days that you were available to take sales appointments

is a massive impact on, your throughput of marketing. What I mean by that is for the amount of eyeballs, clicks that turn into customers, right? Throughput. They have to go through all of the steps in your sales process, right? From click to opt in, to apply, to schedule, to show, to close, right? All the way through.

Like, that's throughput, right? And so availability, I don't remember, I'm going to tell you the story about how this came to be. But I've been trying to get our gyms to increase their availability. Like you need to find a way to be available more times. Like if you're only available for three hours in the afternoon, four days a week, you're just not going to make that much money. Like I'm like, I don't know how to say this differently.

Right. And I kept really banging my head against the wall with this. I'm like, why is no one getting this? I'm like, guys, you're going to make three times this much money if you just have full availability. Right. People like, ah, you know, I don't know, man. Like, just heeing and hauling, right? Just like, just dragging ass.

And I was like, what the, like, why are you not doing this? Right? And so this last Friday, I framed it differently and I had a huge response to it and I had tons of people messaged me as a result. And when I said it, I felt like it hit. Right. And the difference was for the last month, basic or two months, I've been trying to talk about how much opportunity was being lost, right? How much opportunity for gain? I was like, guys, you're going to three times how much money you're making.

Like you're going to go from having, you know, 15% of your lead show to like 35, 40% of your lead show. It's a massive difference simply by having tons of availability for people's self-schedule, right? Because they're, A, more likely to schedule, B, more likely to show at a time that's more convenient. And I have the data to support that now because we've done this across 100-plus locations. And we've tracked appointments correspondingly to different levels of availability, right? There's a whole bunch of other factors too, but this was a really big one, right? And so in framing it this last Friday compared to other times I've tried to bring this up with people, I said it differently.

When I said it, I felt everyone changed. And what I said was, guys, you're wasting two-thirds of your ad spend, right? Instead of spending $9,000 a month on advertising, I was like, you could spend three, you have the same amount of people come in your door. I was like, so that's $6,000 a month, you can be saving, right, by not having, by just simply having better availability. Like, you have this much availability. You're going to save thousands, right?

you're going to not overspend on your acquisition by by 3x right you're overspending to a car customer it's costing you three times as much to get someone in the door as it should right and so now they may that may seem subtle to you but when people saw that they're like holy shit i'm spending three times as much i'm i'm spending three times as much as i could be spending on advertising i'm like literally oh my gosh i just spend a third of what i'm spending now to get the same amount that is what clicked for people and the difference was up to this point and I was talking in the terms that I understand. And I'm going to talk the second half of this little content piece I want to talk about this.

But it's I talked about the opportunity for gain. I was like, guys, if you change nothing, you make three times this much money. Right. No one gave a shit, right? Because humans don't think an opportunity for gain, right? I'm still making the same fucking mistake. All right, talking like this. Because I told you in my 2019 lessons that people by pain not gain.

right and it's continually being reinforced for me all right and so I only talked about the opportunity for gain up to this point and instead after that it was about the pain that was being solved right about the pain of overspending on acquisition about how much they could save right and that's just because humans are illogical and they only think about pain avoidance there's so much more pain avoidant than they are desiring for gain now Now, like, that was the big shift in messaging for this last Friday that if you have to, if you're trying to communicate to someone to get them to change, try and talk in terms of pain

avoidance, not opportunity for getting, not talk about how much better their life's going to be, but talk about all the pain they're struggling through now that they won't have to have. If you talk in those terms, they're going to be far more likely to receive the message and then act in accordance to that. All right. It's a huge breakthrough for me, right? and hopefully for our Drummond community, because if they can actually change the freaking availability, then they could save two-thirds of their acquisition costs.

They wouldn't have to burn two-thirds of their ad spend every month on lease that should be walking the door to just hit a scheduler that doesn't have available anything that they can make. Right. So that was kind of the first half. Hey, Mosin, a 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.

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. The second half is kind of the fallacy that most business owners make because they're human, right? I feel like most of our, you know, our growth as entrepreneurs is just unlearning who we are, right? And learning bad habits. Anyways, an opportunity for gain and an opportunity for saving, right, or pain avoidance, whatever,

you want to throw it out there, are equal from a mathematical standpoint. And so you have to disproportionately weigh opportunities for gain, right? Because if I can make an extra $3,000 a month, it's the same as me taking effort to save $3,000 a month. It's the same, provided the cost of those things from a time standpoint is the same, right? And so the cost of 3xing your throughput is the same. You have to open this availability. So what do you have to do? Right?

But if you have to frame it to yourself that you're going to save two thirds, it's not a very big growth mindset. Because for me, I'm like, shit, I can triple how much money I'm making. But some people just wanted to stay the same and then save more money. Right. That's what most people do. And so the fallacy as a business owner is not falling into that trap and being able to see opportunities for gain and pain avoidance in the same light as simply math.

Right? Like if I can save you $3,000 a month on rent, it's the same as, me setting up an affiliate relationship with you so that you can get, you know, affiliate commissions on everything that the people in your community already buy. So it has no operational complexity in either way, but adding $3,000 a month of profit, right, that doesn't add any operational complexity is the same as me getting $3,000 a month knocked off your rent, right? But if I said it that way, $3,000 a month knocked off your rent, like all you have to do is just, like, put these signs up and ask these questions, and your landlord's going to knock off the rent.

$3,000 a month in rent. People are like, hell yeah, let's do it. I'm stoked, right? Versus doing the same setup to make $3,000 a month more, right? And they don't do it. Right? So you have to check yourself, and I do this all the time for me, not in a preachy way, I'm saying like making sure that you're not letting your emotions make the decision

and just letting the math guide you. Because as long as the operational complexity of putting any intervention in is the same, then you should simply look at it in terms of how. how much money it could swing in either direction. Right. And so that is my, that is my, my big, my big takeaway from this last Friday. I had a bunch of gym owner's message me being like, oh my God, that just made so much sense. I feel so stupid for not just having better availability because they were like, no, I'm just going to take the times that are convenient for me.

I'm like, you realize if you can just set every day from nine to nine as available and then only block off the one or two times you know you can't take someone, just doing that, right? starting as the default of full availability and then only changing the couple of times that you know for a fact that you cannot meet with someone, right? If you just do that, you could take your schedule rates from 40 to 60%, which is a 50% increase in throughput just from that. And then on top of that, take your show rates from 40 to 60%. All right. And I just have the data to back this up. And so you think about how much does it cost you to do that? Not a ton. And if you're like, well, I'm outside of the business, then how much would you have to be? And how much would one extra person who's working part-time be able to buy you back, triple your return

on ad spend, and then you extrapolate that over a year? Because everybody thinks in a one-week time frame, I'm like, come on, right? Think about this. If you're over to 3x, right? So here's me talking about it in terms of gains, that if you're going from 10 new clients a month to 30 new clients a month simply by opening your availability, month two and month three and month four, that shit stacks, right? It stacks.

and then it becomes irrelevant from a cost standpoint, right? But from the pain avoidance side, I'd say, like, if every month you have to spend one third this amount of money that you normally do to keep your business the same, how much more money is that in your pocket? So instead of spending $9,000 a month on ads, you can spend three, you can take the extra six and put in your pocket, 70-something thousand a year, whatever,

72,000 a year that you can save, right? And by save, I mean, that's direct to bottom line, right? if you're like the average gym that runs on 12% or 12% EBTA, right, 12% take home, then $72,000 or $72,000 a year is a lot of money, right? Just by opening the availability up in order to increase your throughput of all of your marketing. And also just be kind of like a business, like 7-Eleven. Like you don't have to always, you don't have to sell all day. You just have to be available to sell.

7-Eleven doesn't have to have customers in their doors at all times. In fact, I'm sure there's been plenty. times you've walked into a 7-11 or a royal farm or a wah-wah or whatever is in your neighborhood right and walked in there's no one there right but they were available to take your business right and so to the same degree especially in the fitness world we have to operate on off hours a lot of times because the clients that we have hopefully many of them at work normal jobs from 9 to 5 and I see gym owners who only have availability from 9 to noon and I'm like well who do you think's going to come in right you know what mean or like they don't take any appointments after five cool you don't have to do it but your business

does or like your business needs to have that availability you're like well what i do right now it's like well then you need to like you open to business and so you have to grow it to the point that eventually you can have someone else do it for you and that's kind of what you sign up for and if you haven't done that up to this point it might be the reason that you still haven't gotten there right so even sometimes if it takes a short term commitment from you saying listen sweetheart i'm going to be like it's going to be six months but i'm going to be able to two or three x our growth rate so that I can get back out and pay someone to take this availability over. That's fine, right? But we're talking, we're not just talking like an incremental increase.

We're talking 2x, 3x, the amount of people walk in the door and have the data to back that now, which is crazy to consider. All right. So anyways, I hope you guys, I hope you guys take that into consideration when you're trying to communicate something to your tribes, your community. Talk about it in terms of pain avoidance. Talk about it in terms of the things that they won't have to do, that they currently do. So it's basically taking things that they don't like now. removing them rather than adding things that that they would enjoy right if you talk about it in those terms people tend to be more responsive to it and uh if you are a gym one for god's sake open up your fucking love