The Game with Alex Hormozi - Scaling Outbound | Ep 249

Episode Date: November 13, 2020

When it comes to scaling, think outside the box. Today, Alex (@AlexHormozi) talks about one of the issues that have been prevalent in the marketing community: organic outbound not being scalable. He talks about how this issue is actually not as true as you might think and how scaling outreaches can be more consistent and reliable than paid outbound.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: (1:44) - Alex explains scaling and shows calculations based on company data(4:24) - After calculating, how can you scale your numbers?(6:35) - In outbound, people are warmer than cold traffic(7:59) - Scaling outbound: multiply activity and people(9:58) - Alex shares math of getting VA in company & ROIFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What's going, everyone. In this video, what I want to do is talk to you about how you can scale outbound. 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. One of the issues that I see that's being really prevalent in kind of like the marketing communities is talking about how organic or outreach is not a scalable acquisition system and you should only use paid. And I actually used to believe this, and that's why I'm making this video.

And it turns out that this, it couldn't be further from the truth. And I also now have over time continuing to believe that Alba might actually be more scalable, more consistent, more reliable than even paid. And the reason this came to the forefront is about a week ago, I was talking at a mastermind event. And one of the girls in the audience was like, hey, I really want to have, I want to have a scale-b acquisition system because what I'm doing right now is unscailable. And I was like, well, what are you doing? And she was like, well, why do you think this isn't scalable? And she thought for a second, she was like, I don't know. I just, you know, I'm the one doing it.

I was like, right, you can pay someone else to do it. And then now you can pay more people to do it. And then there you go, right? So what I'm going to do is actually walk you through the math behind this. And just kind of understanding the theoretical piece of how this works, right? So just like there are different platforms you can do paid advertising on, right? You can do YouTube ads. You can run Facebook ads.

You're going to Instagram ads, whatever, right? You can also do outbound on different platforms as well. You can do cold calls. You can do cold emails. you can do direct messages on Instagram or Facebook or whatever, right? All of those are just different channels that you can do outbound on, right? So it could be a phone, right? It could be the email, like I said, or it could be, you know, chat, whatever chat looks like.

You get the idea, right? So there's different platforms that you can use this on. So what I want to do is walk you through kind of how the scaling works and then how you can calculate ROI the same way as metric driven as you can for paid. If anything, I mean, I think it's equally quantifiable. And so what I'll do is I'll walk you through how our numbers work just as a real-life example for you so you can see this in your own business. So right now we're doing, because this is something that we started implementing just recently because I wanted to scale our acquisition systems. And so we're using phone primarily and we do 100 cold calls per day. All right, that's what we're doing.

You're like, wow, that sounds horrible. Like, well, let's walk through the math. I'll show you. And that means, and we're doing this times five. So it's five days a week. We've got one guy who's doing this. And so it's 500 total. All right, that's the total amount that we're getting.

From that 500, we'll typically get about 10 interested people, right? And I'm defining this as people who said, yes, I'd like to have another conversation about this, whatever. Right. From those 10, we'll get seven to show up for that next appointment. And then from there, from the follow up, we usually close one sale. All right. Those are the metrics that we have right now. Now, the reason this is interesting to me, right, is that I'm looking at the cost, okay?

And so this right now is actually one person who's working part-time. They're not even working full-time. And so let's just say for, you know, money's sake, right, that we're paying, you know, $1,500, I'll say $1,600, I'll say $1,400 a week, right? $1,600 per month for this. All right? That's what's happening. Now, what's wild about this is that that means that we would be closing one per week, right, from outbound using this process, which is about what we are doing.

All right. Now, compared to the volume that we get from paid, this is really not a lot, right? This is not a lot. This isn't going to pay our bills. This isn't going to, like, keep the lights on at gym launch, right? But the process is understanding how this scales and the metrics behind it. So check this out. So $1,600 a month, right, is equating to, because this is one week, right?

That equates to four sales, right? Four sales. Now, four sales, right, means that my cost of acquisition is $400, right? $1,600 divided by $4. That's where this is, right? It's $400. Now, to put this in perspective, I usually pay $2,000 to $2,500 per sale using paid advertising. And so my cost of acquisition on outbound is actually significantly less.

We're talking like two, three, four, five, six times less than what I'm used to pay. And so the next question is, is how can you scale this? Right? Well, right now, we're getting, you know, one person to do this, but what's to stop me from having 20 people doing this? Right. And if I had 20 people doing this, all of a sudden, we're at 80 sales a month, right? Which is great. That would make a meaningful difference in our business.

and what's more is that those 80 sales in total would have cost me $32,000. 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. Which is a lot less than I spend right now. in marketing, right? Not to mention that this process also includes, like, if you take my marketing costs, not just from my advertising, but the actual team, I've got creatives, I've got graphic designers, I've got videographers, I've got copywriters, I've got funnel people, I've got traffic, like all of those are additional payroll that go on top of the ads that we're spending in order to do this. And so the next question that comes naturally from this is like, okay, so I understand how to scale the people, right? That's operations, right? You have to train.

people on how to do the script, how they, how they get your foot in the door, kind of how the conversation, generate interest, all that kind of stuff, right? But the next one's like, well, how do I get these names, right? How do we get these lists of names? And that's where the channel that you're using, right, matters, right? And so if I were scaling phones, which is probably one of the most time-tested ways of scaling, then it means you're just, you can scrape lists off of the internet, et cetera, whatever, and then just feed them into a dialer. This is not complicated stuff. There's a zillion different tools that do that. If I was doing cold email, there's a zillion different tools for cold email that you feed in

500 plus emails a day, and from 500 emails, you might get 5 to 10 responses that are meaningful. And what's interesting about Outbound that I have found is that, believe it or not, these people are actually warmer than cold traffic, which I find interesting. But I think this is just my theory on this, is that if you're in that 10 people, out of the 500, those 10 people are inherently in a moment of pain or higher interest than they would otherwise be. With cold traffic, it's more interruption-based. And so you have people who actually believe it or not who are more like, it's called buyers in power. But basically, they're kind of on their back foot, like maybe I'll see, maybe I'll click. Whereas if you're

responding to this at this point, it's probably of more importance to you. And so same thing here, though, is understanding the actual numbers. So if you're doing cold email, you probably have to have 500 per day in order for it to be meaningful, 200 minimum, right, in order for the volume to be meaningful. Same thing here, 100 cold calls a day is probably the minimum it would take for it to be meaningful. Messenger, same thing, right? Now, this is where it's interesting. It's like, well, where do you get messenger people?

Well, one, you could hit up all the followers you have or all the friends you have. That's the first and easiest thing you can do. beyond that, it's going into the groups of people, the ponds that exist, and then doing messages from there because you already know that they're qualified or they're more likely to be a certain type of avatar who you can likely serve. All right. And so scaling outbound really comes down to just multiplying two things. You have to increase, you have to get the lists, you have get the names where the pawns are, right?

Times activity, which is the effort the hundred a day, right? times people. That's it. That's the process. That is exactly what you do. And so right now I've got one guy, right, who's doing outbound, right? And he's generating one sale per week. And then you then ask yourself, well, I want to have 20 sales a week.

Well, then you need 20 of these people. And the only next question that has to come up is, well, is it worth it? And so that's simply a function of what the cost of acquisition is compared to the price. right and so in this instance if you were doing that and let's say you were getting one sale a week from someone and this is again like i said part-time if my cost of acquisition mind you right i said was $400 as long as my profit on a customer that is coming in and that's gross profit that means like after my cost of fulfillment is over $1,200 that's 3x then it is worth it and is a scalable system all right So hopefully that makes sense for you.

Hopefully, Brooke, at least a little bit of beliefs about whether or not this is scalable and what price you need to have and what kind of cost of acquisition would be necessary. This is where having some people, there's a lot of VAs who will do this for significantly less. So if you're, let's say you're paying a VA $500 a month, for example, and let's say from that VA you're able to generate, I don't know, 10 appointments a week. And from those 10 appointments, you're able to, let's say, because you're not selling something super high, like we are. Let's say you're able to sell two people a week, all right? Let's say for your business, for example. So if you have two per week, and that means you're getting eight a month,

I'm just doing rough math here, and you're paying a VA $500 per month, which is a great, great ROI, that means that your cost of acquisition is tiny, right? Is minuscule, right? It's 60 bucks-ish, right? So the question is, and if you're selling something for $2,000 plus, which you should be, no matter what industry you're in, right? Especially if you're doing cold outreach. Then at that point, your ROI is insane, right? If it costs you $60 to acquire somebody for $2,000, you're looking at just absolutely insane numbers.

You know, getting 3 to 1 is exciting. This is getting, you know, 10 to 1 to be 600, so 30 to 1 returns, you know, 32 to 1 returns. And that's something that you can truly print money on. And so when you can find these kind of arbitrage opportunities, which this inherently is, outbound is an arbitrage opportunity. And the only reason that people don't succeed with is they just don't know how to do the activity, number one, or they don't do enough of it.

And so if you can break that pattern of yourself and understand where the ponds exists, what activities and in what amount are going to generate the outcome, and then simply adding more people to that process so that you can get the amount of sales that you want on a reliable basis and not be constrained by any platform in your life. So anyways, this is why I get really excited about it when I see 30 to 1 plus returns, because I'm comparing this to paid ads. I mean, acquiring customers for $60 in just about any business is a really, really good acquisition cost, and it's just understanding how to do it.

So anyways, hope that made sense. Hope you found that valuable. Hope it was enjoyed before you. If you were somebody who's only doing paid, having the outbound kind of be a slow growth thing that just becomes this foundational base that every single month you had one more person and then you just know you get another four to eight sales every month, and one more person, another four to eight sales. That is consistent scale.

And as you add people, you can also add people on the back end, which sometimes can be easier than having the blast off that paid advertising can be, but also the troughs of when an advertising campaign stops working or you launch a huge campaign and it doesn't work or doesn't convert. That can be really difficult from a business, from a cash flow perspective, because it's uneven, whereas this is extremely reliable and consistent. So anyways, hope that was value before you. Leave a comment if it was.

And if it wasn't, you can also leave a comment if you just want to tell me to fuck off. But anyways, keeping awesome, lots of love, and I'll get you guys soon. Bye.