The Game with Alex Hormozi - The Art Of The Downsell (Service Sale #1) | Ep 182

Episode Date: February 21, 2020

"You always have that advantage cuz you are in the moment of truth." Today, Alex (@AleHormozi) discusses the importance of mastering the first sale in order to maximize throughput and revenue in a service-based business. He outlines a sales process that includes anchoring high, working down, and using humor and rapport to sell.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:(1:13) - 4 sales types(2:45) - Service sale process with high anchor and downsell(8:57) - Mastering first sale maximizes throughput with math breakdown(11:46) - Importance of providing value and getting clients invested(13:28) - Start high, work down with rapport and humor to sellFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

In that moment, their pain is the highest, right? Tomorrow it might not be there in the day before it wasn't, because the day is the day they walked in the door. So you always have that advantage because you're in the moment of truth. You're in the moment that they want to make a decision. 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. What's going on, everyone? Hope you guys are having an awesome Tuesday, or whatever day you're listening to this. If you're listening your car on podcast, all that good stuff. I hope you are rocking and rolling. So I've been a little delayed in my making of content, and that is because I've been making content in a different form,

which is visual frameworks. So I have another 24 frameworks that I'm putting together. It might end up being like 36 by the time I'm done with it. And it's going to be all around acquisition. So it's just general acquisition strategies. And really, you know, how we've built three multi-figure businesses using kind of different models than was traditional. So one that I wanted to share with you today was kind of the five sales that you must know if you were selling service

All right and so sorry it's four sales But if you look at this beautiful thing which if you're listening then you can just kind of listen along There's four sales that have to happen right the first sale is your service sale all right now You're not just selling one thing but you're gonna anchor high and then continually down sell all the way down All right the second sale and I'm gonna break down each of these sales the second sell that you need to have is gonna be your bullet on sale so this is to be the sales for ancillary services or products. So this would be for us in the gym space, your nutrition sale. Now in the nutrition cell, you're going to be able to sell heart rate monitors, you're

going to be able to sell supplements, you're going to be able to sell meals. And these are all things that you're going to bolt on because your client is going to buy these things anyways a lot of times per your recommendation. The third thing is going to be your continuity sale, all right, which is once you've gotten them in, you want to upsell the continuity. And then the final set that you're going to make is kind of prepay for the duration. All right, so I'm going to walk you through how this process works. So when someone walks in the door, and this is how you can actually maximize your client value,

because right now you're only, like right now when people start working with us, right? They're usually only selling one thing and they're doing it really poorly. So someone comes in and they're like, hey, you know, you should sign up for a membership and they hand them a clipboard with prices and say, let me know if you have any questions. Or they say, hey, just want you come work out for a week and then, you know, let us know if you like it and we can talk about membership stuff that, right? These are the typical ways that most people try and sign people up for memberships. is it doesn't really work and if you look at the math you come in way way behind a business that actually has a valid in process like you go to Hertz you're not they're not

gonna say yeah like walk around the parking lot pick a car let us know if you like one like it doesn't work that way right because they understand the game and if you want to win the game or at least keep playing the game you have to know how to play right and so the first step is understanding the sales that you're trying to make so the service sale we'll start there the entirety is that when someone comes in is the time when they're most excited to purchase right their pain is highest they got in their car they made time they drove all the way there and so for some reason you cannot close someone on that hi Lila close someone in that

in that moment then you're kind of missing something right because they came and in that moment their pain is the highest right tomorrow it might not be there in the day before it was it because the day is the day they walked in the door so you always have that advantage because you're in the moment of truth you're in the moment that they want to make a decision all right so I believe that you should capitalize on that until the most expensive thing possible and that also gets a higher investment from the client which means that they're going to be more invested, both financially and emotionally, because

there's a transfer of energy there when they hand you money. Now they're likely. So if you want to be a coaching, want to get people good results, you have to get them invested. That's part of the coaching job is to get someone invested. And if you can't do that, then you're missing out on the first and probably the most important piece of what you are being paid to do. All right. So back to our little drawing here. Okay. So the service sale, now you see that there's four sales under the service sale. That's because this is a down sell, all right? Or an upsell matrix, whatever we want to say it, is that At each of these sales, there's not just one sale that's yes or no. If they say no to the first one, you start on the second sale.

And being able to go through this and navigate it smoothly is going to be your skill set that you're going to hone over time. All right. So the first thing you're trying to do is a diagnostic set, which is selling a goal. So, okay, Darth, you know, you came in for 21 day, whatever, or 14 day, whatever, or seven day fix or six week detox. It doesn't matter, right? They came in for a widget because that is the level of awareness that they came out on. and that is the offer that you put on the front end that is getting clicks to get people in the door. Great.

Now, we can both agree that after having spoken, you want to lose 40 pounds, it's not going to happen in 21 days. Can we agree with that? Right. Otherwise, we start hacking off body parts and neither of us want that, right? Horrible cleanup for me and for you, probably really difficult to do workouts, et cetera. Ha, ha, ha. Okay. Great.

So we can both agree on that. Fantastic. So why don't I just solve your problem? Is that cool? Great. Notice the tonality here, right? It's that we're going through the sale and they're agreeing with you. They're like, no, you're right.

It's not going to solve my problem. All right. So what it's going to take is going to take you whatever, 24 weeks to hit your goal. It's going to take another 10 to maintain it. So it's 34 weeks in all. And it's only $9 a week. All right. And you're going to get me. You're going to blah, blah, blah, blah, blah. Right. Sound good. Fair enough. So you're going to say yes. Or she's going to be like, I can't afford that. And you're like, cool. What you can do is you can just prepay today. And you just put it on a card than pay on your returns. Just like that. We still switch from a paid and full to another paid and full. If he still says no, right, then you can start decreasing the duration. Right. You can decrease the down payments.

So you're like, all right. So instead of 3,000 a day, how about we put 1,000 down a day, and then we can decrease your payments over time, right? So instead of paying, you know, prepaying, I can still give you 10% off and you can put a thousand down. And then instead of paying 90 a week, you're only gonna have to pay 66 weeks. Is that work?

Fair enough. And so you might be like, yeah, I can do that. Cool, she can't do that. And it's like, you know what? Maybe the time can be. Is time coming kind of the issue? Yeah, I'm not really sure if I'm gonna like it. Okay, cool.

How about this? Why don't we just start with six weeks or 12 weeks, whatever you guys want to do, right? And let's just get you some results first, and then we'll go from there. Fair enough. All right, so let's just do 600. There's no payments after that, and we'll go from there.

Great. So when you anchor the $3,000 front end, right? The thousand down sounds like way less. And then the 600 feels like nothing, right? And so that is how you start down. Now she still says no, and she's like, I hate you. Your mustache is offensive to me. You know, my uncle was a mustache guy

and I hated him and you remind me. Okay, I understood. So why don't we, like, can I just get you, can I just get your results first? Can we just start there? Okay, cool. So I'm gonna train you for this 21 days, absolutely free. All right, and what I need you to do

is make a movement so you really wanna hit results? Yes, great. All right, so you need to make eight workouts during this period of time, all right? You need to make three appointments, all right? The first appointment's in 48 hours, which is where we're gonna go over all your food, right? If you're not gonna change how you eat,

you're not gonna change how you look. Great, you understand, awesome. The next one, and all I'm doing is I'm pointing on the contract where they're initially. All right, the next one is a feedback appointment. Like I can't change your program and make it more personalized to you if I don't get feedback. Does that sound fair?

Does that make sense? Okay, cool. you're going to show up for that appointment you're initially here I'm pointing with my finger great so the third one is your way out because I need to turn information pictures because listen there's no way we're going to be able to know if we made progress I can't get an after picture from here before that makes sense yes fantastic so you're an initial here all right so these are what you're committing to me and I'm committing to training for free for the next

21 days all right and so if you miss this as an added layer of accountability this is to get you doing this because you said you struggled with accountability the past you struggled getting going sticking with it right is that we're going to be $25 call it call it tax whatever you want to call it right motivation tax to get you to show up does that make sense ha ha ha great and so that way now I know I can get your results and still make it effectively free make sense great and so just like that you went from three thousand dollar ticket to a thousand dollar ticket to a and that's a thousand

dollar upfront so six hundred dollars up front and you could probably split pay the 600 they still can't do that then you could just close the trial all right so no matter what everyone leaves with something all right every human who walks in the door has to sign up. They don't sign up. You're not getting, you can't help them. 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 laylist posts and I will give you all the love in the world. All right, so let's get back to the show. And so you should never lose anyone ever who walks in your gym because everyone can sign out for four. free. And if you want to help them, you can still sign them up for free and you have them put their card down for contingencies. So it's a free trial with contingencies or with commitments,

which is just that they're going to follow through so you can actually get them results, which everyone will agree with when you're going through the sale because they said they want to get results. Do you think you can get results if you don't show up for the gym? No. Do you think you can get results if you don't change the way you eat? No. Okay. So then just show up these appointments. That's all you got to do. Like, you don't have to do anything. You just got to show up. Fair enough? Great. All right. So that is, that is the step down on the service sale. All right, now I don't want to make this an overly long podcast. I'll probably just talk about the second sale in the next video.

I thought I was going to be able to make it through all of them. But it turns out that was probably not going to be the case. So that is the first sale. Mastering that first sale is going to maximize your throughput. So right now, the average gym closes one out of three people who comes in the door. One out of three. So if you want to be three times better, then your neighbor, follow this sales process. Because here's how the math breaks down.

If you have, let's say, I'm going to do a multiple of three. so it makes my life easy. So let's say you get nine people who walk in the door. All right. The typical guy is closing three of them on a membership, right? Maybe, right? Or maybe, like, and he's getting 100 bucks. Okay.

Now, you are smart mofo and you're not going to do that because you listen to these types of things because you're trying to grow and trying to improve, right? And so you're like, all right, well, I'm going to close one out of nine or two out of nine on a $2,500 prepack. Right? So boom, you're already at $5,000. Like if you close nothing else, you're already crushing

through the gym across the street. But then you still have seven other sales, right? And let's say you get two of the other sales at 1,000. Okay, cool. Maybe just one. Let's just, let's not get over. Let's go one at 1,000, and then they got a contract on the back end. The next one, you get 600 with a contract on the back end.

Another one, you got 600, no contract. And the rest of them, so I think I just said five, right? And the other four, you just get their card down, right? So now all nine of these people, you have the opportunity to get into continuity. Now with the four people are on trials, do you think they're out of the woods yet? Do you think that we're just going to be like, you know what? We wish you the best. And I hope that you'll come back and let me know if you want to stay for a membership.

Hell no, because we're controlling the process here. This is our master out and they have now entered it. So that is going to bring us to sale number two, which is what we're going to do in the next 24 to 40 hours from every single one of those nine people. All right? So if we're talking revenue from just these nine shows, the person that we're trying to compete against the guy down the street who can barely pay his bills, which is hopefully not you because you're listening.

because you're listening to this is making $300 in nine shows all right they're making 30 bucks a show it's hard to be a business when you're making 30 bucks a show right that's hard it's hard to market hard to acquire hard to pay people hard to pay commissions it doesn't work right so that guy's making 30 bucks a show nine divided by 300 so whatever that math is i think it's about 30 33 whatever all right you are a smart cat you got two people to prepay out of your nine you got 1,000 it's got 6 000 total between those three you got two 600 downs all right so those are your 5 so you got whatever that is, 7,200, right? And then you got four trials. So you got 7,200 compared to 300. You're 20 times better, or whatever the math is, 23 or four times better,

than the guy down the street. And that is how one simple tweak in how you sell your service can massively change the throughput and the future of your gym or your service business or whatever is simply by catering the conversation. And the reason that it works is because you're providing more value because if you sell someone in membership you're probably not providing as nearly as much value as someone who you just sold on 36 weeks of one-on-one accountability and nutrition and workouts you know training at your facility who do you think is going to get the better before and after picture if we're looking nine months from now right the guy down the street had three

people who signed up for membership two of them are going to turn out in the first month because they got poor onboarding right and so there's going to be one left who maybe meet someone as a little bit social and maybe they'll turn out at month five, right? They probably won't get any before and afters. But you, because you learned how to have a value-based selling process that diagnosed, right, you're not practitioners, disclaimer, right? But figured out what the problem was so that you could prescribe a solution for them,

you're now able to cater your programs to people to provide more value so that at the end of that nine-month period, you'll have two people who made it all the way through because they're already prepaid, right? One person paid $1,000 probably is going to make it all the way through because they put $1,000 down. That's a pretty big stick, right? And then you've got the 600 person, which you probably got a 50-50 shot on. And the trials, maybe one of the four actually makes it through. That's okay. But you went from one, maybe making it to four or five making it all the way through it.

And because of that, your business provided more value simply because you're able to set expectations in a way that people could consume them and so that they can describe a monetary value to it and then become invested, which as coaches, that is our job. It's not programming because you can look up of workout. on bodybuilding.com and look up a diet plan. The job of our job is to get people motivated and invested in doing it. And that is why they pay us money to do this. All right. So I hope that makes sense.

If you're not using this kind of selling process of starting high and working your way down and learning how to have that conversation smoothly, using rapport, using humor so that you can have it without seeming like a weirdo, then that will be something that the guy down the street learns faster than you and puts you out of business. So hopefully you are that guy and not the guy being put out of business. So use this process on the next. next installment, I'll talk about the Bolton sales, the upsell process from there.

There are multiple upsells, and all of these are just in one of the first 48 hours, which will help you liquidate your acquisition costs, pay payroll costs, pay onboarding costs, which are important because if you can onboard and activate a client well and you can liquidate that cost, then you're going to extend the lifetime value of the customer and also make a lot more money and provide more value. So anyways, keeping awesome. Have an amazing day. I'll teach you guys on the flip side.