The Game with Alex Hormozi - The Offer Is King | Ep 185

Episode Date: March 6, 2020

Your offer can either make or break you. Today, Alex (@AlexHormozi) talks about the importance of having an exceptional and irresistible offer to grow a business. He provides examples of successful offers, discusses the three components of a good offer, and seven ways to ethically use free offers to acquire more customers at a cheaper price.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:(0:52) - The core offer should be exceptional and grow the business.(2:54) - 3 Components of a good offer(4:48) - 1st-3rd Free Offers: bribe, limited, and trial with penalty(8:17) - 4th-7th Free Offers: with deposit, “forever”, giveaway, & with commitmentFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

There's a famous marketer who said, for every dollar you give me, I'll give you $1,000 back. He ran an ad in the paper and he got zero responses. 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. Hello, everyone, and welcome back to, I guess my show. So anyways, I guess you could call a show. I don't know.

Thoughts. Anyways, so I wanted to make something so this is called the offer is king and that's because the offer is king So if you have a good enough offer You don't have to sell hard you don't have to have amazing copy or amazing creative You just get a lot of people to sign up for your thing and so if you really think about your business Most businesses should be founded on a core offer that is exceptional right an irresistible offer that is what it's going to grow the business, right? And so what I want to walk you through is three really good offers, the three components of those offers, and then seven ways to ethically use free. So we're going to

cover a lot of ground really fast. So three of the greatest offers of all time were Domino's offers. Some of you guys may remember this, but it was delivered to your door in 30 minutes or it's free. Right? That's an irresistible offer. And they had shit pizza. But because of that, people, wanted to make the order they didn't have to sell them on it they saw the offer and when they were hungry they were like shooting 30 minutes I can do that I can have pizza at my door and sometimes it's almost gamification almost a challenge it's like well if it's not in 30 minutes I get the pizza free so it's it was something that was incredibly compelling it was one of the fundamental keys to

their growth and why back in the days of yellow pages it was literally an entire section was pizza no other restaurant had a food category of pizza everything else is just restaurants right so any who that was because of that one key or All right. The next was 10 CDs for a penny, right? And this was from, I think it was Sony way back in the day. Now obviously it came with continuity and so that was kind of like the first trial offer.

But that offer is one of the single greatest offers of all time for those who are old enough to remember it. The third offer you may recognize, which is when it absolutely has to get there by tomorrow morning. And that is FedEx. So you'll notice the first two kind of have a pricing component. FedEx does not, but it has a really high very very very very very very very very very very very very very value component to it. So I just want to break down these things into three pieces. Each offer has a component of believability. There's a famous marketer who said, for every dollar you give me, I'll give you $1,000 back. He ran an ad in the paper and he got zero responses.

That is a crazy offer, but it's so good that it's not believable and literally no one responded to the ad. Right. And so one of the things that makes offers believable is having a reason why that you would do this. If you're like, hey, I'm dropping all my prices by half off because all my inventory is going to go bad, people believe that. They're like, okay. Or like, I'm overstocked and I got to make room for new inventory. Everything's half off. People believe that. It's a good reason why, right?

So, believability is number one. Number two is a high R.O.Y offer. So basically, an offer that people deem valuable that can be communicated in a couple of words. Like, guarantee you to your door in under 30 minutes. That was valuable. For FedEx, it was delivered to wherever you need to be or wherever it needs to go by next morning. That is valuable, right?

You can give offers, but if people don't find it valuable, it's not gonna matter, right? And so the third piece is kind of the business around it, right? And so that's kind of what I wanna cover with free offers because you'll notice the penny offers basically free. The Domino's Pizza offer has a free component to it. And so understanding how to use free as a marketer is probably, in my opinion,

the single most valuable thing, that you can learn how to do. It's learning how to build a better mouse trap. And so right now I'm working on a book called Acquire, and the subtext is building a better mousetrap, which is just kind of like how to structure offers in a way that you can get tons of volume, but also make money on the offers, right?

And so this is, you know, my notes for the different ways that you can use free offers. I think I have seven on here, so I'll walk you through them pretty quickly to just kind of explain them. So the benefit of having free offers, is that you get the highest volume of leads, right? Number one, number two, it's typically the lowest cost

to acquire our customers, so that's number two. And the third is that, in my opinion, the key to having massive growth is to having a free offer, right? And especially something that's irresistible that can spread through word of mouth that other people can comprehend. All right? So, first of the free offers is a free bribe offer, right?

So this is where you offer a, so when someone comes in, you offer a program for free as a benefit for signing up, right? So Frank Kern, way back, current way back in the day did a he had all of his courses that he'd ever made so high value offer probably $12,000 in value he said I'll give you all of the courses that I've ever made absolutely free if you sign up for my $397 a month continuity right in my newsletter or whatever right so that's a free bribe offer so you can use the word free brings lots of attention has huge value in ROI but it was a

free with purchase right so that's kind of the idea is like if you buy this much smaller thing you get this huge value thing for free and it's also a really nice price anchor okay so that's number one if you're doing in the fitness thing it's like hey our six-week challenge is a thousand dollars or you can just sign up to become a member and get our $1,000 challenge for free and only become a member for $200 a month right that becomes a compelling offer lots of people say yes and you get people straight into continuity all right the second is a limited free offer a limited free offer is let's say this is an AB close when someone walks in the door obviously the vast majority

of people listening to this are a gym owner so I'm gonna just make it gym specific so if someone's coming in you say okay the free thing let's say you sign up for a 14 day or let's say a 28 day you come in for 28 day promotion the free thing has one you know you could say 28 day trial they come in it's one day a week of workouts you have no personalized nutrition no no no no no accountability coach right now during the sales process they've already said they're not motivated they need help blah blah blah and so then you upsell right as americans as apple buy a 28 day challenge or 28 day intensive or whatever you want to call accelerator where they they pay 199 or 299 or whatever

for the enhanced version that has three workouts a week or unlimited workouts and personalized nutrition and an accountability coach and if they don't you know lose 10 pounds in the first 28 days you give them another 28 days free right so you have an upsell from an initial offer that makes it incredibly compelling right that's the point so they get all this volume for free but then you can sell upsell three out of four people into a paid offer all right so that's how you use free and you can monetize it the third way of using free is a free trial plus penalty. So this would be a down-so. So these can be used in conjunction with one another. So if someone

doesn't take that, that, you know, the AB close that I just mentioned, you could say, awesome. If you're going to stay, then you have to put a card down because you want to be held accountable. You have to work out this many times. If you miss your workouts, we're going to charge you for the missed workouts. And you have to attend the, you know, a feedback session and a transformation picture session and a nutrition session, right? If you know show any of those, it's 50 bucks. And so they have a huge motivator to actually consume your product or service. So the likely they convert on the back end is significantly higher. Right.

That's the point. And so that way, at least your trials become more qualified trials or more invested. And it's a really easy close to close someone on a free trial. If you can't close free trials, then you have other issues. Hey, if you're a return listener and you have not rated or reviewed the show, I want you to know that you should feel absolutely terrible about yourself and everything else in the world. I'm kidding. But it would mean the absolute world to me if you guys would go ahead and do that.

You don't even have to pause the show. You can keep listening and you can just do it with your thumb right now. It'll take you less than 60 seconds. And like I said, the only way that podcast grows through word of mouth and this is you joining hands with me and helping as many entrepreneurs as we possibly can because no one is coming to save us. It's just us. All right. So please go do that now. And let's get back to the show.

Okay. The fourth one is a free with deposit. So this is a classic. The old six-week challenge that we ran for a very, very, very long time. It was probably the most popular fitness offer in the last day. decade was a free six-week challenge obviously you always have to be compliant put stipulations for any type of these things on your advertisements states differ etc but that's where if someone hits a goal they do an outcome they can

get their money back or get it credited towards something so it's like it's free with a contingency so it's like you put X dollars down if you do X Y and Z you can either get it back or you can get it towards a program whatever right that's kind of the pitch there so it's a free with deposit so free with stipulations All right. The fifth way of doing free is free forever. And this is a really compelling offer.

So this is where you have to really know how your mousetrap works, right? So if you have multiple ways of monetizing a customer, I could say, for example, I will train you for free, for legitimate free. Like I will give you free training, straight up, your membership is true forever, right? As long as you just do the things that I tell you to do,

which may include buying supplements from us. That's part of the program. Now, a good friend of mine owned a, a chain of a franchise of weight loss clinics and they made only like 5% of their revenue on service and they made 95% of their revenue on supplements and so people would come in and they'd essentially give the the service way for free but they were required to use the supplements as a part of it so that's a free a hundred percent free but you're you're bolting on a different revenue stream so

that's where you can offer multiple services and monetize a different service than the one you're giving away for free free, right? And especially if you have something that's high margin, you can give that away for free. If something's high margin and low value, it's an easy thing that you can give away for free and then give something else away that's higher perceived value or make them buy something that's higher perceived value. People tend to appreciate physical products more than they appreciate service or value service. All right. So that's kind of a free forever model, which is really understanding that how you can monetize the second need, the next thing they're going to need after the first thing.

All right. The sixth way is a free giveaway. This is a classic, you know, you run a, you run a free giveaway, let's say meals for a month, right? I'll pay for all your food for a month. I'll pay for your whatever, right? And so you get tons of people who are going to opt in for that and you say like, well, we, you know, we picked one person. But if you still want to do the program, it's this and we'll give you a discount since you, you know, signed up, right? You know, signed up to be a part of it. So the thing is, is when you have this, people are still raising their hand to demonstrate they have a need for the. So, you know, service right and so if you have a giveaway that's perceived as high value and something that's related to the core offer that you have you instantly get tons of very cheap leads that are qualified for the service all right a good friend of mine just started running a twenty five thousand dollar transformation challenge and he's getting people to buy without even doing phone calls straight on the page because it's a twenty five thousand dollar challenge and it's like three hundred bucks to sign up online so people are seeing the huge giveaway

and then they're choosing to participate to have the have the chance to earn that right now now obviously with giveaways and things like that you always have to make sure you're not gambling all that kind of stuff but I'm just talking big high-level marketing all right the next and probably last one of these seven there's probably more these are just the ones I thought off on the top of my head is a free with free with commitment so not contingency but commitment so that's where you say your first 28 days or your first month is free as long as you commit to a nine-month contract or you commit to a whatever, right?

And so when you do that, you can still market free. You'd have to, again, put the contingencies in. You want to be a compliant advertiser. But that way, you can still give people free on the front end. It makes the sale very easy, puts a little bit more the onus on the fulfillment. But if you get the commitment, which you should, then you will be able to convert a very high percentage to people on the front end. And typically, at higher average contract values,

because they're not confronting that price on the front end. on the front end, it's more like perceived value on the back end and they're kind of sort of going to see how it goes. Now that being said, during the process, you still need to sell the people even if you're not closing them. So even if someone has their car-and-file and it's planning on rebuilding, you still need to sell them on staying. So just a big mistake that I see happen all the time is that when people give trials and

things like that, they're not actually, they just sell the trial rather than selling the continuity. Selling someone on trials, it's just selling them on trying it. You have to still sell them again, even if they're on auto-bearing. bill or whatever because the thing is is you know 30% of the people who go through are going to immediately call you up and say oh no I didn't mean to let that go through and then you have chargebacks and all sorts of crap so you don't want that make sure they know they're gonna get billed and if it were me I'd probably only

bill the people that I knew had been sold and had kind of at least verbally agreed to it we already have the contract but at least I know that they're in so those are seven ways to make free offers to get lots of people in the door and make irresistible offers that will ultimately make you more money so learning how to monetize free is one of the biggest tools in your skill set in your toolbox and if you don't know how to do it you will be a significant disadvantage because your competitors will be and they can acquire more customers at a cheaper price than you do and if they can monetize them in the ways that I just outlined and you just

know the metrics you know what percentage convert what percentage stay with the average ticket is and that's why knowing the math is so important but if you know those metrics then you can market with reckless abandon because you know what your LTV is and you know that you can win based on those numbers. So anyways, hope that was valid before you. The offer is absolutely king. Like, if you get the offer right, someone should be able to explain to someone else in like

one sentence or two sentences, what it is that the offer is. If you can't explain it like that, then it is not clear enough to a prospect. And if you get the offer right, it will make you more money than you know what to do with.