The Game with Alex Hormozi - The Offer Is King | Ep 529

Episode Date: April 27, 2023

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:(0:35) - The core offer should be exceptional and grow the business.(2:22) - 3 Components of a good offer(3:58) - 1st-3rd Free Offers: bribe, limited, and trial with penalty(7:42) - 4th-7th Free Offers: with deposit, “forever”, giveaway, & with commitment(11:55) - Continue to sell people even if not closing the deal.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was March 6, 2020)

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 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. 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, like 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 freight.

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. 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, shoot, in 30 minutes, I can do that. I can have pizza at my door. And sometimes it's almost gamification. It's almost a challenge that's like, well, if it's not in 30 minutes, I get the pizza free. So 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.

If pizza, everything else is just restaurants, right? Anywho, that was because of that one key irisdible offer. 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 value component to it. So I just want to break down these things into three pieces. Each offer has a component of believability, right? 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, right? 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 right if you're like hey I'm you know I'm dropping all my prices by half off because I 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 you know new 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 ROI 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 30 under 30 minutes That was valuable for FedEx. It was at you know 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 going to matter right And so the third piece is kind of the the business around it right and so that's kind of what I want to 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 mousetrap. 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 it's typically the lowest cost to acquire 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 in the day did a, he had all of his courses that he'd ever made. So high value offer, probably like $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. 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 a fitness thing, it's like, hey, our six week challenge is $1,000 or you can just sign up to become a member and get our $1,000 challenge for free and only become member for $200 a month, right? That becomes a really 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 A, B close. When someone walks in the door, obviously the vast majority of the people listening to this, are our 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 accountability coach right now during the sales process they've already said they're

not motivated they need help blah blah and so then you upsell right as america as apple buy a 28-day challenge or 28-day intensive or whatever you want to call it, accelerator, where they pay $199 or $2.99 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 lose 10 pounds in the first 28 days, you give them another 28 days free. So you have an upsell from an initial offer that makes it incredibly compelling. 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. 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, the AB close that I just mentioned, you can 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 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. They're 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. Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast that you do the exact same thing.

So if it was a review, if it was a post, if you do that, it would mean the world to me and you'll throw some good karma out there for another entrepreneur. 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 decade was a free six-week challenge. Obviously, you always have to be compliant, put stipulations for any types of things on your advertisements, states differ, et cetera. 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. 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, a good friend of mine owned a, uh, a, a, uh, a, a

a chain of, she had 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 service away for free, but they were required to use the supplements as a part of it. So that's a free, 100% free, but 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. 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 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 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 or signed up to be a part of it. So the thing is, when you have this, people are still raising their hand to demonstrate they have a need for the service, right? And 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. A good friend of mine just started running a $25,000 transformation challenge and he's getting people to buy without even doing phone calls straight on the page because it's a $25,000 challenge and it's like $300 to sign up online. So people are seeing the huge giveaway and then are choosing to participate. to have the have the chance to earn that right 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 it's more like perceived value on the back end and they're kind of sort of going to see how it goes, right? 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 carophile 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, you know, auto bill or whatever, because they're,

The thing 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 going to 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, what 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, I 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.