The Game with Alex Hormozi - What People Pay For Now | Ep 195

Episode Date: April 7, 2020

"People pay for you to pay attention(…) They want you to pay attention to them." Today, Alex (@AlexHormozi) discusses how to adapt to changing buying behaviors during a recession. He explains the importance of messaging, focusing on savings, and providing more value for the same price, as well as the significance of giving attention to customers.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:(0:55) - Messaging shift from prosperity to preservation doctrine for clients(2:13) - Present offers as best value, not premium, focus on savings(3:51) - Structure operations for operational efficiency and customer value(6:22) - Small group studios provide status and credit to clients(9:09) - Communicate changes to customers as more valuable and discounted(11:59) - Monetize free and discount offers to acquire customers, create an efficient modelFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

You can adapt and buying is actually stronger if you have the correct messaging. 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, happy Tuesday. I hope you guys are rocking and rolling and ripping and roaring and doing all the things that you are or should be doing for your business to grow. So I wanted to talk about a couple things right now because we are in a recession or about to be in one

And so I wanted to cover what people pay for now And kind of a how to change your messaging be how to change your product and pricing And see at least a special note for anybody who's in fitness How to make more valuable services. Okay, so what people pay for right now? The entire if you look at like all of gym launches ads you turn off all our old ads and turn on new ads almost overnight To acquire customers. and we are, and we're doing it well. And the reason is because we switched from what I would consider prosperity doctrine

to preservation doctrine. And so you have to make sure that you're messaging in terms of how your community and clients is no longer about the opportunity of necessarily crazy before and after transformation, et cetera, but more so preserving what they have already, like keep what you've already had don't get worse because right now every like all of buying behaviors 100% flipped and it happens for very short periods of time and if you learn and adapt to that you can actually capitalize on it now most people aren't very adaptive as they don't capitalize because they just keep trying to do the thing that was they were doing before and then they get stuck because people don't know how to

adapt right but i'm telling you because you're smart and you're listening um that you can adapt and buying is actually stronger if you have the correct messaging okay so what else do people respond to right now. Discounts, savings, all of Walmart and budget shopping was birthed out of the Great Depression. That spawned an enormous, I mean, Walmart's still, you know, fifth largest company or whatever it is, you know, in the world, the huge, huge, huge companies, right? They came out of a changing buying behavior. And it happened because people were now super budget conscious. It didn't mean they didn't spend money. They just wanted to make sure they were getting a deal, right? They want to make sure they were getting a bargain. They want to make sure they were getting a discount.

think about how you're marketing and how you're presenting offers to prospects, if rather than saying, hey, if you want to get the best thing, it goes from being the premium offer to being best value. And it's literally every other time in the world, you always want to flip that. You always want to like in every marketplace. You've probably heard me say this. There's two winners, the best and the cheapest, right? And so in this little environment that we have right here, some themes that we've adopted at gym launch are more for the same, right? So we're going to give you more than we ever did before for the same price. So that's number one.

That's an easy way if you want to maintain the customers that you have, start adding far more value than you were before to maintain them at that same level, right? And think, what would I, what would I charge before this for $500 a month? And now I need to continue to provide that at a $200 a month level, right? And so the businesses that structure themselves for efficiency and operations are the ones who come out of that's super strong. And then that is why that once the economy shifts around back to normal, they explode because they structured themselves in such way that they focused. Like if you look at Amazon, Jeff Bezos said, there are some businesses that are structured to provide value so that they can charge as much as possible. And there are other businesses that seek to continue to improve so they can charge as little as possible.

He said, we are the latter, right? And it's always been Amazon strategy. He said, your profit margins my opportunity. That being said, he's had a bazillion dollars in funding, and he's almost had free money for like 10 years. And he's kind of a one, a unicorn type style. But the fact of the matter still remains is that right now you have to look at your operations and think, how can I structure this so that I can be as operationally efficient as possible

so that I can provide as much value as possible to the people that I have, right? So it's more for the same is kind of the theme that we've had internal. at gym launch. And that's kind of been our North Star in terms of how we're, you know, creating our products and the packaging, the pricing, et cetera. And then prosperity, preservation versus prosperity doctrine in terms of marketing, right? And so from presenting an offer to a prospect, I might say, hey, there's these two programs. Program A is the premium program. Program B is the one that most people end up doing because they want to save a lot of money. Now, in a typical scenario, if I said that, that might not be the main offer that I want them to sell. In this environment,

that option B is going to be the highest converter because right now the conversion on savings and preservation is four times higher and it's twice as high as what growth and prosperity was before. So typically prosperity compared to preservation is two to one in terms of response rates on advertisements, right? That's why most people advertise that way for most of the time. But when it flips, it becomes four to one towards preservation compared to growth. Okay.

So it's a huge flip and biodynamic. make so make sure that when you're selling you're hitting those points and when you're marketing you're hitting those points in terms of discount in terms of bargain in terms of deals in terms of it being a steal etc because that's what the that's what the buyer universe is going to respond to it all right so that hopefully I've covered that piece now what people pay for now you may have heard me say this before but I think it's very valuable say again is that people pay for you to pay attention right that is what they want they want attention they want you to pay attention to them okay so if

I were doing live workouts, right, which many of you guys have transitioned to doing live workouts right now. It's not about the workout. It's never been about the workout. It's been about the attention that you give to the individual. Now, how do you do that in a remote setting? If it were me, I would demonstrate the exercise that I needed them to do at home. And I would do it in 10 seconds, right? 15 seconds tops. And then I would start my timer and say, you guys go. And then the rest of that minute while the timer is going, I'd be calling people's names out. Be like, Amy Beth, thanks for hopping on. You're doing awesome. Get a little bit lower. Ryan Carson, thanks for being here, man. Make sure you keep your pelvis forward kind of tuck in.

You know, Jason Cook, keep rocking it, dude. Keep the pace up. Don't slow down. Erica, hey, it's not time to eat a cookie right now. Like, we're in the middle of it, right? And so the thing is, as we say that, people know that someone is checking on the fact that they're there. People want credit for showing up to the workout. That's why people come to the gym, that's a small group studio, is because the trainer knows their name and knows that they're going to be expected to be there. That is what people pay for. The expectation that someone is waiting for them, right? And the attention that they get while they're doing the session.

Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words. We can out more entrepreneurs, make more money, feed their families, make better products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you do is you can just leave a review, but take you 10 seconds or one type of the thumb, it would mean the absolute world to me.

And more importantly, it may change the world with someone else. And so how do we mimic that in a remote setting? That is how. And you have to be able to call people out by name, give them feedback in the remote setting, in the live workout, so they feel that they're getting continued value. That is something that no app is going to be able to do, right? Beachbody Online is like $9 a month, right?

Kail Aintzeen's got the sweat app for $20 a month, right? They have amazing, clean, beautiful workouts, right? And you got the Pelotons and whatnot. I don't think they call people's names out. Correct me from wrong, but I'm pretty sure they don't. Personalize it like that. Like, these are the competitive advantage a service-based facility has and that you should use to be able to continue to get your customers engaged because then they know that

you, A, saw that they were there, B, feel like they got status and credit. C, they're getting called out. Everyone loves to hear their own name. And then, D, they're still getting form corrections. They're still getting motivated. They're still getting pushed to move through the entire workout while it's going. All right. So it doesn't necessarily mean you need to just work out eight hours a day because I would kill you, right?

For eight full hours or your train just need to work out for eight full hours. I don't kill them too. Is that you need to demonstrate and then make sure that all the rest of their time and attention is put on the screen so they can call people out individually for doing a great job. Because right now that is what people are going to pay for it. They're going to pay for attention, right? That's what they want. And so the more that you can think to. yourself, what would I, what would I do in the old setting for $500,600,000 a month, right?

And of those things that I would do for that value that I would normally charge, how can I still provide those and structure my business from an operational standpoint? How can I put systems in place so that I can do that at $200 a month or $300 a month? Right. And like when you, when you think about it that way, you're going to be able to come out ahead because you're going to be able to offer more than anyone else is going to be able to offer. I'm not saying that change is not going to suck. It is, right? Most people don't like change entrepreneurs. We tend to deal with change better. If right now, if there's been a part of you that's been kind of excited about this because you're like, yeah, we get to break shit and make new things, that's just you. Everyone else

is scared shitless, right? And so just remember that when you're presenting change to your team. I talked about that yesterday, like how to present those changes. And then also with your customers, making sure that when you're communicating change to them, talking about how it's going to be more valuable than what you did before and how they're going to get a better deal and how it's discounted, right? And so for most of our gyms, for example, when they sold hybrid, it was at $99 a week. All right, that's what the 101 tension was for. Now, most of them had a price point for group workouts for $169 to $200 a month roughly is what most of our guys charge, right? So what are we doing?

We're giving the 101 remote, one-on-one being the key here, remote services for half the price. right so if you if you just keep your membership you're getting what we used to sell for four hundred dollars or five hundred dollars a month for only one sixty nine or two dollars a month and so this is where you're starting to you have to maintain your value discrepancy right and so right now people value things less because the dollars are worth more every dollar two people now is worth more to them and so you have to give them more for the dollar that they are spending all right so big picture i hope that that made sense in terms of how you structure your workouts, how you structure your marketing in terms of the wording around

the copy, the offers that you make. Like right now, trying to sell premium, probably not going to be the best call. Not going to be the best call. Be real with you. It probably isn't. Unless you have super wealthy individuals, we have a great way to target them. But if you're talking Genpop, which most of us are, it's going to be free and discount offers. That's it. That's what they're going to be responsible for for at least the next six months, right? Whether or not the coronavirus thing is done or not in the next six months. Doesn't really matter. The buying behavior isn't going to shift that quickly after they've had this panic and fear. So free and discount offers are going to be the way that you're going to have to lead.

And then you have to build the monetization system behind it so that you can still make money off of it. There's a zillion ways to make money off free offers and discount offers. All right. Like I can name 11, right? You have a free plus penalty. You have free with deposit. You have free with commitment. You have a limited free, which is you have a free offer that you're marketing,

but then you're trying to upsell a better offer, right? That's another version of free. You can do a free bribe offer, which is they come in free, you give them the program if they just sign up and become a member for free today. All of these are different ways that you can run free. Same thing works for a discount offer. Hey, this is, we're discounting the first month by 84%. They come in. You can still have a one-time fee for enrollment or you can choose to waive that.

It doesn't matter. The thing is that if you have a, as long as you have the mousetrap, the monetization system behind it, these are the types of offers you're going to have to run right now. And believe it or not, people are more responsive to the free and discount offers. than they ever have been before. And as I said earlier, impressions are 60% off. Advertising is off. Google and Facebook are going to lose 44 billion this year in advertising because of Corona, right?

And that means $44 billion of advertising isn't going to get spent, which means that everything, because it's an auction-based system, is half off, right? And so if you have a monetization system behind it and you know how to make a discount of free offer and you know how to monetize that so that you can acquire customers, you don't have to necessarily give up. You can actually get through this and structure your business in such a way that when you get out of this on the other side, you create an operationally efficient model, more efficient, potentially more profitable and more valuable consumers, which is exactly what

happens in recessions. The people who have the lowest value get kicked out, right? And so it squeezes everyone else to become more efficient and more profitable. The guys who make it through grow more than they did before the rest of the risk. recession happen. So you can think about it in terms of let me be grateful for the fact that we have the opportunity to make our business better, which is how you should think about it. Because the end of the day, like I said, Superman ain't coming. It's just us. All right. So anyways, hope that made sense. That is what I would do if I was doing live workouts. That is how I changed my marketing, which is what we're doing

for our people right now. And how I would structure the actual programs and offerings and pricing on the backend in order to get people to pay now just as much as they were before. More for the same. Lots of love. Keeping amazing. Please drop a like or comment if you found a valuable. And I'll you guys on the flip side. Bye.