The Game with Alex Hormozi - *Why Things Don't Happen The Way You Expect Them To*...And How To Be FREAKISHLY Accurate with Your Predictions | Ep 122

Episode Date: April 18, 2019

It requires more than just thought and will require real effort to help build the business. Today, Alex (@AlexHormozi) discusses how to reverse engineer goals to a precise level and achieve gym growth. Using a step-by-step guide, he breaks down how to reach a goal of 300 EFTs (electronic funds transfers) and the strategies and tactics needed to get there.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:(3:37) - A step-by-step guide to achieving a 300 EFT goal(5:59) - How to make predictions based on real numbers(12:25) - Lead generation and conversion strategies for a small business(14:12) - EFT goals and lead generation strategies(17:35) - Making accurate predictions for business growthFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What is going on, everyone? Hope you guys are having a thankful Thursday full of thoughtful things for your people that starts with TH. Anyways, I wanted to break this down because it just came off a full day yesterday of having our top 10 Pristice Labs sellers out to Austin, which was an awesome full day. We got to share best practices on the selling side and on the gym owner side, which was super, super cool. So tons and tons of nuggets that I will be dropping for our legacy group tomorrow based on some of the findings there. But one of the conversations that came up during the full day was how to basically reverse engineer goals to a freakish amount of precision. And so if you've been involved in our community at all, a lot of, what's up, Sam, a lot of people in my community and then who work at Jim Watch would say, and I'm, I'm just saying what they tell me is that Alex's back of napkin math is very, very accurate. And so I make decently far out predictions six months, nine months away of how many people we're going to have, how much rough we're going to have, what we're going to need to sustain the growth that we want to hit.

And usually those things are very, very accurate within a pretty small margin of error. And so what I want to share with you is the process of doing this. And of course, this is going to be really tactical and really physical. help your business so it'll be less this type of thing is the type of thing people are like oh man it's going to require thought this isn't going to be like mental masturbation where I can just like think and feel good this is actually like the real shit that builds your business so sorry this is going to be run of real ones and I try and make some of the softer pieces because I know everyone loves those but like I have

more obligations to help you make more money so anyhow so so I'm going to give you the the numbers that Monica Batar came up with yesterday she didn't come up with them this is what she approached and we broke them down for her. And then I, and I broke them down for someone else afterwards. And I was like, you know what? I think it would be good to do a sample of this for everyone here.

So she was at 100 EFTs, so she 100 recurring members at her gym. And she had added 50 EFTs the month before. So she basically restarted her gym. She had a huge emotional issue that happened, some big family issues that went on. And so she basically closed her gym down and started over. And was still able to maintain her legacy agreements

because of how much she had cash she'd stopped. So anyways, she basically went from zero to 100 in like two months. That being said. And she's a stud. She was a subfigure gym owner. Like she's a beast. But she was like how quickly and how should I set my goals for when we should hit what and how long it's going to take you? Right.

And so I want to break this down for you because I did it for her in like six minutes. And she was like, holy shit. And there's a lot of steps to it. But they're really, really straightforward. So she has 100 EFTs. All right. She has 100, man, seriously, 100 EFTs. Great, okay, perfect.

You guys can see it. Okay, so she's 100 active members. Now, we know that she wants to get to 300. All right. So she's trying to get to 300 EFTs. And when she started talking to me, she said, I don't think I can handle more than 200. And I was like, well, let's do the math.

And so she could handle 22 people per session, okay? And with 45 minute sessions, she could do three hours in the afternoon, three hours in the morning, and have eight sessions a day. So that would be 176 people per day that she can service. And that's with perfect attendance spread across. But that's on Monday, Wednesday, Friday. If she's doing Tuesday, Thursday, Saturday, then she gets another 176. That should be an addition side. All right?

Which means she total would be like 350ish, right? So I said, I think 300 is a very easy goal for you to hit because like your actual max is significantly higher than. So let's hit 300 as the goal. All right. So that's where the 300 came from. So let's go back. So now she has 300, which means she is a 200 delta between where she is currently and where she would like to be. Right.

So I was like, let's set a goal for this that seems reasonable. Do you think gaming, you just did 50 EFTs in a month? I was like, let's just say that we try and gain 20 net the next 10 months from where you're at now. Okay. So that means that she gained 20 for the next 10 months, she'll get to 300 before the end of the year. She'll be there at like November. Okay. So 20 per month. But what is that actually, I freaking hate this marker. Okay. What does that actually mean though? Right. So everyone's like, okay, cool, 20 per month. I thought this was supposed to be a hard mess. Ah, it gets more complicated, but it'll get more accurate. So check it out. We know she signs up plus 50 per month, right? We also know that her attrition is 6%, which means that she loses 6% of her customers month over month.

All right. So the reason I'm going to say this is back of napkin is because it's not going to be perfect, but it's going to be really, really close to accurate. And I'm going to show you why. All right. So if she's got 6% attrition, then I'm going to take like one of the last months that she has here. Okay. So let's say when she's at 270 EFTs, all right?

So that's going to be one of the last months near the end. And I'm going to take 6% of that number, okay, 0.06. And if you want to know how to do math really fast in your head, just everything is tens, fives, and ones, okay? So if I know it need to know what 6% is, I'm going to take 270, take 1%, take 1%, which is moving it over, which be 2.7, multiply by 6, which means I'm going to have 12 plus 4.2,

which means it's going to be 16.2, okay? That's what 6%, if you're curious on how to do this in your head. Anyway, so 16.2 is what her attrition is going to be on that last month, right? Now, if we also have to add that 20 EFTs of growth, it means that what she actually needs to be signing up is 36 people per month. Ah, it gets a little more complicated. Now, so she has to sign up 36 EFTs per month, including her attrition. Now, mind you, in the beginning, if she signs up 36 per month, she's actually beginning at a fast rate, which means she might hit this in like maybe, eight months, right? And I like sitting my goals long and achieving them early, so I recommend

doing it this way. Now that being said, it also gives her room to, for like, I'm going to turn fuck up and have something break along the way, which is likely, right? So, let's go back and let's reverse engineer the 36. So if she has 36 EFTs, right, that she needs to sign out monthly, and we know, so I'm going to start, I'm going to start it at the end, so you guys can see everything, hopefully you're following along at home. Okay, so 36 EFTs is the back end, right? Now we're to go backwards this way. Now, in order for her at 36 EFTs, we know that she converts 66% of people from her front end program into her continuity. Okay? So if she's doing 36, sorry, 66% then that's going to be roughly like 55 people. I can probably do the actual math.

Let's say 36 divided by 466. Da da da da, 54.5. See? Head math. Pretty good. Okay. So 55 people are going to be if she's doing two, if she's converting two-thirds, which is fairly standard for much than Jim Lord's community. Now, mind you, the way that these stats become accurate is by using the stats that you have right now.

It's not by saying, I should be converting 80%. Once I do X, Y, Z will be at, boom. Forget about all that. What are you doing now? And then when you use the stats, you're actually doing now, when you're messing stuff up, and you make your predictions off of what you're doing right now,

what is, you'll be amazed at how accurate there. Okay. So, 55. people have so this is EFT this is signups so I'm gonna say front end sign ups all right now uh-oh we also know there's another drop off she usually drops 10% of people between sign up and start okay so she's losing 10% of people that it means she's gonna be signing up 61 people all right 10% off of that is 55 okay is actual sign-ups all right now net. I'm going to say net front end signups here. All right. She loses 10% between sign up and start.

Cool. Now, this is per month. Okay. So I like to get to weekly so that this can become a little bit more tactical. So let's divide this by four instead of four. And I do that because I like to give myself a little bit of wiggle room. So if I can do it in four weeks rather than four point three weeks, I'm still heading my goals. Okay. So this will be 15 people per week that she needs to sign up. okay, this is getting a little more tactical. But what does that mean?

So right now, we know that she converts, again, two thirds of people who walk in her door. She's a good salesman. So she converts two out of three people who walk in her door into a challenge, okay? Or a front end program of her choice, whatever, right? Which means 22 people are going to need to actually sit down with her. All right?

So that's going to be shows. Now, of the 22 people that sit down with her, she has a 50% show rate, which means she's going to need 44 people, scheduled in order to hit that 22 shows. Now, right now she does 75% of her leads get scheduled. So if we've got 75% of, so 44 represents 75%, which would be 3 quarters. So divided by 3 is 15 plus 15 is 60.

Cool. It's actually 59, but I'm just going to say 60 for minutes. 60 people 60 leads okay so now she's got 60 leads that she needs to get per week all right now how much does it cost her per lead right now cost her about $12 per lead all right which means she has to be willing to spend for you're scheduled 22 shows 15 closes okay cool we're good um I just want to make sure that I'm not messing y'all up. 15 times a week, 22 show, 44 are scheduled from that, that's 60 leads. Okay, good.

Now, that means that she's spending $720 per week in ads. Okay? Now, do-do-do-do-do. That means that per day, she's spending $100 roughly, let's just say $120 roughly, today. Now, 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 word 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. We also know that in order for her to hit 120 to get that, she usually had like only one third of her ads are winners. Okay. So she's spending $10 per day to get this from winners, right?

Per ad set. That means that she has 12 winning ad sets that are working, which means she created 36 total ad sets to get her number. All right, 36 ad sets to get 12 winners. Okay, 12 letters. All right. So, in order for her to hit her goal, what she is going to need to do, right, is that if she's doing 15 signups per week and she signed it and she's selling people five days a week,

it means she needs three signups a day, which means she needs to sit down with, so divided by five, about five people a day. All right? So she sits down with five people a day. and it means that per day, if she's getting 60 leads per week, she's going to get something doesn't seem right here. Sorry, see, this is what happens when you do a lot. Something doesn't seem right here.

60 leads, 22 signups, something got lost, because I know it would be more leads than this. 60% of children are 40. No, I guess this is right. Okay, so if she's got 60 leads a week, right, that are coming in. then we know that she's going to be spending basically $3,000 per month in ads, right? Well, it's $120, so it would be $20 times $3,600. All right? So $3,600 a month in advertisements.

And that every week, she's going to need to make 36 ads knowing that two-thirds of those ads aren't going to work. Okay? And so if we have to break this down tactically for her, she's going to every single week make 36 that, which takes time. This shit takes time, right? Four hours probably, maybe more. Four hours a week she's going to be making advertisements.

From there, that is going to generate her 60 leads per week that she's going to be able to work. She's going to get 44 of them scheduled up the 60. Half of those people will show, which is 22. Of those half that show, she'll close 15 per week. Of those 15 per week that she's, scheduling I just switched to monthly here I'm probably confusing but if we're doing it per week then she's probably going to lose 10% which is one and a half so she's going to have 13 people who start per week of the 13 people that that actually start which is this number she's going to

have two-thirds of them actually finished which means to see me closer like nine people finishing and that's where you do the times four converting and that gets you to 36 EFTs which with attrition gets her to her goal within 10 months. So if right now you're like, huh, I really want to hit X EFT goal, you have to break it all the way down in terms of what you need to do to get there. So that could like and for you, that's assuming and you have to assume the numbers you have. Okay. So she has a really good scheduling percentage.

She has a decent show percentage and she is a good sales percentage. If you tweak some of these numbers, like let's say she's only scheduling half of these people, then we're looking at like 90 leads. just if we went from 75% to 50% on her schedule rate. If her show rate, because he did this with someone else, was 30%, then all of a sudden this number, let's just change two of the numbers to show you how different this can be. So if she can schedule, if she's scheduling 50% instead, okay, she needs 90 leads. If she then is only having a third show, then it means that we have to, let's just say 25%

for math sake so that I don't kill myself. All right, that means that she needs 190 leads. per week right now very quickly that number just tripled by by tweaking two of the numbers and so you have to use the numbers that are real for your business all right now like what's actually happening you know what you wish is happening like well once we hire this new appointment center once i get this new salesperson in or like not off the one hot day that you once had in sales but you need to look at how many appointments that i actually meet last month and how many of them that i actually close and how many of them actually started and then use those numbers and you'll be absolutely flabbergasted at how accurate

your predictions will be. And so this is just how you can forecast what you need to do on a daily basis. She needs to have five people show up, which means she needs 10 appointments per day. Done. That's what she needs. She needs 10 appointments per day. And that's how we know that she's going to hit this goal, right? That's how this works. But if you want to forecast anything, take the numbers that you have, take what's real, and then see what the logical next step before that that needs to happen. Like, you can even go even closer to that. So to get those leads, I need X amount of clicks, and my funnel is convert, like my landing page is converting at X. And so you can go all the way back. You can go even further and do this. I just don't want to overcomplicate

for everyone. But, like, that is how you make predictions. And so, like, when we make back of napkin, math predictions based on like how many support reps we're going to need an X amount of revenue and how many applications we need to drive growth to hit this goal. This is how we break it down. It's like we need this many applications. If we have this many applications, this many schedule, this many are showing. This is what we're closing. This is what the average sales guy is closing per month. Not what they should be closing, but they're actually closing. And in order to hit this volume goal, I need this many salespeople at current level, right? I'm sure if we can improve things, awesome. But the thing is is your improvements will happen, but would scale other things

will break. And so that's why predicting based on current numbers becomes so accurate because the improvements that you make are going to be to fix broken systems. And the systems will always be broken because as you are growing, things brick. You always need to be constantly refixing things because what works to retain 100 clients is not what works to retain 200 or 300 or 500 EFTs, the systems that you create break. And that is part of growth. Welcome to business. So anyways, hope this was valuable for you guys. If you can drop a comment or tag someone who's on your team.

If you want to be frequently good at predicting things, don't do best case, do current case, and give yourself a little bit of wiggle to mess up, and then you'll be amazed, and your staff will be amazed at how accurate your predictions are. And fun math trick. So I told you

that, like, so fun fact for everyone here, I, for the longest time, when we talk about limiting beliefs, I, for most of my life, thought I was really bad at math. Okay, that was the thing. Most people who were in our world would be like, Alex is really good enough, right?

I do math all the time. And it was because one day I was like, why do I think that? And I traced it back to like, I was really good at math, and then I had this one pre-coct teacher who was horrible. And I basically just didn't pay attention to anything.

You're just a horrible teacher. Or maybe I didn't take more responsibility to class because I was 15. I wasn't at that level of development. But from that point on, basically everything after algebra two, I had no idea what was going on. right so I thought I was bad at math but here's how you can do and like to be fair you

really never need calculus of business for most part right but if you want to know how to do like math really quickly in your head which I love doing it like calculating tips and all that kind of all that kind of stuff is that everything is on tens fives and ones okay hopefully I'm just adding bonus value for you guys okay so if I need to take let's say 17% of 240 okay then what I I'm going to think of in my head is I've got 240 right right I've got 240 I'm gonna think what's 10% of them boom that's 24 right you move the decimal and then what's half of that to get my five right is 12 so 15% would be 36 right but I

have two more percent that I have to take care of well what's 1% 2.4 you move the decimal twice which means I have to add 4.8 to my 36 which means 40.8 is 17 right you can check your calculators that's what it is All right. And so if you're like, how does Alex take 16% of blah, blah, blah, blah, it's like, this is how you take the percentages. You do your tens and then you get to your five and then you add your ones. And so you can do this from a multiplying standpoint. You can do it from a division, like from a from a getting percentages standpoint. But like that's the hack. It's like when I have, you know, you know, whatever 320 and I want 16%. Right. 320. 16%. So I'm going to go. 320 in my head 32 is 10%, 16% so only half of that which is 16, right? I'm gonna add that to it, it's 48, and then I got my 1% that I have to add on top of it, which is 3.2, which will take me to 51.2, right? You guys can check it on your calculators.

So if I'm doing 16% of 320, that's how you do it. You can do it in your head, and everyone's like, oh my God, you're simply to math. It's not really. It's just tens, fives, once. And so if you want to do this for yourself and have a party tricker, just I think it's really useful because you can get really good estimates in your head and not constantly have to pull a calculator out, which kind of slows your momentum down. So anyways, fun trick for you there.

But that is how we make frequently accurate predictions, and you should apply this to your business. Just logically reverse engineer the goals that you have. Lots of love, drop a comment, double like. Have an amazing day. And I'll get you soon.