The Game with Alex Hormozi - Your Inflow Is Your Bottleneck: Acceptable Metrics | Ep 207

Episode Date: May 19, 2020

She wished for a weapon, but not for the skill to wield it. Today, Alex (@AlexHormozi) talks about being prepared for the requirements you need to fulfill in order to reach your goal, significantly if these requirements will help you scale massively. He also shares why your inflow is probably your bottleneck and there have to be acceptable metrics that you can extrapolate off of and then work backward into the factors 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:(1:39) - Metrics: grow off everything, reach desired goals.(5:03) - Selling service: expect turnover, easy in and out.(6:53) - Goals disconnected from required actions, need multitasking.(10:00) - Inflow bottleneck, operational preparation for scaling.(15:12) - Clear priorities or adjust goals accordingly.(17:00) - Time to reach goals, scale massively with realistic improvements.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

They're like, man, these guys just expect me to sell all day. And the answer is, yes. 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 Monday morning.

I wanted to make this because I woke up with this on my mind and I think it was relevant. So I was looking through our weekly reports. and I was looking at the sales team stuff and I was looking at the GLX stuff, which is our fulfillment side. And I thought this was really fascinating. I would share this with you. So one of the things that happens is we get a lot of people who come on and they say, you know, we're like, hey, what's your goal right now? What are you trying to accomplish, right? And a lot of James are like, man, if I could get 300 members, that would be amazing.

If I get 200 members, that would be amazing. I'd get 500 members. That would be amazing. Right. And so they have these goals, right? And yet, they don't follow the simple math. of getting there and so most times the inflow is the cap right now there's obviously like you've probably heard if you've if you've ever followed my stuff for

long enough you know that I talk a lot about retention about lifetime value etc right but at a basic level there there is at some point what I would consider acceptable metrics right what that means is let's say that you're you know if you're in the service-based business you're never gonna get your turn below 1% to I mean it's just it's very unlikely right and And if you are in that, it's typically because you're growing purely off organic referrals, which is awesome. But if you want to be massive, you need to grow off everything. You need to grow off organic.

You need to grow off outbound. You need to grow off paid acquisition, running ads. And the issue that I just continue to see is, and so this last week, I think we had like 10 gyms pause on GLX. And so GLXs are kind of done for you side. And all 10 of them paused because there was too much inflow. They could not handle the lead flow and the appointments that were being set for them. And I'm going to pause that right there. And Layla was on a podcast this last week as well with, I think it was Push Press.

I think it's Push Press. And the CEO Push Press was like, you know, we've heard that the number one complaint that we hear from people, you know, from our customers who have worked with you is that they're like, man, these guys just expect me to sell all day. And the answer is, yes. because that's what you said you wanted, right? And so what's interesting for me is most people want a full gym until they actually have a full gym or see what's required to get a full gym, right? And so when we used to fly out and force gyms to grow because we didn't have limiting beliefs around growing a gym,

someone would have 80 clients at their CrossFit, and then in 21 days, they'd have 280 clients at their CrossFit, and they'd be like, holy shit, what do I do? I did not sign up for this. It's like, actually, you did sign up for this. And so it reminds me, oh, I'm going to pull this up for you. My favorite magic cards of all time, all right, was called Burning Wish. So Dr. Cashy sent me a card version was really cute of him.

And underneath it says she wished for a weapon but for not the skill, sorry, she wished for a weapon, but not for the skill to wield it. And I feel like a lot of times that's what happens is, at least for the people who are coming in to GLX underprepared, is they're like, I really want to grow. I want to get new customers, right? Our top client right now in the last 30 days signed up 130 new clients all right hundred and thirty and we actually that's in the last 30 days but she signed up 130 in the last two and a half weeks so if we give it another like one and a half weeks she'll probably top 200 new clients all right if you want a 200 300 300 400 person facility and you are not able to sign up 20 new clients a week

you will not get there, right? Because this is where the acceptable metrics parts comes in. I would like to give you permission that if you have a service-based business, services of any kind, anything that is easy in is easy out. And you're like, well, I mean, we have to onboard them and what you should be, right? But easy in, service is easy in. Switching from your CRM to another CRM, not easy, right? Big pain in the ass.

And so the likelihood that you switch is very, very, very. low which is why software and things like that are much stickier than services are and so you have to kind of accept that that comes with the territory so if you're selling service and you want to be big then you have to know that there's going to be a back-end turn that's going to occur and that's just because easy and easy out that's how it works right but if you have easy in and you're not maximizing the fact that that's your advantage and services that you can scale quickly right your inflow then you're not using one of the primary

advantages of being a service provider right and so if it's like I want to get to 200 or let's say let's say let's say 300 members right I want to get to 300 members okay cool you want to get to 300 members now your turn's 10% industry average and you can only sign up 10 trials a week and that's you maxed out right 10 new prospects per week that give you a credit card for some front-end program or a trial of some sort right you can only sign up 10 of those a week now even somebody who comes in and signs up straight into EFT what we have noticed is we still have to resell them on a longer term because really

there's the I'm gonna try it phase and then there's the I'm gonna commit phase and even if like I said you sign someone up for recurring it doesn't actually mean they'll stick until they really make the second sale and we've seen that across the board for us and our gyms at least okay so if you can only take on 10 new new potential prospects right per week and that's your cap and you want to get to 300 members then that would mean that you have to convert 75% of them week in week out and a lot of people are not doing it and 10 mind you means that you're closing 50% of four calls a day right that are showing and

let's say you're getting half those calls which means you have to have eight scheduled appointments a day now most gyms that I talk to don't even have they're stressed out of their mind with that right but that's just for them to get 20 or 30 new customers a month. You want to get to 500? You want to get to 400? You have to accept the fact that you're going to be selling all day because you're selling a service and you're trying to get to a high number. And so most times, most times people have goals and are disconnected from the actions that are required to get there, right? The numbers, the basic math. And most people just don't

do the math. So I would highly encourage you. If you know what your turn is, look backwards and think okay if I'm gonna lose 20 customers a month and I'm at 200 and I want to get to 400 a lot of times you don't just double your info like sometimes you have to do even more than that because you also lose some efficiency on the back it's part of the game right and so if you're at 10% you're losing 20 all right and so if you know you're converting half of your trials that means you have to make 40 sales a month all right the industry average by the way is 35% which would mean that if you wanted to replace those 20 you'd have to sell 60 trials a month okay of

some sort 60 friend and programs of of some sort per month. If you can't do that, you will never grow. And you will always wonder why. All right. And so this message is basically for anyone who wants to be a big dog. If you want to dominate the market,

which is the marketing that most people respond to, like dominate your competition, blah, blah, all that kind of stuff, right? You want to be a seven figure gym. Okay, cool. Then you have to do the math that seven figure gyms do. And I do not know a single one of them that do not know how to be a seven figure gym,

to take on high numbers of traffic on a week in week out basis right what I continue to see is I'm gonna turn my ads on for a couple weeks and I'll turn them off and then we gotta go service those people no no no no no if you want to scale your inflow never stops you have to be able to sign up people this week and next week and the week after that and the week after that and the week after that and fulfill you need to be doing both things concurrently and if you're incapable of doing that it means you're not able to manage your schedule of your team right

They have to know that the first two hours of the day, it's blocked on their time, is going for outbound, for ongoing fulfillment. Like they're reaching out to your existing customers to make sure that they stay. Then you have two hours a day that's blocked for onboarding for new customers. Then you have orientations, right? All that stuff. And then you have sales. And you have to disperse the meetings that have to happen in order to make this entire model

work. 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. Right? And that's with any service business. Like this works the same for us, right? We've got sales appointments. We have kickoff calls.

We have builds that happen in the background. And then we have ongoing check-ins to make sure the customer. clients are doing well right beyond that we still have daily calls with me to make sure that they're being able to sell and convert and all that kind of stuff right and so the whole point of this is if you're not where you want to be a lot of time it's because your inflow is your bottleneck and you haven't operationally prepared yourself for what it actually looks like to sign up a hundred people in a month right 50 60 80 new people in a month the math is there if you want to do

it you can do it but I'm just seeing this like more times than not and then when when Dan said it for push press that the no more complaint that people got from Jim Much is like they're just they just flood you know they flooded me with Lee they expected me to sell a day yeah because that's what you said you wanted so either switch your goal or switch your head right like because like if you want to get to here it's just math backwards right and so just most people have not done that math so here's how you do the math if you want to grow

to let's say 300 members okay and let's say your turn is 10% that means you need to sign up 30 people per month to break even now let's just get those 30 done let's say you convert half because to get the 300 you have some skills right so you're converting half your front-end people which means you're at 60 new sign-ups per month that's 15 a week all right now if you're selling one out of two that you're that you're talking to now you're talking 120 a month of people people who you're talking to ever so that's 30 a week roughly right they're talking to and you're probably selling only five days or now here's another way i could go off on it's

like we only sold two days a week it's like well good luck trying to sell you know 30 people in two days it's not it's very unlikely that's going to happen right so if you know let's say you're selling six days and you're selling 30 so you got sell five people a day or sorry meet with five people per day which is not that unreasonable it's five 30 minute sessions it's two and a half hours three hours of sales a day like this is not crazy right um um Now, you're still going to have show ups, right? Which is going to be another inefficiency. All right.

So they go 30 goes to 60 appointments a week. Ooh, interesting. All right, now we're at 60 appointments a week and we're just maintaining 300. We're not even growing to get there yet. Interesting, right? And so now we're seeing how this math starts to work out. You're like, okay, so now if I wanted to grow an extra 30 on top of that, then I needed to have even more.

I need to double what I just said. okay and so we have 30 conversions from 60 front-end sales which is half of 120 meetups 120 client conversations per month okay that and then you have half of those that show for their appointments and then you need to double that to grow right that's the math and so if you're not able to deal with that math then you will not get there and sometimes it's just like just giving the sheer reality of the situation is like it's a volume game it's a math game it's the same people who get bent out of shape over one person who says I got to talk to my husband I don't have my card on me it's like cool move on

champions have short memories right they bounce back fast they're unaffected by losses because they're just thinking I know I need to close half which means here's the news flash if you have to meet with 200 people a hundred people are going to say no and you have to be emotionally okay with that because you just understand the numbers right you know like I don't know I mean you should try and get better at your craft always of course right but if you just can't accept emotionally and this is what I continue to see is that some guys just can't take the emotional beating of having

people say no which is why they'll never grow right and like the most experienced salespeople they don't get bothered they're like yeah they understand that people come with their own preconceived notions to the call it's a not about you the salesman it's about them right and just remembering it's about them so don't get butt hurt if for some reason someone says no of course they have excuses that's why they're not in shape of course they've limiting beliefs that's why they're not in shape and so if we're gonna expect that they're not gonna come with emotional baggage to

the call or to the meeting it's ridiculous right and so then if we're to take this back one step right and we said let's say 240 consoles we're gonna have to be generating 15 leads a day right roughly huh well what is the take to get 15 leads a day in cost well right let's back into it 15 leads a day 10 bucks a lead or 150 dollars it's 4,500 dollars an ad spend per month just the math and I think that a lot of people don't confront the math they make these goals and don't think about what it takes to get there and then as soon as it even gets to a third of what it would actually take to get there to achieve what they want they're

like oh my god this is just so much so well yeah if that's what you want then this is how this is how it works it's like why I want to be a champion bodybuilder okay well I can only work out three days a week for an hour okay good luck okay right and so it's like do you want to be a champion or do you just want to be another person who also ran and that's fine if that's what you want it's just I'm not hearing that that's what you want so either people need to get real clear on what they really want or real and and and then make the adjustments accordingly or realize that it's

not actually their priority. And I could go into a whole other thing about like priorities are just priorities. There's never really conflicting priorities. You just have one that is a bigger priority than another. And if it conflicts, then the other one is a secondary priority. And sometimes priorities do conflict in terms of their nature, but not their importance. And so you just need to figure out which of these things is more important to me. Right? And most times, it's simply being able to delegate time and appropriate on a calendar when things need to get done. If we know that we have to on more, 30 new customers per week, then how do we fit, let's say 30, 30 minute consultations in?

Okay, it's 15 hours a week. I've got one team member, they're here five days a week, there's three hours on their calendar. Great. So now that one person has three hours a day on their calendar, five days a week, for taking on new customers. Okay, that seems reasonable. They still have another five hours, right? And if they have to do conversion meetings, which is to convert them into a launcher membership, from a trial or a front-end program.

Now, from those people, we know that we, again, have 30 people we gotta meet with. And so of those 30 people, and it's the say, it's gonna take a 30, it's a 30 minute consult to sell someone into membership, boom, now that person's at six hours a day. All right, this is just one employee. And so this one employee is now managing the onboarding

and the conversion sales, right? And then they have two hours a day to do continuous reach outs to the existing customers. Great, that is a role, right? And then you have a salesperson who's going to, well, I mean, that has to be a full-time salesperson who's going to hit those numbers, right? They're going to meet with 60 people, right? 60 people, six days a week. It's 10 a day.

Right? 30 minutes, it's only five hours, right? And so if you're looking at this, this is the game, is how long does it take? How many of them do we have block the time? And that is how you scale. That's it. That's all there is. Right?

And just confronting the math. Now, you can try and tweak it in control, but you have to understand, you're not going to going to have orders of magnitude improvements. You're not going to sell 100% of people who show up. You're not going to keep 100% of people month over month. It just doesn't happen, right? It just doesn't. And so you have to deal with what is, right? You're always going to try to improve, and that's normal. But if you wait for always your improvements, you will never start and you will never get to where you're trying to go. And so that is my message for the week is that your inflow is probably your bottleneck. And there has to be acceptable metrics that you can extrapolate off of and then work backwards into how much time that's

required and how many people are required to help you get there and if that means for you as the proprietor or the owner of the business that you need to work double time in order to afford the person who's going to be able to release the bottleneck then that is part of the game all right so anyways I hope you guys have an amazing Monday I hope you look at money math and I look at time math to figure out how you can break your bottlenecks so that you can get to the gym that you want whether that's Corona or not Corona or remote or launching anything or you have a B to B business it doesn't matter the metrics are all the same

All right. So lots of love. Hope you guys are stoked for this week because I am. We're super excited and I will catch you guys all soon. All right. Bye.