Podcasts > The Game w/ Alex Hormozi > 3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

By Alex Hormozi

In this episode of The Game with Alex Hormozi, entrepreneur Ben Francis (founder of Gymshark) joins Hormozi to discuss branding and business strategy. The discussion centers on the impact of real-world experiences in fostering brand loyalty, as demonstrated by Gymshark's success in hosting fitness expos and cultivating personal connections.

The conversation also explores the importance of long-term brand-building versus short-term business metrics. Hormozi and Francis emphasize the need for entrepreneurs to establish enduring brands that transcend the founder's lifetime. They examine strategies for balancing brand-building efforts with direct response marketing and explain how a consistent commitment to brand equity can yield compounding returns and higher pricing power over time.

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3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

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3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

1-Page Summary

IRL (in-real-life) vs. AI/digital experiences

Alex Hormozi emphasizes the high demand for genuine in-person experiences that digital interactions cannot fully replicate. He points to Gymshark's success, attributing it to fostering personal connections at fitness expos which resulted in brand loyalty and higher sales.

Hormozi and Ben Francis, Gymshark's founder, highlight how exceptional in-person events create a multiplier effect, as attendees share their experiences within networks, amplifying the brand's reach. Brands like Gymshark and GymLaunch strategically invest in physical retail and meetups, recognizing their unmatched impact on cultivating brand allegiance.

Long-term brand-building vs. short-term business thinking

Hormozi stresses the importance of entrepreneurs adopting a long-term approach to building iconic brands, rather than solely focusing on immediate business metrics. Ben Francis admires brands like Range Rover that become industry symbols transcending the founder's lifetime.

Hormozi contrasts this vision with practices of arbitrage businesses overly focused on return on ad spend metrics, which can lead to unsustainable models. He cites New Balance's remarkable turnaround after shifting from direct response to brand building, despite initial losses—the investment paid off after 18-24 months.

The importance and value of branding

Brand associations drive higher engagement, loyalty, and pricing power

Hormozi emphasizes that compelling branding leads to higher response rates across marketing efforts. By associating products with aspirational elements customers love, brands can witness higher long-term advertising returns.

Consistent brand-building yields compounding returns

Investing in top-of-funnel brand awareness allows brand equity to compound over time, permitting brands to maintain a positive stance while "under-asking" relative to the goodwill built.

Balancing brand-building and direct response

The optimal brand-building to direct response ratio is often 75:25 or 70:30, as evidenced by New Balance reallocating its marketing budget from 70:30 to 30:70. Hormozi advocates a "give to ask" ratio of 3:1, suggesting iconic brands should aim for 6:1—continuously investing in brand equity before relying on it for sales.

1-Page Summary

Additional Materials

Clarifications

  • Arbitrage businesses focus on exploiting price differences in markets to make a profit. They often prioritize metrics like return on ad spend to measure the effectiveness of their advertising investments. This approach aims to maximize revenue by capitalizing on discrepancies in pricing or valuation across different platforms or channels. By closely monitoring and optimizing these metrics, arbitrage businesses seek to generate consistent returns from their advertising efforts.
  • New Balance's turnaround after shifting from direct response to brand building signifies their strategic change in marketing focus. Direct response marketing aims for immediate sales, while brand building focuses on long-term brand recognition and loyalty. This shift allowed New Balance to invest in creating a stronger brand identity, leading to improved customer perception and ultimately increased sales over time. By rebalancing their marketing strategy towards brand building, New Balance was able to see positive results after an initial period of adjustment.
  • The "give to ask" ratio is a concept that emphasizes giving value before asking for a sale, focusing on building brand equity through generosity and engagement. For iconic brands, a suggested ratio could be 6:1, meaning they should prioritize giving six times more value through brand-building efforts before expecting a return in sales. This approach aims to cultivate strong customer relationships and loyalty by prioritizing long-term brand-building over immediate sales conversions. Hormozi suggests a shift from a 3:1 ratio to a 6:1 ratio for iconic brands to ensure sustained success and a positive brand image.

Counterarguments

  • While in-person experiences can foster deep connections, digital experiences offer accessibility and convenience that can also lead to strong brand loyalty, especially for global audiences.
  • The success of a brand like Gymshark may not solely be attributed to in-person events; online marketing, social media presence, and product quality also play significant roles.
  • The multiplier effect of in-person events might be limited by geographical and logistical constraints, whereas digital campaigns can achieve global reach instantly.
  • Investing heavily in physical retail and meetups may not be a viable strategy for all brands, especially those with limited resources or those operating in digital-first industries.
  • Long-term brand-building is important, but short-term metrics are also crucial for businesses to ensure immediate survival and to fund long-term strategies.
  • While iconic brands may transcend the founder's lifetime, not all businesses have the goal or the capacity to become industry symbols, and some may succeed with a more niche, targeted approach.
  • Direct response advertising can be sustainable if it's part of a balanced and adaptive marketing strategy that responds to market and consumer behavior changes.
  • The turnaround of New Balance may not be solely due to a shift in marketing strategy; product innovation, market trends, and other factors could have contributed.
  • High response rates to branding efforts are not guaranteed; they depend on the quality of the branding and its resonance with the target audience.
  • Brand associations do not always lead to higher engagement or loyalty; missteps in branding can lead to negative associations and damage to the brand.
  • The idea that consistent brand-building yields compounding returns assumes a stable market environment and may not account for disruptive technologies or changing consumer preferences.
  • The optimal brand-building to direct response ratio may vary significantly across different industries, markets, and individual company circumstances.
  • The advocated "give to ask" ratio may not be suitable for all businesses, particularly those in highly competitive markets where more aggressive sales tactics are necessary.
  • Continuous investment in brand equity before sales can be risky for smaller or newer businesses that might need to prioritize immediate revenue generation to sustain operations.

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3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

IRL (in-real-life) vs. AI/digital experiences

There is an increasing awareness of the value that genuine in-person experiences provide over digital interactions, as evident from the strategies employed by successful businesses like Gymshark.

There is high demand for genuine, in-person experiences and connections that digital interactions cannot fully replicate.

Alex Hormozi, the podcast host, emphasizes the irreplaceable nature of real, in-person interactions, which he suggests are in high demand. He compares digital communications to the "beyond meat of connections," suggesting they fall short of the authenticity delivered by face-to-face encounters. Hormozi points to Ben Francis, founder of Gymshark, and highlights how Gymshark's emphasis on physical presence at fitness expos significantly drove the company's growth. The personal connections established at these events resulted in a loyal customer base and disproportionately higher sales figures in the hosted cities.

In-person events and workshops can create exceptional experiences that amplify the brand's reach and influence.

Ben Francis's Gymshark and Hormozi's own business experiences underline the potency of in-person events. Despite the seemingly unscalable nature of these events, they create a multiplier effect as attendees often share their exceptional experiences within their networks, extending the brand's reach.

Hormozi relays that Gymshark's decision to open phy ...

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IRL (in-real-life) vs. AI/digital experiences

Additional Materials

Clarifications

  • Gymshark, a successful fitness apparel brand, has leveraged in-person experiences like fitness expos to build strong personal connections with customers. These interactions have led to a loyal customer base and increased sales in the cities where the events are held. By prioritizing physical presence and real-world connections, Gymshark has demonstrated the value of blending online business strategies with offline engagement to drive brand loyalty and growth.
  • Alex Hormozi, a podcast host, emphasizes the unique value of face-to-face interactions over digital communication. He believes that genuine, in-person connections are highly sought after and irreplaceable, contrasting them with digital interactions which he likens to a less authentic s ...

Counterarguments

  • While in-person experiences are highly valued, digital interactions offer convenience, accessibility, and inclusivity for those who cannot attend physical events due to geographical, financial, or physical constraints.
  • Digital platforms can also create communities and foster connections that are as strong and meaningful as those formed in person, especially for niche interests or global audiences.
  • The scalability of digital experiences can lead to a broader reach and potentially greater brand exposure than in-person events, which are limited by physical space and location.
  • The environmental impact of in-person events, including travel and resource consumption, is often greater than that of digital interactions, which can be more sustainable.
  • The success of a brand like Gymshark may not solely be attributed to in-person interactions; other factors such as product quality, marketing strategies, and online presence likely play significant roles.
  • The COVID-19 pandemic has shown that businesses can pivot to digital models and still thrive, suggesting that digital interactions can sometimes substitute for in-person experiences effectively.
  • The investment in physical stores and events may not be ...

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3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

Long-term brand-building vs. short-term business thinking

Alex Hormozi emphasizes the significance of entrepreneurs adopting a long-range approach to building iconic brands, contrasting this with the narrow focus on immediate business metrics.

Successful entrepreneurs should focus on building iconic, enduring brands rather than pursuing short-term business metrics.

Entrepreneurs are encouraged to prioritize the creation of an iconic brand with a 50-year plan in mind. Hormozi discusses insights from Ben Francis (presumably the founder of Gymshark) on the importance of a long-term brand-building philosophy. Francis admires companies like Range Rover, Harley Davidson, and Ford that have managed to build products and brands that not only endure but become iconic symbols in their respective industries. Hormozi shares a mutual understanding with Francis about the goal of building a brand that continues to influence the market well beyond the founder’s life. They contrast this vision with the practices of arbitrage businesses that are overly focused on bottom-of-the-funnel and return on ad spend (ROAS) metrics, which can lead to unsustainable business models.

Branding takes significant time and investment to yield meaningful results.

Hormozi shares the cautionary tale of New Balance, a company that witnessed a remarkable turnaround by shifting its focus from direct response marketing to brand building. This strategic redirection, instigated by a new Chief Marketing ...

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Long-term brand-building vs. short-term business thinking

Additional Materials

Clarifications

  • A 50-year plan for building a brand involves creating a long-term strategy that extends over five decades to establish a brand's enduring presence and influence in the market. This approach emphasizes sustained growth, consistent messaging, and long-lasting relationships with customers to achieve iconic status. It requires a visionary outlook, strategic decision-making, and a commitment to investing in brand-building ...

Counterarguments

  • While building an iconic brand can be beneficial, not all business models or market niches can support or require such a long-term approach.
  • Short-term business metrics are important for ensuring immediate survival and cash flow, which is crucial for new or small businesses.
  • A 50-year plan may be too rigid in rapidly changing industries where flexibility and adaptability are key to survival.
  • Some businesses may become iconic or influential through innovation and disruption rather than deliberate long-term brand-building strategies.
  • Overemphasis on brand-building can lead to neglecting product quality or customer service, which are also crucial for long-term success.
  • The success of companies like Range Rover, Harley Davidson, and Ford is not solely due to their long-term brand-building but also due to various other factors, including market conditions and historical context.
  • The turnaround story of New Balance may not be applicable to all businesses, as each company opera ...

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3 Reinforced Lessons From Hanging w/ Ben Francis (Gymshark) | Ep 793

The importance and value of branding

Alex Hormozi delves into the foundational aspects of branding and how effective branding can drive significant business advantages.

Effective branding can drive significant business advantages, including higher response rates, conversion rates, and price premiums.

A strong brand creates positive associations in the minds of customers, leading to increased engagement, loyalty, and willingness to pay.

The discussion highlights that companies with compelling branding experience higher response rates across all marketing efforts. Hormozi discusses incorporating aspirational associations into the brand strategy, suggesting that bold branding moves can persuade customers to turn to the brand for even mundane needs. By associating the product with things, people, or experiences the target customer loves, businesses can witness long-term higher returns on advertising and investment.

Brands that invest heavily in top-of-funnel, brand-building activities can benefit from compounding returns over time, as their brand equity grows.

The podcast confirms the importance of top-of-funnel brand awareness activities. Hormozi speaks of the long-term benefits and effectiveness of a high ratio of "give" to "ask," aligning with the concept of investing more in brand-building. Brand equity can compound over time, allowing a brand with a larger audience to still "under-ask" relative to the goodwill built, thus maintaining a positive brand stance.

Maintaining the right balance between brand-building and direct response marketing is crucial for long-term success.

The optimal ratio of brand-building to direct response marketing is often 75:25 or 70:30, as evidenced by the case study of New Balance's turnaround.

The New Balance turnaround story is a prime example of the power of branding—the company reversed its direct response to brand-building marketing budget allocation from 70:30 to the oppo ...

Here’s what you’ll find in our full summary

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The importance and value of branding

Additional Materials

Clarifications

  • Top-of-funnel activities in marketing refer to strategies and initiatives aimed at creating brand awareness and attracting potential customers at the beginning stages of the customer journey. These activities focus on reaching a broad audience to generate interest and introduce the brand to new prospects. Examples include advertising campaigns, content marketing, social media engagement, and other efforts designed to capture attention and drive initial engagement with the brand. The goal of top-of-funnel activities is to build a strong foundation for customer acquisition and nurture leads through the sales funnel.
  • Brand equity compounding is the concept where the value of a brand grows over time as a result of consistent brand-building efforts. As a brand becomes more recognized and trusted by consumers, its perceived value increases, leading to higher customer loyalty and willingness to pay premium prices. This compounding effect can result in long-term benefits for the company, as the brand's strength and reputation continue to grow with each successful branding initiative. Over time, this accumulated brand equity can give the company a competitive advantage and contribute to sustained success in the market.
  • Direct response marketing is a strategy where businesses prompt immediate action from consumers, often through specific calls to action in advertisements. It aims to generate a direct and measurable response, such as making a purchase, signing up for a newsletter, or visiting a website. This approach is distinct from general brand-building marketing, as it focuses on driving immediate customer engagement and conversions. Direct response marketing can include various channels like email, direct mail, online ads, and telemarketing.
  • Brand-first initiatives are marketing strategies that prioritize building brand awareness and equity over immediate sales conversions. These initiatives focus on creating a strong brand identity, positive associations, and emotional connections with customers. By investing in brand-first activities, companies aim to establish a solid foundation for long-term customer loyalty and engagement. This approach often involves strategies such as storytelling, content marketing, and experiential branding to connect with consumers on a deeper level.
  • New Balance's turnaround involved a strategic shift in their marketing budget allocation from a focus on direct response to prioritizing bra ...

Counterarguments

  • While effective branding can drive higher metrics, it is not the only factor; product quality, customer service, and market conditions also play significant roles.
  • Positive customer associations are beneficial, but they must be backed by actual product or service quality to sustain long-term loyalty.
  • High response rates from branding efforts do not guarantee conversion or customer retention if the product does not meet customer expectations.
  • Aspirational branding can alienate customers who do not identify with the aspirational message or find it inauthentic.
  • Investing in top-of-funnel activities is important, but without a balanced focus on conversion optimization, it may not lead to a proportional increase in sales.
  • The optimal ratio of brand-building to direct response marketing can vary significantly depending on the industry, market, and specific business model.
  • New Balance's success story may not be universally applicable; what works for one brand in one context may not work for another in a different context.
  • Building brand equity is important, but overemphasis on brand-building can lead to underinves ...

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