Answering Your Top Business Questions for 1 Hour | Ep 851
In this episode of The Game w/ Alex Hormozi, host Alex Hormozi provides actionable advice for improving customer experience, optimizing profitable acquisition channels, developing strong leadership, and evaluating business pivots.
He emphasizes a personalized onboarding process, overcompensating to turn dissatisfied customers into brand ambassadors, and exhausting high-ROI acquisition channels before adding new ones. Hormozi also stresses structured training for desired leadership behaviors, providing specific feedback, and carefully weighing risks when considering major business model changes.
The episode offers practical strategies for enhancing customer engagement, scaling operations efficiently, nurturing effective management, and pursuing sustainable growth. Hormozi shares insights from his entrepreneurial experience to help businesses maximize their potential.
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1-Page Summary
Customer Experience and Engagement
Alex Hormozi emphasizes the importance of personalized onboarding to improve customer retention and engagement. He recommends 4-6 one-on-one sessions before integrating new clients into group settings, as well as booking clients for their next session and sending reminders to ensure attendance.
When mistakes occur, Hormozi suggests overcompensating to turn unhappy customers into brand ambassadors. He references a Disney statistic arguing it takes 37 "magical moments" to overcome one negative experience, highlighting the significance of exemplary customer care.
Scaling and Optimizing a Profitable Acquisition Model
Hormozi advises exhausting existing high-ROI customer acquisition channels before pursuing new ones. This involves identifying and scaling the most profitable channels through an 80-20 analysis, optimizing sales efficiency and conversion rates, and maximizing existing channels before adding new ones.
For example, he suggests a caller focus on increasing speaking engagements, a lucrative acquisition method, before expanding into new channels like B2B.
People Management and Leadership Development
Hormozi stresses the importance of a structured approach to train leaders on specific behaviors and skills for success. This includes documenting and demonstrating desired behaviors, then duplicating them through training.
He advocates providing actionable feedback that specifies which behaviors leaders should stop, start, and continue doing. Instead of vague feedback, Hormozi recommends pinpointing the exact behaviors to change.
Evaluating Business Model Pivots and Growth Strategies
When considering a major business model change, Hormozi advises evaluating the risks and trade-offs. He suggests a caller focus on scaling her profitable existing model from two locations, rather than pivoting to a new strategy like a membership model.
Hormozi emphasizes identifying constraints and leverage points within the current model, prioritizing low-risk changes over high-risk ones to allow for sustainable growth and innovation.
1-Page Summary
Additional Materials
Counterarguments
- Personalized onboarding may not be scalable for all businesses, especially those with a high volume of customers.
- The recommendation of 4-6 one-on-one sessions might not be cost-effective for every business model and could lead to increased overhead.
- Overcompensating for mistakes could set unrealistic customer expectations and may not always be financially viable.
- The "37 magical moments" statistic from Disney may not apply universally across different industries and customer demographics.
- Exhausting existing high-ROI customer acquisition channels might lead to market saturation and diminish returns over time.
- The 80-20 analysis might overlook emerging or smaller channels that could potentially offer high ROI in the future.
- Focusing too much on optimizing existing channels might cause a business to miss out on new, innovative acquisition strategies.
- Prioritizing speaking engagements may not be the best strategy for all businesses, especially if their target audience is not engaged through those channels.
- A structured approach to leadership development may not account for individual leadership styles and could stifle creativity.
- Actionable feedback is important, but there must be a balance to ensure leaders are not micromanaged, which could hinder their development.
- Evaluating risks and trade-offs is crucial, but being too risk-averse might prevent a business from making necessary and potentially rewarding pivots.
- Focusing on scaling an existing model might cause a business to miss out on opportunities for diversification and new revenue streams.
- Prioritizing low-risk changes could lead to complacency and prevent a business from making bold moves that could lead to significant growth.
Actionables
- You can create a personalized welcome package for new members of a club or organization you're involved in, including a welcome letter, a schedule of one-on-one meetups with existing members, and a list of upcoming group events to encourage integration and a sense of belonging.
- By doing this, you're applying the concept of personalized onboarding to a community setting. For example, if you're part of a book club, you could pair new members with a "reading buddy" for their first few meetings to discuss the book and share insights before they join the larger group discussion.
- Develop a habit of sending personalized follow-up messages after any service you provide, such as tutoring, freelancing, or even after hosting a social event, to ensure participants are reminded of the next meeting or are aware of how much you appreciated their attendance.
- This strategy enhances engagement and shows that you value their participation. For instance, if you tutor students, send a message summarizing what was covered in the session and confirming the date and time of the next one, along with a word of encouragement tailored to their progress.
- Practice giving specific, actionable feedback in your daily interactions, focusing on what the person did well, what could be improved, and how they can make those improvements.
- This approach can be used in any collaborative setting, such as a study group or a community project. For example, after a group study session, you might tell a peer, "Your summary of the chapter was very clear (continue doing), adding more examples could help illustrate the points better (start doing), and try to avoid going off on tangents (stop doing)." This method helps others understand exactly how they can improve and reinforces positive behaviors.
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Customer Experience and Engagement
Alex Hormozi underscores the importance of a smooth onboarding process in customer retention and engagement, as well as the potential turnaround from unhappy customer encounters.
Smooth Onboarding Improves Retention and Engagement
Hormozi suggests a personalized approach to onboarding that includes four to six one-on-one sessions before integrating new clients into group settings. He believes it’s crucial for members to feel comfortable and acquainted with the culture and environment to ensure better program buy-in and to prevent them from feeling lost.
Personalized Onboarding: 4-6 One-on-one Sessions Preceding Group Sessions
Offering personalized onboarding sessions provides a tailored experience that can improve customer satisfaction. If customers opt to start in a group setting, Hormozi recommends still providing a complimentary one-on-one session to enhance their experience and foster a sense of value and connection.
Book Customers Into Sessions and Send Attendance Reminders
Hormozi advises booking customers for their next session at the end of the current one, citing that this practice helps retain clients by keeping them engaged with future sessions. Furthermore, he emphasizes the efficacy of an automated reminder system and the personal touch of a manual reminder from session instructors to ensure customers remember their upcoming appointments.
Turning Mistakes Into Opportunities: Making Unhappy Customers Brand Ambassadors
Discussing an i ...
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Customer Experience and Engagement
Additional Materials
Counterarguments
- Personalized onboarding might not be scalable for all businesses, especially those with a high volume of customers.
- The cost of providing 4-6 one-on-one sessions might outweigh the benefits for some companies, particularly if they operate on thin margins.
- Automated reminders can sometimes be perceived as impersonal or annoying if not executed with care, potentially leading to a negative customer experience.
- Overcompensation for mistakes could set unrealistic customer expectations and lead to abuse of company goodwill.
- The Disney statistic may not be applicable to all industries or customer experiences, and relying too heavily on it could misguide a company's customer service strate ...
Actionables
- You can create a feedback loop by asking new acquaintances for input on how your initial interactions could be improved. After meeting someone new, whether in a professional or personal setting, follow up with a brief message or email asking for their thoughts on the interaction. This mirrors the onboarding process and can help you refine your approach to building relationships.
- Develop a habit of acknowledging and rectifying your mistakes in everyday situations to strengthen relationships. If you realize you've made an error or a misjudgment with a friend or colleague, go beyond a simple apology. Offer a gesture that demonstrates your commitment to the relationship, like treating them to coffee or assisting them with a task, turning a negative into a positive experience.
- Use calendar apps with reminder function ...
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Scaling and Optimizing a Profitable Acquisition Model
Within the context of customer acquisition models, Alex Hormozi discusses strategies for scaling and optimizing these systems for profitability.
Exhaust Existing Acquisition Channels Before Pursuing New Ones
Hormozi emphasizes the importance of making the most of current acquisition channels before considering the adoption of new ones.
Identify High-Roi Channels for Scalable Growth
Initially, Hormozi advises businesses to focus on exhausting the market of current customers before diversifying channels as changing customer types can introduce greater risk. Hormozi further encourages evaluating the most profitable customer acquisition channels through an 80-20 analysis, concentrating efforts where the highest ROI is evident.
Optimize Sales Efficiency and Conversion Rates to Sustainably Increase Profitable Channel Spending
As businesses scale and ad spending goes up, return on ad spend (ROAS) tends to decrease. To combat this, Hormozi suggests improving various components such as the lead magnet, ad creatives, and conversion rate optimization on sales pages. Additionally, boosting the overall efficiency of the sales process is crucial, and this requires gradual optimization of each element individually over time.
Maximize Existing Customer Acquisition Before Adding New Channels
Hormozi points out the necessity of fully utilizing existing channels to their highest potential before integrating new ones. For instance, Caller #4 identifies referrals as a main business driver. Hormozi suggests capi ...
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Scaling and Optimizing a Profitable Acquisition Model
Additional Materials
Counterarguments
- While focusing on high-ROI channels is important, it may lead to over-reliance on a few channels, which can be risky if market conditions change or if those channels become saturated or less effective.
- Optimizing sales efficiency and conversion rates is crucial, but there's a risk of diminishing returns. At some point, the cost of optimization may outweigh the benefits, and resources might be better spent elsewhere.
- Maximizing existing customer acquisition channels before adding new ones can limit a company's reach and prevent it from discovering potentially more effective or efficient channels.
- Capitalizing on what's already working efficiently assumes that current success can be easily scaled, which may not always be the case due to market saturation or changing consumer behaviors.
- Increasing the number of speaking engagements assumes that this channel will continue to be effective at a larger scale, which might not hold true if the target audience is limited or if the market dynamics change.
- Moving from B2C to B2B cautious ...
Actionables
- You can analyze your current customer interactions to find upsell opportunities. Look at your purchase history and identify products or services that complement what your customers have already bought. For instance, if you sell coffee machines, you might reach out to customers with offers for premium coffee beans or machine maintenance services.
- Create a referral program to leverage your existing customer base for new acquisitions. Offer incentives like discounts or free products for customers who refer friends or family. This taps into the trust and satisfaction of your current customers to bring in new ones without immediately expanding into new marketing channels.
- Experiment with A/B testing on your most successful s ...
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People Management and Leadership Development
Alex Hormozi underscores the necessity for a precise and methodical approach to cultivating effective leaders, emphasizing the significance of specific behaviors and skills.
Develop a Structured Approach to Train Leaders
Hormozi stresses the value of training leaders not only on wide-ranging principles but also on detailed behaviors and skills that lead to success.
Behaviors and Skills for Effective Leadership
While specific behaviors and skills are not enumerated, Hormozi touches upon the broader hiring and training approach by noting the importance of identifying the smallest skill deficiency in potential hires to ensure they align well with the leadership team's needs. He also notes the importance of behaviors like kindness, which can be expressed by smiling on the phone, nodding, repeating back what someone says, and raising one's voice upon entering a room, illustrating how behaviors contribute to effective leadership. This underscores that training should focus on what people need to do rather than who they need to be.
Document, Demonstrate, Duplicate Framework For Training
To train effectively, Hormozi emphasizes breaking down skills into sub-skills, which can then be documented and taught in a structured manner. He demonstrates this by detailing how one might train someone to respond to Slack messages promptly. Hormozi believes that leaders should give specific directives to guide their teams' behaviors, focusing on the tangible actions rather than abstractions.
Give Leaders Actionable Feedback: What to Stop, Start, Continue Doing
Providing actionable f ...
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People Management and Leadership Development
Additional Materials
Counterarguments
- While specificity in training is valuable, overemphasis on detailed behaviors may stifle creativity and adaptability in leaders.
- Focusing too much on small skill deficiencies might overlook a candidate's overall potential and ability to grow into a leadership role.
- The importance of innate qualities and character traits in leadership should not be underestimated, as they can significantly influence a leader's effectiveness.
- A structured approach to training may not suit all learning styles, and some leaders might benefit more from experiential or situational learning.
- Documenting and systematically teaching skills can be time-consuming and may not always translate into practical, real-world application.
- Providing specific directives for team behaviors could lead to micromanagement, which can be detrimental to team morale and autonomy.
- Actionable feedback is important, but it should be balanced with positive reinforcement to maintain motivation and engagement.
- Relying solely on clari ...
Actionables
- You can refine your leadership skills by creating a personal development plan that targets specific behaviors. Start by listing the key behaviors mentioned in your role's job description or by observing leaders you admire. Break these behaviors down into actionable steps, such as improving communication by practicing active listening in conversations or enhancing decision-making by analyzing past choices for patterns.
- Enhance your ability to give constructive feedback by practicing with a peer feedback partner. Pair up with someone who also wants to improve their leadership skills. Schedule regular sessions where you take turns giving each other feedback on specific actions, using the "stop, start, continue" framework. This will help you learn to provide clear, actionable feedback without resorting to vague or negative comments.
- Develop a habit of asking clarifying questions in your daily interactions to better understa ...
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Evaluating Business Model Pivots and Growth Strategies
As businesses reach decision points in their growth, evaluating the risks and trade-offs before implementing a significant change to their business model is crucial. Hormozi's advice serves as a guide for entrepreneurs considering such pivotal moves.
Evaluate Risks and Tradeoffs Before a Major Business Model Change
A caller discusses a business pivot that arose due to a shortage of practitioners, with about 16,000 open positions in the field. In response to the supply constraint, the caller has raised prices and is contemplating adopting a concierge membership model. Hormozi advises caution in modifying a lucrative business model and concentrates on addressing the recruitment issue at hand.
Scale the Profitable Business Model Before Pursuing New Strategies
Hormozi suggests that before pivoting, it is essential to focus on scaling the profitable parts of the business. He advises the caller to continue expanding the profitable model from her two existing locations rather than embarking on a new strategy or modifying the business model.
Identify Constraints and Leverage Points Instead Of Assuming a New Approach
Hormozi emphasizes the importance of recognizing constraints and leverage points within the current business model. For the caller, the major constr ...
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Evaluating Business Model Pivots and Growth Strategies
Additional Materials
Counterarguments
- While evaluating risks is important, being overly cautious can lead to missed opportunities for innovation and market leadership.
- Scaling existing profitable models is not always feasible or the best path for growth, especially in rapidly changing markets where agility is key.
- Identifying constraints and leverage points is crucial, but it may not always be clear how to do so effectively, and some constraints might be symptoms of deeper issues requiring a business model change.
- Prioritizing low-risk changes can lead to incrementalism, which might ...
Actionables
- You can use a decision matrix to weigh the pros and cons of potential changes in your life, such as moving to a new city or changing careers. Create a simple grid on paper or a spreadsheet, list the factors that matter to you, and assign weights to them based on their importance. Score each option against these factors, multiply by the weights, and compare the totals to make a more informed choice.
- Start a "profitability journal" to track which of your daily activities yield the most personal satisfaction or benefit. Over a month, note down activities that make you feel productive, happy, or fulfilled, and those that don't. Review your journal to identify patterns and decide which activities to scale up (like a hobby that brings joy) and which to scale down or eliminate (like a time-wasting habit).
- Create a personal "issue resolution chart" to tackle ongoing challenges before making big ...
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