Make Your Offer So Good They Feel Dumb Saying No | Ep 884
In this episode of The Game, Alex Hormozi shares strategies for optimizing sales and marketing approaches. He discusses how to time offers for maximum impact, structure profitable partnerships through different affiliate models, and transition from project-based to subscription-based revenue streams. The episode explores the mechanics of customer acquisition costs, lifetime value metrics, and methods for enhancing profit margins.
Hormozi also addresses the practical aspects of scaling service-based businesses, from building effective sales teams to managing handoffs between front-end and back-end salespeople. He examines various customer acquisition channels, including targeted advertising and referral systems, while offering insights on identifying profitable market segments and implementing data-driven decision-making in business operations.
This is a preview of the Shortform summary of the May 13, 2025 episode of the The Game w/ Alex Hormozi
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1-Page Summary
Sales and Marketing Strategies
Alex Hormozi shares insights on maximizing sales effectiveness through strategic timing and partnerships. He emphasizes approaching customers during moments of deprivation rather than satisfaction, using the analogy of offering a steak to someone who's just finished eating versus someone who's hungry. Hormozi suggests timing upsell offers with customer milestones, particularly within the first 30-60 days of a transaction.
For partnerships, Hormozi outlines three effective affiliate models: commission-based sales, allowing 100% markup for exposure, or service bundling. He stresses the importance of creating irresistible offers for partners and identifying key decision-makers in B2B sales scenarios.
Business Model Optimization
The discussion explores transitioning from project-based to subscription-based revenue models. Mohamed Fatah, Elphin's founder, considers shifting from commissions to a SaaS model, while a chiropractor looks to implement long-term memberships. Hormozi acknowledges that while project-based work can sometimes generate higher immediate cash flow, subscription models offer valuable stability.
Hormozi emphasizes the importance of analyzing key metrics like customer acquisition cost (CAC), lifetime value (LTV), and average order value (AOV). He recommends raising prices to enhance profit margins and suggests implementing Buy Now, Pay Later options to improve cash flow.
Scaling a Service-Based Business
For scaling service businesses, Hormozi advocates for an in-house sales team trained in upsells and effective handoffs between front-end closers and back-end salespeople. He shares success stories of rapid team expansion through specialized recruiting firms and emphasizes the importance of cutting underperforming salespeople to allow top talent to handle more sales.
The discussion includes diversifying customer bases through targeted "whale" accounts and multiple sales channels. A UK chiropractic center reports success with a mix of referrals and Facebook advertising, demonstrating the effectiveness of combining different marketing approaches. Hormozi suggests using data to identify profitable niches and leveraging targeted advertising for specific customer segments.
1-Page Summary
Additional Materials
Counterarguments
- Approaching customers during moments of deprivation may not always be ethical or well-received, as it could be seen as taking advantage of vulnerable moments.
- Timing upsell offers too aggressively within the first 30-60 days could potentially overwhelm or alienate new customers who are not yet fully convinced of the product's value.
- Affiliate models like 100% markup for exposure may not be sustainable for all businesses, as they can cut significantly into profit margins.
- Creating irresistible offers for partners may sometimes lead to undervaluing one's own product or service, which could affect long-term brand perception.
- Transitioning to a subscription-based model may not be suitable for all businesses, especially those with products or services that do not naturally lend themselves to recurring use or payment.
- Focusing solely on metrics like CAC, LTV, and AOV might overlook other important aspects of the business, such as customer satisfaction and product quality.
- Raising prices to enhance profit margins could lead to a loss of customers if the price increase is not accompanied by a perceived increase in value.
- Buy Now, Pay Later options can encourage customers to make purchases beyond their means, potentially leading to financial difficulties for them and increased default rates for the business.
- An in-house sales team focused on upsells might prioritize short-term gains over building long-term customer relationships.
- Rapid team expansion through specialized recruiting firms can lead to a diluted company culture and a lack of cohesion among team members.
- Cutting underperforming salespeople without proper performance support or training could be a missed opportunity for development and may affect team morale.
- Diversifying customer bases is important, but targeting "whale" accounts could lead to over-reliance on a few large clients, increasing risk if one or more accounts are lost.
- Using data to identify profitable niches is useful, but over-targeting can lead to neglecting broader market opportunities and potential innovation.
- Leveraging targeted advertising for specific customer segments may lead to privacy concerns and a potential backlash against perceived invasive marketing practices.
Actionables
- You can enhance customer engagement by creating a feedback loop after purchase. Set up a simple email or SMS system that asks customers how they're enjoying their product a week after purchase, and use their responses to suggest additional products that complement their recent buy. For example, if someone bought a camera, follow up with a message asking how their photography is going and suggest a compatible lens or photography class.
- If you're a small business owner, consider offering a customer loyalty program that rewards clients for repeat purchases. Design a point-based system where customers earn points for every dollar spent, which they can redeem for discounts or exclusive products. This encourages repeat business and can be a stepping stone to a subscription model, where customers pay a monthly fee for perks or products.
- You can optimize your spending by conducting a personal audit of your expenses and investments. Use a spreadsheet to track your monthly costs and income, then calculate your personal 'Customer Acquisition Cost' (CAC) by dividing the total spent on non-essentials by the number of items you've bought. This will help you understand your spending habits and identify areas where you can save money or invest more wisely.
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Sales and Marketing Strategies
Alex Hormozi provides insights on effective sales and marketing strategies, focusing on customer deprivation, and the strategic use of affiliate and referral partnerships.
Capitalize On Customer Deprivation, Not Satisfaction
Hormozi emphasizes the importance of timing in sales, arguing that it’s crucial to approach customers when they feel most deprived rather than when they are satisfied.
Offer At Deprivation, Not Satisfaction, to Maximize Conversions
He uses the analogy of a restaurant customer declining an offer for another steak after just finishing one, suggesting that offers should be made when customers are actually hungry or in need. Hormozi points out that achieving one goal may create deprivation for the next, and that's the moment to sell the next solution.
Timing Offers on Customer Milestones Boosts Upsell Likelihood
Hormozi suggests timing upsell offers with customer milestones that occur within the first 30 or 60 days of a transaction. When a customer achieves something significant, like a "first," it's a prime time to acknowledge their progress and suggest additional relevant products or services to take advantage of the momentum.
Manual Reminders and Investment Boost Appointment Show Rates
He advises presenting upsell opportunities in an open-handed way, aligning with the customer’s ambitions and future goals. This approach personalizes the offer and makes it more compelling to the customer.
Utilize Referral and Affiliate Partnerships for New Segments
Hormozi outlines strategies for leveraging referral and affiliate partnerships to reach new customer segments and boost sales.
Offer Affiliates High Commissions or Resale Rights
Hormozi proposes three modes of affiliate partnerships: affiliates selling for a commission, selling a portion at a 100% markup for exposure, or bundling with another service. Each strategy is designed to incentivize affiliates to ...
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Sales and Marketing Strategies
Additional Materials
Counterarguments
- Approaching customers when they feel deprived might not always be ethical or customer-centric, as it could be seen as taking advantage of their vulnerability.
- Customers may appreciate transparency and ongoing engagement rather than being approached only at times of deprivation, which could foster long-term loyalty.
- Timing offers based on customer milestones could be seen as too formulaic and may not account for individual customer needs or circumstances.
- Upselling too aggressively or too soon after a milestone might make customers feel undervalued and as though the company is only interested in their money.
- Personalizing offers is beneficial, but there is a risk of overstepping privacy boundaries or making incorrect assumptions about customer ambitions.
- Open-handed upsell opportunities need to be balanced with respect for the customer's right to decline without feeling pressured.
- High commissions for affiliates could ...
Actionables
- You can track your own milestones and create a reward system to encourage personal growth. For instance, if you're working on fitness goals, set a milestone for the first 5 pounds lost and treat yourself to a new workout gear item. This mirrors the strategy of timing upsell offers with customer milestones, but applies to your personal achievements.
- Develop a habit of reaching out to friends or colleagues when they've accomplished something, offering your help or resources for their next step. After a friend finishes a big project, for example, you could offer to introduce them to someone in your network who can help with their next venture, effectively personalizing your support to align with their ambitions.
- Create a personal referral system fo ...
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Business Model Optimization
Businesses are keenly exploring fresh models and strategies to optimize their revenue streams and improve cash flows. Industry experts and entrepreneurs weigh in on how to achieve this, particularly by transitioning from project-based to subscription-based models and leveraging unit economics.
Transition From Project-Based To Subscription-Based Revenue Streams
Discussion around the transition from project-based work to subscription models focuses on balancing customer value with sustainable revenue.
Feasibility Of Shifting From Projects to Subscriptions
Mohamed Fatah, the founder of Elphin, is contemplating a move from a commission-based model to a SaaS model, preferring recurring subscription fees from creators over a percentage of their earnings. Likewise, a chiropractor expresses interest in retaining clients long-term through memberships. Alex Hormozi acknowledges the feasibility of this model for marketplace services, encouraging an attendee to consider subscriptions for stability, as marketplaces like Shopify do successfully.
Increasing Customer Lifetime Value: Upsells, Cross-Sells, and Value-Add Services
The chiropractic clinic reveals a strategy for increasing customer lifetime value, noting retention rates that reflect successful upsells and value-add services. Hormozi supports this, suggesting immediate post-purchase upsells to offset CAC and improve financial metrics. He even recommends selling high-margin items, such as specialized machines for at-home use and supplements in long-term packages, which increases upfront cash without adding to operational costs.
Higher Order Values vs. Subscription Revenue Stability
Hormozi acknowledges the potential for project-based work at high renewal rates and points out that project-based pricing can, at times, be more lucrative than subscription models due to its ability to generate immediate cash flow. However, a steady subscription base is a key target for businesses, with one audience member aiming for 40% subscription revenue for the year. Hormozi concurs with creating both free and paid tiers as a means to grow the creator network and increase the odds of upselling.
Improve Cash Flow and Unit Economics
A primary concern in business optimization is refining cash flow by carefully considering unit economics.
Analyze Metrics: Cac, Ltv, Order Value For Optimization
...
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Business Model Optimization
Additional Materials
Clarifications
- Unit economics in business refers to the direct revenues and costs associated with a single unit of a product or service. It helps companies understand the profitability of each unit sold and is crucial for assessing the sustainability and scalability of a business model. By analyzing metrics like customer acquisition cost (CAC), lifetime value (LTV), and average order value (AOV), businesses can optimize their unit economics to improve cash flow and overall financial performance. Understanding unit economics is essential for making informed decisions on pricing strategies, cost management, and revenue generation.
- Customer Acquisition Cost (CAC) is the expense incurred by a business to acquire a new customer. It includes costs related to marketing, sales, and other activities aimed at attracting customers. Monitoring CAC helps businesses assess the efficiency of their customer acquisition strategies. CAC is often compared to Customer Lifetime Value (CLV) to ensure that the cost of acquiring a customer does not exceed the potential value that customer brings to the business.
- Customer Lifetime Value (LTV) is a metric that predicts the net profit a business can expect from its entire future relationship with a customer. It helps companies understand the long-term value of retaining customers and guides decisions on marketing strategies and customer acquisition costs. LTV is calculated based on the projected future cash flows from a customer relationship, emphasizing the importance of focusing on customer relationships for sustainable business growth. By considering LTV, businesses can prioritize customer retention and loyalty over short-term gains, leading to more strategic and profitable decision-making.
- The Average Order Value (AOV) is a metric that calculates the average amount of money customers spend on each transaction when making a purchase. It is a crucial metric for businesses as it helps in understanding customer spending habits and can be used to optimize pricing strategies and marketin ...
Counterarguments
- Subscription models may lead to customer fatigue and subscription churn if not managed properly or if the market becomes oversaturated with subscription offerings.
- The transition from project-based to subscription-based revenue may not be suitable for all types of businesses, especially those with highly customized or one-off projects that do not lend themselves to a recurring model.
- Upselling and cross-selling strategies can sometimes lead to customer dissatisfaction if perceived as aggressive or if they do not add genuine value to the customer experience.
- High-margin items and long-term packages could potentially alienate customers who are sensitive to price or who prefer flexibility over commitment.
- While project-based work can offer immediate cash flow, it can also lead to inconsistent revenue and make financial planning more challenging.
- Free tiers in a subscription model can sometimes cannibalize paid tiers if not carefully structured to encourage upselling.
- Focusing too heavily on metrics like CAC, LTV, and AOV might lead to overlooking other important aspects of the business, such as product quality or cust ...
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Scaling a Service-Based Business
Alex Hormozi discusses strategies essential for scaling service-based businesses, focusing on optimizing sales processes and diversifying customer bases.
Optimize the Sales Process and Team For Growth
Hormozi highlights the benefits of an in-house outbound sales team, particularly when it comes to targeting high-value clients, also known as "whale" accounts.
In-house Sales to Boost Control and Effectiveness
He recommends employing an in-house sales team, educated on upsells, to use rapport and trust gained during service interactions for sales opportunities. Hormozi also suggests improving low Ascension rates by integrating Ascension into onboarding and revamping the sales process to ensure follow-up calls post-webinar.
Create a Structured Sales Funnel With Clear Role Handoffs
Hormozi believes in a structured sales funnel where leads are passed from front-end closers to a "master educator" or back-end salesperson, ensuring efficient role handoffs. Centralizing sales, according to Hormozi, can lead to cost efficiencies and better sales utilization without major business model changes. He also talks about possibly adjusting subscription lengths, like moving from two-month programs to yearly subscriptions to increase customer lifetime value.
Build a High-Performing Sales Team By Recruiting and Training
Emphasizing recruitment, Hormozi shares how rapidly they added team members by using specialized recruiting firms and suggests negotiating bulk recruitment costs. He advises centralizing sales and cutting underperforming salespeople to allow top sales talent to handle more sales, which could result in a 25% sales increase. He also stresses focusing on recruitment and training to expand the outbound sales team.
Diversify the Customer Base and Sales Channels
Target "Whale" Accounts Through Focused Outreach
James shares his success with high-value accounts, indicating targeting them can significantly raise revenue. Hormozi echoes this by discussing strategies for securing and selling to more departments within whale accounts.
New Marketing Channels: Paid Advertising To Supplement Referrals
A chiropractic center in the UK utilizes a mix of referrals and Facebook paid advertising, evidencing a good balance of sales channels, with a 35/65 split between referrals and Facebook Meta. Hormozi also underscores the importance of targeted ads, ...
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Scaling a Service-Based Business
Additional Materials
Counterarguments
- In-house sales teams can be expensive to maintain, and not all businesses may have the resources to support them effectively.
- Upselling can sometimes lead to customer dissatisfaction if not done tactfully or if customers feel pressured.
- Integrating Ascension into onboarding might overwhelm new clients or detract from the primary service offering.
- Structured sales funnels with clear role handoffs require meticulous planning and may not be flexible enough to accommodate unique customer needs.
- Centralizing sales might create bottlenecks or reduce the personal touch that can be crucial in service-based businesses.
- Longer subscription lengths could deter potential customers who are wary of long-term commitments.
- Recruiting through specialized firms can be costly, and these firms may not always understand the specific needs of the business.
- Focusing too heavily on "whale" accounts can make a business vulnerable if those accounts are lost.
- Paid advertising requires continuous investment and may not yield a positive ROI if not managed effectively.
- ...
Actionables
- You can create a personal networking strategy to connect with influential individuals in your field. Start by identifying local business events, industry meetups, or online webinars where these high-value contacts might be present. Engage with them by offering valuable insights or assistance, and maintain the relationship by providing periodic updates on your progress or sharing useful resources.
- Develop a personal referral program among friends and colleagues. Offer incentives, such as a free consultation or a helpful resource, for every successful introduction they make that leads to a new project or collaboration for you. This approach diversifies your opportunities much like a business would by combining referrals with other methods of outreach.
- Enhance your personal bra ...
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