In this episode of The Game, Alex Hormozi tackles the challenges of growing a business without external funding. He addresses complex partnership dynamics, offering practical solutions for managing ownership structures and ensuring fair compensation. The discussion covers operational improvements, including staff retention strategies and dynamic pricing models to optimize revenue during peak periods.
Hormozi also explores methods to enhance customer experience and boost recurring revenue through membership programs. He outlines specific approaches for tracking marketing effectiveness, suggesting ways to improve lead generation and follow-up processes. The episode provides concrete strategies for business owners looking to scale their operations using existing resources, with a focus on sustainable growth through improved systems and careful financial management.
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Ani faces complex partnership challenges involving three sets of partners with misaligned goals and varying levels of involvement. As the partner handling most of the work without taking a salary, Ani seeks solutions for fair compensation and business growth. Hormozi suggests two main options: increasing Ani's profit share without changing ownership structure, or consolidating ownership through buyouts or equity swaps between partners. He emphasizes approaching these discussions with transparency and clear expectations to maintain positive relationships.
To address staffing challenges, Hormozi recommends implementing a career development program with tiered titles and regular compensation changes to boost retention. He advises using dynamic pricing during peak periods (Thursday through Saturday) with a 20% increase and suggests using the BAMFAM (book a meeting from a meeting) method to secure client rebookings. This approach, combined with basic sales training, can help overcome booking objections and smooth out facility demand.
The business currently offers various membership perks, including free facials, product discounts, and referral bonuses. Hormozi suggests structuring membership options with pre-payment discounts: 10% for six months and 15% for twelve months. He recommends presenting membership as the default option during booking and utilizing the checkout process to encourage annual pre-payment, potentially offering the current service free with a 12-month commitment.
While the business spends $1,000 monthly on Google ads per location, Hormozi identifies opportunities for improvement in lead tracking and follow-up. He recommends implementing comprehensive lead source tracking through methods like sign-in sheets and ID checks, hiring a dedicated lead follow-up specialist for immediate contact with potential clients, and significantly increasing the marketing budget to drive growth once reliable tracking is established.
1-Page Summary
Ani is facing complex partnership problems that are affecting the operation and future growth of her business. To address these challenges, options for restructuring the partnerships are being considered.
Ani’s partnership structure involves three sets of partners, with different levels of involvement affecting the business’s customer service and fulfillment. Issues have arisen due to a lack of alignment in goals and involvement among the partners. Ani, who does most of the work, particularly in marketing and scaling, doesn’t take a salary and feels this arrangement is unfair, especially when compared to another partner who cannot manage or train staff due to their full-time career and new baby.
Ani has taken on responsibilities that were not initially hers and is looking for a way to grow the business that aligns with her vision, which is larger than what her partners foresee. Hormozi identifies the crux of the issue, which is the misaligned goals between Ani and her partners, leading to discrepancies in workload management and compensation, affecting both current operations and potential expansion.
Hormozi discusses potential solutions to resolve the partnership imbalances Ani experiences.
One option is to increase Ani’s profit share to compensate for her additional responsibilities, without changing the ownership structure. Hormozi highlights the possibility of defining roles within the business that might be unfilled and should be compensated at market rates. This would keep the ownership structure intact while adjusting profit sharing to reflect the actual work done.
Another option Hormozi suggests is for Ani to buy out the underperforming partner or offer to be bought out herself using a "shotgun offer." T ...
Resolving Partnership/Ownership Issues
The caller mentions they offer training to advance their team's techniques, which is an important retention tool. Alex Hormozi suggests focusing on a career path for team members as a way to keep more staff. There's a real challenge in effectively training new hires, a vital part of a business model that relies on taking individuals with low skill, training them quickly, and charging more for their improved skills in the market.
Managers are currently spending most of their time performing services rather than training new employees, leading to a lag in new employee training and inconsistencies in service fulfillment. This neglect in proper training is affecting the performance of some locations.
Retention improves profit margins, as a more skilled team attracts returning customers. Hormozi recommends creating a tiered title system, like Junior, Normal, and Senior technicians and artists, with title and compensation changes every three months to motivate employees. Regular, repetitive role-playing should be used for training, ensuring staff learn and retain skills. Also, it's crucial to swiftly correct mistakes during training and encourage immediate retakes.
With busier times typically being Thursday through Saturday, dynamic pricing is advised due to the higher demand and lesser supply. Hormozi suggests increasing prices during peak periods by 20% and framing off-peak discounts to encourage demand smoothing. He also mentions using memberships to avoid surge pricing during busy times.
The BAMFAM method, which stands for "book a ...
Improving Operations and Customer Experience
Alex Hormozi highlights the importance of a well-structured membership program with compelling offers and incentives to ensure customer retention and business stability.
Creating an attractive membership program involves offering tangible benefits that are hard to refuse.
A caller reveals that their membership includes perks such as free facials for monthly members, product discounts, and increased referral bonuses from $10 to $50. They also provide anniversary and birthday gifts to members, elementing added value to the membership.
Hormozi suggests structuring membership offers with considerable value, aiming to make the deal irresistibly good. For instance, he considers the inclusion of free facials each visit as part of the membership quite compelling. Another novel idea is incorporating sweepstakes into the membership, where members can win valuable prizes monthly, further driving referrals and engagement.
The caller and Hormozi discuss new membership program tiers: monthly, six-month, and 12-month options, where customers can pay upfront for six and twelve months. To encourage prepayment, discounts of 10% for six months and 15% for 12 months are offered. Hormozi notes the advantages of prepayment, such as reduced churn rates, immediate cash flow, and secured future business.
Ani, a participant in the discussion, considers the importance of a product improvement process to decrease churn and increase upsells, with the goal of retaining 70% or more customers past three months.
Hormozi recommends focusing on improving the upsell process, a critical area for business growth.
During or before the current appointment, try to book the next session for clients, leading to a natural progression to discuss membership opportunities. Hormozi advises framing membership as if customers have technically been part of the program and just need official confirmation to unlock benefits they've been missing.
He suggests making membership appear as the default option to increase opt-in rates, citing a study on organ donation. The presumption is that customers are already in membership, simply needing to affirm to receive existing ...
Developing and Optimizing a Membership Program
Discussion unfolds around the crucial steps that businesses need to take to optimize their marketing efforts and lead generation, with specific emphasis on understanding and improving lead tracking, follow-up processes, and allocating adequate resources to marketing investments.
The conversation underscores the importance of precisely identifying the sources from which clients are coming.
Alex Hormozi addresses tracking and attribution of ad spend, noting that understanding whether clients come from organic SEO or paid ads is vital. Although the Caller spends a thousand dollars a month on Google ads for each location, it remains unclear if this leads to client acquisition. Hormozi stresses the importance of integrating ads and attribution with brick-and-mortar operations, suggesting methods like ID checks upon appointment confirmations to verify client sources. He also advocates for a dropdown on sign-in sheets for clients to indicate where they heard about the business. Additionally, Hormozi suggests confirming payment card details and acquiring referrals to track marketing efforts effectively. By collecting such data, businesses can avoid poor investment decisions and focus on the most rewarding marketing strategies.
Hormozi identifies a gap in the Caller’s lead follow-up process, noting the need for prompt and efficient contact.
He advises the Caller to hire someone dedicated to calling leads within one minute of their inquiry, which will help resolve the lead generation issue. This approach aims to improve conversion rates by making immediate connections with potential custo ...
Optimizing Marketing and Lead Generation
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