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$100M Offers - Alex Hormozi

 included in  categories Business and Consulting Course and Book Notes
     4609 words   22 minutes 

“Make people an offer so good they would feel stupid saying no.”

It’s an offer you present to the marketplace that cannot be compared to any other product or service available, combining an attractive promotion, an unmatchable value proposition, a premium price, and an unbeatable guarantee with a money model (payment terms) that allows you to get paid to get new customers . . . forever removing the cash constraint on business growth.

  • More customers
  • Increase average purchase value
  • Buy more times
  • Commoditised = price-driven → race to the bottom
  • Differentiated = value-driven → sell in a category of one so it’s too difficult to compare prices

If there is a ton of demand for a solution, you can be mediocre at business, have a terrible offer, and have no ability to persuade people, and you can still make money.

We are not trying to create demand. We are trying to channel it.

This entire book sits atop the assumption that you have at least a “normal” market, which I define as a market that is growing at the same rate as the marketplace and that has common unmet needs that fall into one of three categories: improved health, increased wealth, or improved relationships.

They must not want, but desperately need, what I am offering.

The degree of the pain will be proportional to the price you will be able to charge.

Your audience needs to be able to afford the service you’re charging them for.

Are there associations they belong to, mailing lists, social media groups, channels they all watch, etc.

Growing markets are like a tailwind.

Health, Wealth, and Relationships

Always pain

Starving Crowd (market) > Offer Strength > Persuasion Skills

Great market + bad offer + bad persuasion = success

Normal market + good offer + bad persuastion = success

Normal market + normal offer + normal persuasion = limited success

Bad market = fail

The goal is to find a smaller subgroup within one of those larger buckets that is growing, has the buying power, and is easy to target

You must stick with whatever you pick long enough to have trial and error. You will fail. In fact, you will fail until you succeed. But you will fail far longer if you keep changing who you market to, because you must start over from the beginning each time. So, pick then commit.

For most, if you are under $10M per year, niching down will make you more money. After that, it will depend on how narrow the niche is, or, what is called TAM (total addressable market). If you are at $1M or $3M, thinking you have capped and must expand, you are wrong. You just need to be better.

Honing in on one niche will make you more money because you can literally charge 100x more for the exact same product.

“This is made exactly for me” and would happily fork over maybe $1000 to $2000 for a time management program that could help you achieve your goal. The actual pieces of the program may be the same as the generic $19 course, but since they have been applied, and the sales messaging could speak so much to this avatar, they will find it more compelling and get more value from it in a real way.

“Price is what you pay. Value is what you get.” - Warren Buffet

Pricing where the market is means you’re pricing for market efficiency. Pricing this way means you are providing a service at just above what it costs for you to stay above water.

Lowering price is a one-way road to destruction for most — you can only go down to $0, but you can go infinitely high in the other direction. Unless you have a revolutionary way of decreasing your costs to 1/10th compared to your competition, don’t compete on price.

“There is no strategic benefit to being the second cheapest in the marketplace, but there is for being the most expensive.”

When you raise your prices, you . . .

  • Increase your clients’ emotional investment
  • Increase your clients’ perceived value of your service
  • Increase your clients’ results because they value your service and are invested
  • Attract the best clients who are the easiest to satisfy and actually cost less to fulfill, and who are the most likely to actually receive and perceive the most relative value
  • Multiply your margin because you have money to invest in systems to create efficiency; smart people; improved customer experience; scale your business; and, most importantly of all, to keep watching the number in your personal bank account go up, month after month, even with reinvesting in your business. This allows you to ultimately enjoy the process for the long haul and help more people as you grow, rather than burning out and shriveling into obscurity.

People want to buy expensive things. They just need a reason. The goal isn’t to be slightly above the market price — the goal is to be so much higher that a consumer thinks to themselves, “This is so much more expensive, there must be something entirely different going on here.”

Price your services or product in such a way that it stings a little when they buy.

Our clients still got a deal. The gap between what they paid (price) and what they got (value) was massive.

The truth is that 99 percent of businesses need to raise their prices to grow, not lower them. Profit is oxygen. It fuels the fire of growth.

The Grand Slam Offer only becomes valuable once the prospect perceives the increase in likelihood of achievement, perceives the decrease in time delay, and perceives the decrease in effort and sacrifice.

You should never charge more than your product is worth. But you should charge far more for your product and services than it costs to fulfill it. Think up to a hundred times more

Larger-than-life claims are the easiest to establish (and therefore less unique). Anyone can make a promise. The harder, and more competitive, are the Time Delay and Effort & Sacrifice

What will I make?

Our goal is to accurately depict that dream back to them, so they feel understood, and explain how our vehicle will get them there.

it’s not about the money, it’s about the status (the perceived increase or decrease in relative standing when compared to others socially or professionally)

Example: If you buy this golf club, your drive will increase by 40 yards. Your golf buddies’ jaws will drop when they see your ball soar 40 yards past theirs . . . they’ll ask you what’s changed . . . only you will know.

talk about how other people will see your customer

How will I know it’s going to happen?

messaging, proof, what we choose to include or exclude in our offer, and our guarantees

How long will it take?

The thing that makes them stay long enough to get their dream outcome is the short-term experience.

The only thing that beats “free” is “fast.” If you find yourself in a market competing against free, double down on speed.

Perceived Effort & Sacrifice (Goal: Decrease)

What is expected of me?

Problems & Solutions

What points of friction exist for them? I like to think in the sequence that the customer will experience each of these obstacles.

Each problem aligns with the four value drivers as well

The more problems you think of, the more problems you get to solve.

List out each core thing that someone has to do. Then think of all the reasons they wouldn’t be able to do it, or keep doing it (using the four value drivers as a guide).

“What would I need to show someone to solve this problem?”

Logical solution: make trains faster to increase satisfaction

Psychological solution: decrease the pain of waiting by adding a dotted map

What level of personal attention do I want to provide? one-on-one, small group, one to many

What level of effort is expected from them? Do it themselves (DIY) - figure out how to do it on their own; do it with them (DWY) - you teach them how to do it; done for them (DFY) - you do it for them

If doing something live, what environment or medium do I want to deliver it in? In-person, phone support, email support, text support, Zoom support, chat support

If doing a recording, how do I want them to consume it? Audio, video, or written.

How quickly do we want to reply? On what days? during what hours? 24/7. 9-5, within 5 minutes, within an hour, within 24 hrs? 10x to 1/10th test. If my customers paid me 10x my price (or $100,000) what would I provide? If they paid me 1/10th the price and I had to make my product more valuable than it already is, how would I do that? How could I still make them successful for 1/10th price? Stretch your mind in either direction and you’ll come up with widely different solutions.

Find a way to solve every problem a prospect presents with.

5: Trim & Stack

“Create flow. Monetize flow. Then add friction.” This means I generate demand first. Then, with my offer, I get them to say yes. Once I have people saying yes, then, and only then, will I add friction in my marketing, or decide to offer less for the same price.

The ultimate goal is to find a sweet spot where you sell something very well that’s also easy to fulfill.

I look at the cost of providing these solutions to me (the business). I remove the ones that are high cost and low value first. Then I remove low cost, low value items.

If you aren’t sure what’s high value, go through the value equation and ask yourself which of these things will this person:

  • Financially value
  • Cause them to believe they will be likely to succeed
  • Make them feel like they can do it with much less effort and sacrifice
  • Help them accomplish their goal and see the result they want with far less time investment.
  • What should remain are offer items that are 1) low cost, high value and 2) high cost, high value

If there’s one type of delivery vehicle to focus on, it’s creating high value, “one to many” solutions (e.g. digital products)

The bundle does three core things:

  • Solves all the perceived problems (not just some)
  • Gives you the conviction that what you’re selling is one of a kind (very important)
  • Makes it impossible to compare or confuse your business or offering with the one down the street

Total value: $4,351 (!) All for only $599.

Use scarcity to decrease supply to raise prices (and indirectly increase demand through perceived exclusiveness)

Watches: $100,000, $500,000, $2,000,000+ rare status symbols that people buy only so other .001 percenters know they belong.

People want what they can’t have. People want what other people want. People want things only a select few have access to.

Increase demand and decrease perceived supply

I might have ten people willing to pay $500, but two of them willing to pay $5000. So, I would make more, have lower costs (more profits), provide more value, and increase the demand in the remaining prospect base by selling fewer units. Think about how exclusive scenario one vs scenario two would feel. Think about all the people who would want to purchase, but would not be able to. Would this increase or decrease their desire? It would increase it, of course. The next time we promote scenario two, we then open three spots at the same price and sell them all (still leaving some prospects with pent up demand!)

If I have a rare problem, and I must solve this problem for my own pursuit of happiness, it will consume all of my attention. By the nature of my problem being specialized, there will be very few people who can solve it. This means there is not a large supply of solvers. In many cases, I will perceive only one possible “solver” (Supply = 1).

That’s how these guys can charge so much . . . because they don’t need it.

Limited Supply of Seats/Slots: in general or over X period of time.

When using this tactic, you must also let everyone know that you sold out.

Only accepting….X Clients

Only accepting X clients per week (on-going)

Only accepting….X clients per class or cohort

Always remember have less spots available than you think you can sell . . . so that when you want to do it again in the future, everyone will remember you sold out . . . fast.

If you don’t hate money, sell a very limited supply of 1-on-1 access

Limited Supply of Bonuses

Never available again

Use urgency to increase demand by decreasing the action threshold of a prospect.

Kicks off on Monday, otherwise you’ll have to wait until our next kickoff date

The biggest sales on a week long campaign or launch happen in the last 4 hours of the last day (up to 50-60%). That means that the last 3% of the time allotted creates 50-60% of the sales…that’s completely illogical, but also unmistakably human.

Promotion (or discount or bonuses)

“The price is going up! So get in now!”

The sooner someone acts the better it will be for them

Before their competitors

Use bonuses to increase demand (and increase perceived exclusivity).

They establish the price, then they expand upon it until you feel it’s such a good deal it would be stupid to pass it up.

Add bonuses Instead of discounting whenever possible on core offers.

When selling one on one, you ask for the sale first, before offering the bonuses. If they say yes, then after they have signed up, you let them know the additional bonuses they’re going to get. This creates a wow experience and reinforces their decision to buy. On the other hand, if the person does not buy after the first ask, then you present a bonus that matches their perceived obstacle, then ask again. Don’t feel weird about asking again. You simply agree with the prospect, add the bonus, and ask if this consolation was “Fair enough.” People have a hard time rejecting reciprocity, so adding a bonus to accommodate, then another, then another, and people will feel almost obligated to buy from you.

  1. Always offer them
  2. Give them a special name that has a benefit in the title
  3. Tell them:
    1. How it relates to their issue
    2. What it is
    3. How you discovered it, or what you had to do to create it
    4. How it will specifically improve their lives or make their experience
    5. Faster, easier or less effort/sacrifice (value equation)
  4. Provide some proof to prove that this thing is valuable
  5. Paint a vivid mental image of what their life will be like assuming they have already used it and are experiencing the benefits
  6. Always ascribe a price tag to them and justify it
  7. Tools & checklists are better than additional trainings (as the effort & time are lower with the former, so the value is higher)
  8. They should each address a specific concern/obstacle in the prospects mind about why they can’t or won’t be successful
  9. This can also be what they would logically realize they will need next. You want to solve their next problem before they even encounter it
  10. The value of the bonuses should eclipse the value of the core offer
  11. You can further enhance the value of your bonuses by adding scarcity and urgency to the bonus themselves
    1. Scarcity: “Only people who sign up for XZY program will have access to my Bonus #1, 2, 3 that are never for sale or available anywhere else other than through this program.”
    2. Urgency: “If you buy today, I will add in XYZ bonus that normally costs $1,000, for free. And I’ll do that because I want to reward action takers.”

You can get other businesses to give you their services and products as a part of your bonuses in exchange for exposure to your clients for free.

If you secure enough of these relationships, you can literally justify your entire price in the savings and additional true-to-price bonuses.

You can negotiate that each of these businesses can pay you for the people you send their way

Create checklists, tools, swipe files, scripts, templates, and anything else that would take lots of time and effort to create on one’s own, but is easy to use once created. Anything that you can invest in one time that clearly cost time or money to create, but can be given away endless time is a perfect fit for a bonus.

Beyond that, make a habit to record every workshop, every webinar, every event, every interview and use them as additional bonuses (as needed to crush a perceived obstacle).

Proactively negotiate group discounts and a referral commission with adjacent businesses that solve needs your customer will have as a result of beginning this process with you.

What’s the next natural thing they might want? Go to those businesses, get a deal for them they could never get for themselves (because you are negotiating with the purchasing power of all your customers at once, very powerful).

Use guarantees to increase demand by reversing risk.

The key is to identify a client’s biggest fears, pain, and perceived obstacles. “What do they not want to have happen if they pay you? What are they most afraid of?” Reverse their fears into a guarantee. Think of the time, emotion, and outside costs associated with any program or service. The more specific and creative the guarantee is, the better.

Guarantees can be stacked.

A person who only buys because of a guarantee is a person who may not be willing to put in the work necessary to see success with your product or service. In a world where you want to reverse risk and get customers the best outcome possible, tying your guarantee to the things they need to do to be successful can help all parties.

Bigger broader guarantees work better with lower ticket B2C businesses (many people just won’t bother taking the time). The higher the ticket, and the more business oriented it is, the more you want to steer towards specific guarantees.

Ex: 100 sales, 5 refunds (5%) = 95 Net Sales

Guarantee Offer 130 sales, 13 refunds (10%)= 117 Net sales

117/95 = 1.23x (23% increase)

If you do not get X result in Y time period, we will Z.

Bad Example: We will get you 20 clients guaranteed.

Better example: You will get 20 clients in your first 30 days, or we give you your money back + your advertising dollars spent with us.

[Unconditional] “No Questions Asked” Refund: Creative imagery: “You’ll get our famous “Club a Baby Seal Guarantee” After 30 days of using our services, if you wouldn’t club a baby seal to stay on as a customer, you don’t have to pay a penny.”

Satisfaction-Based Refund: “Best case you get the body of your dreams and we give you all your money towards staying with us to hit your long-term goal. Worst case you tell me I suck, I write you a check, and you get six weeks of free training. Both options are risk free. But, the only thing guaranteed not to help you is walking out of here today.”

In a perfect world, 100% of your customers would qualify for a conditional guarantee, but will have achieved their result, and therefore will not want to take it.

Outsized Refund: When you need a lot of stuff to be done by your prospect, and, assuming those things are done, there’s a low chance of the result not being achieved. This will typically outperform a traditional 30-day money back guarantee in terms of net conversions (sales minus refunds).

Service: You keep working for them free of charge until X is achieved. Make this conditional on them doing key actions linked with success

Modified Service: You give them another Y-long period of service or access to your product/services free of charge. Generally, Y should give them at least twice the duration.

Credit-based: You give them back what they paid but in a credit toward any service you offer. Best used during an upsell.

Personal Service: You work with them one-on-one, free of charge, until they reach X objective or result. Definitely want to add conditions.

Hotel + Airfare Perks: Refund of ancillary costs.

Wage-Payment: You offer to pay their hourly rate, whatever that may be, if they don’t find your call/session with them valuable.

Release of Service: You let them out of their contract free of charge.

Delayed Second Payment: You won’t bill them again until after they make or get their first outcome.

First Outcome: You continue to pay their ancillary costs (ad spend, hotel, etc) until they reach their first outcome (if not within X days)

All Sales Are Final

Once seen cannot be unseen, or once used cannot be taken away

“We are going to show you our proprietary process that we are using right now to generate leads in our business. Our funnels, ads, and metrics. We’re going to be exposing the inner workings of our business, as a result, all sales are final.”

Strong reason why is needed

“If you’re the type of customer who needs a guarantee before taking a jump, then you are not the type of person we want to work with. We want motivated self-starters who can follow instructions and are not looking for a way out before they even begin. If you are not serious, don’t buy it. But if you are, boy are you going to make a killing. ”

Performance: A) …Only pay me $XXX per sale/ $XXX per show B) $XX per Lb Lost

Revshare: A) 10% of top line revenue B) 20% profit share C) 25% of revenue growth from baseline

Profit-Share: A) X% of profit B) X% of Gross Profit

Ratchets: 10% if over X, 20% if over Y, 30% if over Z

Bonuses/Triggers: I get X when Y occurs.

Use names to re-stimulate demand and expand awareness of my offer to my target audience.

We are not changing the actual offer. We are only changing the wrapping paper.

The “reason why” can literally be anything. It really doesn’t matter so long as you believe it

The point of good persuasion is for the prospect to feel understood.

Attention (M-Magnet), Discrimination (A-Avatar), Purpose (G-Goal), Timeline (I-Interval), and Method (C-Container)

Don’t give a quantifiable outcome with the duration unless your platform allows it. That being said, duration is a powerful component of a Grand Slam Offer and you should definitely use it anywhere you don’t need to deal with compliance.

Bundle of lots of things.

Good rhymes stick in people’s minds. An alternative approach to rhyming is to use alliteration

  1. Change the creative (the images and pictures in your ads)
  2. Change the body copy in your ads
  3. Change the headline - the “wrapper” of your offer
  4. Free 6 Week Lean Challenge to Free 6 Week Tone Challenge
  5. Holiday Hangover to New Year New You
  6. Change the duration of your offer
  7. Change the enhancer of your offer (your free/discount component)
  8. Change the monetization structure, the series of offers you give prospects, and the price points associated with them (Book II)

When in a local area, the more local you can make your headline, the more it will convert.

In local markets, it’s easier because there’ is trust in the familiar. So selling in-person at higher prices in a local market is inherently easier

Offers fatigue rapidly because there is only a limited radius that a local business can serve

If you sleep with your significant other everyday they have less desire than if you haven’t slept with them for a week. We want the ravenous prospect, not merely the aroused.

You can either sit there and make “complain” posts about how people “ought” to be a certain way. Or you can take advantage of the way people are and capitalize.

You can either be right or you can be rich.

You can find ways to monetize the things that people value in order to give them what they really need.

How can I add $5M in profit without adding any extra product lines to my business? (This was a real project that took me 60min and resulted in exactly $5M in bottom line profit by slightly altering the pricing model of the business). You could say the business owner was… “very happy” with the result of the engagement. → approach is best for consulting/marketing

They were scaling an education business in a niche (not too dissimilar from my own) and could not get past the $1M per month mark. As someone who was doing $1M per week in the same business type (at the time), I was a very specific type of person with the keys to their problem. → he has skills that he monetised well, but it started with the skills

https://www.acquisition.com/training/offers

  • Pay only upon success → e.g. first customer, lost weight
  • Levers of success (all must be neutral or good): Market (e.g. masks during COVID) > Offer > Persuasion
  • Variables: Pain; Purchasing power; Easy to target: Growing market
  • Main markets: Health; Wealth; Relationships
  • Niche: Low volume, high profit
  • Value > price → it’s better to increase value than decrease price (race to the bottom)
  • Higher price = more emotional investment/higher perceived value = better results = more value
    • Far higher price = category of one
  • Value Equation: (Dream outcome x perceived likelihood of achievement) / (time delay x effort and sacrifice)
    • Get the bottom to zero → instant, no inconvenience
  • Outcome (SMART) → Perceived Problems (consider every stage of the start-to-finish process) → Solutions (for each problem; relate to value equation factors)
  • Sales to fulfillment continuum → Start with easy to sell, hard to fulfill (typically more expensive → higher profits) then add friction (harder to sell, easier to fulfill)
  • Delivery: One-to-one/small group/one-to-many, done for/with/it you(rself) (DFY/DWY/DIY), support level, consumption media, speed and convenience, 10x or 1/10x test (x=$)
  • Trim and stack: prioritise high value, low cost solutions (80% margin on service) → but one sexy high cost high value solution
  • Split single product into multiple
  • Provide bonuses from other businesses → improve your offer with exclusives + affiliate commission
  • Types
    • Unconditional: dramatically remove risk for customer, partially increase risk for yourself (but requires excellent product)
    • Conditional (achieve X in Y time, or Z): refund, service
    • Anti-Guarantees (all sales are final)
    • Performance (e.g. commission)
  • Naming: use a fun, catchy strapline
  • Can stack guarantees e.g. 30 day unconditional + 90 day 3x money back if X

Scarcity & Urgeny

  • Urgency: Cohorts, seasonal, promotional/pricing/bonus, exploding opportunity (genuinely now or never)
  • Scarcity: Limited supply (# of units or # of clients)
  • MAGIC (aim for at least three): Magnet(ic reason) + Avatar + Goal + (time) Interval + Container
  • Need to refresh at intervals (image, text, headline, duration, business model, etc)
  • The goal of great copy is for the prospect to feel understood
  • He started with a core great product (how he got his body) and then learnt businesses
Updated on 2023-11-08
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