Podcast Summary
Growing a Business: The Commodity Problem: To survive, businesses must continuously grow by getting more customers, increasing their average purchase value, and getting them to buy more times. Understand business terms like gross profit and lifetime value to focus on growth areas.
Businesses need to grow to survive, and the only ways to do so are by getting more customers, increasing their average purchase value, and getting them to buy more times. This concept, known as the commodity problem, means that maintenance is a myth, and companies must continuously grow or risk falling behind. To understand this concept better, it's essential to know key business terms such as gross profit and lifetime value. Gross profit is the revenue minus the direct cost of servicing an additional customer, while lifetime value is the gross profit accrued over the entire lifetime of a customer. By focusing on these growth areas and understanding these business concepts, businesses can increase their revenue and ultimately thrive.
Creating a Grand Slam offer for unique value: A Grand Slam offer, with promotion, value proposition, premium price, and unbeatable guarantee, sets businesses apart, leading to value-driven purchases and increased revenue.
Having a Grand Slam offer for your business can make all the difference between commoditized, price-driven purchases and value-driven purchases. Both types of offers require the same amount of work from the business in terms of fulfillment. However, the way they are perceived by customers can lead to vastly different outcomes. A Grand Slam offer, which includes an attractive promotion, unmatchable value proposition, premium price, and unbeatable guarantee, allows businesses to sell in a category of their own, making it difficult for customers to compare prices. This forces the customer to reassess the value of the product, establishing the business as a unique category and leading to value-driven purchases. On the other hand, commoditized offers, which are comparable to other products or services in the market, result in price-driven purchases. In such cases, customers make decisions based on the lowest price, leading to thin margins and potential financial struggles for the business. By having a Grand Slam offer, businesses can increase response rates, conversions, and premium prices, leading to more customers and revenue without being constrained by cash flow. This approach allows businesses to differentiate themselves from the competition and focus on the value they provide, rather than competing solely on price.
Offering a Grand Slam Offer vs. a Commoditized Service: By offering a unique, value-driven Grand Slam Offer, businesses can differentiate themselves, avoid commoditization, and significantly increase revenue.
Offering a commoditized service with a commoditized price can lead to a race to the bottom in terms of pricing and profitability. In contrast, offering a unique, value-driven "Grand Slam Offer" can result in higher response rates, more appointments, increased closing percentages, and significantly greater revenue. The example given was of a lead generation agency that traditionally charged a $1,000 down payment and a $1,000 monthly retainer. With this commoditized offer, the agency's return on advertising spend (ROAS) was only 0.5 to 1, meaning they lost money on acquiring new customers. However, in 30 days, those five customers would pay another $1,000 each, breaking even. The Grand Slam Offer, on the other hand, involved a one-time fee covering ad spend, with the guarantee of 20 leads in the first month or the next month free. This offer included access to best practices, daily sales coaching, tested scripts, and more. With this offer, the response rate was 2.5 times higher, resulting in 100 appointments booked, a 2.3 times higher closing percentage, and 28 appointments closed. The price was 4 times higher, and the total collected upfront was 22.4 times greater. The ROAS was 11.2 to 1, meaning the business was getting paid to acquire new customers. The key takeaway is that by offering a unique, value-driven Grand Slam Offer, businesses can differentiate themselves from competitors, avoid the commoditization dilemma, and significantly increase revenue.
Creating a Grand Slam Offer for Maximum Impact: Investing in a Grand Slam offer can lead to substantial revenue growth by increasing response rates, closed deals, and upfront prices. Identify the right market for maximum impact.
Creating a compelling "Grand Slam" offer can significantly increase your business profits. This offer can lead to higher response rates to advertisements, more closed deals, and the ability to charge higher prices upfront. The result is a substantial increase in cash collected. For instance, investing $10,000 to create such an offer could lead to $112,000 in revenue. This approach is particularly effective when targeting a "starving crowd," or a market with high demand for a solution, even if the offer itself may not be exceptional. The key is to identify the right market for your Grand Slam offer to maximize its impact. By focusing on this strategy, you can move away from the pricing wars and differentiate yourself from competitors.
Choosing the Right Market for Your Business: Select markets with pain, purchasing power, ease of targeting, and growth for your business success. Understand your audience's willingness to pay and don't ignore their ability to pay.
The market you choose to serve plays a crucial role in the success or failure of your business. The story of Lloyd, a brilliant entrepreneur, serves as a cautionary tale. Despite his intelligence and sales skills, he struggled for years because he was selling to a shrinking market. The power of choosing the right market was illustrated when Lloyd pivoted to manufacturing masks during the COVID-19 pandemic and experienced tremendous success. When selecting a market, look for indicators of pain, purchasing power, ease of targeting, and growth. The degree of pain in a market will determine the price you can charge for your solution. Ensure that your prospect has a painful problem that you can solve and that they have the purchasing power to pay for your solution. Don't be romantic about your audience; serve those who can pay you what you're worth. Remember, you can't create demand, but you can channel it. Your market matters, so choose wisely.
Identifying a Great Market for Business Success: A great market has a large customer base with specific pain points, the ability to pay for services, and easy accessibility for marketing efforts. Ignoring any of these factors can hinder business growth.
Finding the right market for your business is crucial for success. A great market should have three key elements: a large number of potential customers with a specific pain point, the ability to afford your services, and easy accessibility for targeted marketing efforts. Ignoring any of these factors can make it difficult to grow your business. For instance, targeting an unemployed population may seem like an easy target due to their high pain points, but if they can't afford your services, it won't be a profitable market. Similarly, even if you have a perfect product or service, if you can't easily reach your target audience, it will be challenging to make sales. Growing markets can also provide a significant advantage by making your efforts more effective, while declining markets can make your journey more difficult. It's essential to consider markets that address core human needs, such as health, wealth, and relationships, and focus on a subgroup within those markets that is growing, has the buying power, and is easily accessible. Ultimately, the importance of finding a great market versus a normal or bad one depends on the overall strength of your offer and persuasion skills. However, being in a bad market can stop your progress entirely, so it's crucial to prioritize finding a strong market foundation.
Focus on niching down and creating a Grand Slam offer for business success: Niching down and creating a unique, compelling offer can help businesses succeed, even in average markets. Committing to a niche and growing within it can lead to easier growth for smaller businesses, while larger businesses may need broader audiences for the Total Addressable Market.
To achieve significant success in business, it's crucial to focus on niching down and creating a Grand Slam offer. A Grand Slam offer is one that resonates strongly with a specific target market and sets you apart from competitors. If you're in a great market, even with a mediocre offer or persuasion skills, you can still make money. However, if you're in a normal market with a normal offer, you'll need exceptional persuasion skills to succeed. Committing to a niche and focusing on a Grand Slam offer can help you shortcut the path to success and make more money. The author advises against hopping from niche to niche in search of a better market, as the grass is never greener. Instead, stick with your choice long enough to have trial and error, and remember that riches are in the niches. Additionally, niching down can lead to easier growth for businesses under $10,000,000 per year, but broader audiences may be necessary for larger businesses depending on the Total Addressable Market.
Niching down increases price potential: Specificity and messaging resonate with target audience, allowing for premium pricing in any product or service
Focusing on a specific niche can significantly increase the price you can charge for the same product. Dan Kennedy's example of time management products illustrates this concept: a generic course might only sell for $19, but a niche version for sales professionals could sell for $99, and a further niche version for B2B outbound sales reps could sell for $499. Even though the core content might be similar, the specificity and messaging resonate more with the target audience, making them willing to pay a premium price. This concept applies to any product or service, and can lead to exponential revenue growth if you become the go-to solution for a specific niche and offer a unique solution to their deepest fears or desires. Remember, it's not about you or your personal worth, but about finding the right market and offer combination. Don't be discouraged by failures, but instead learn from them and try again. If you can accurately assess markets and niches, and pair that with a premium offer, you could potentially never need to work again. For more information on how to pick profitable markets and niches, check out the free tutorial and checklist on acquisition.com/forward/training/offers.
Understanding the Value of High Fees: Successfully charging high fees requires demonstrating significant value to clients, leading to substantial returns on their investment.
Charging high prices for valuable products or services is a common practice for successful businesses, and it may be met with skepticism or concern from others due to the perceived disparity in wealth. The speaker in this text, who made significant revenue using a business system, faced such questions from his father. He explained that the clients were making substantial returns on their investment, and the payment structure was based on a percentage of their increased revenue. This perspective helped his father understand the value of the service and why the clients were willing to pay such high fees. Ultimately, the speaker's success challenged the father's assumptions about what was possible and inspired him to consider new opportunities. The text also emphasizes the importance of understanding the value of one's offerings and communicating that value effectively to others.
Focus on increasing value to customers instead of just competing on price: Businesses should aim to deliver more value to customers to create a price-value gap, leading to higher profits and better customer satisfaction.
Creating and communicating value is crucial for making compelling offers and avoiding a price-to-value discrepancy that can lead to lost sales. Instead of competing solely on price, businesses should focus on increasing the gap between price and value by delivering more value to customers. This not only benefits the business by allowing for higher profits, but it also provides better value to customers, creating a win-win situation. Additionally, pricing based on market efficiency can lead to a race to the bottom, where businesses are barely breaking even. Instead, charging a premium price is a smart business decision that allows businesses to truly provide value and differentiate themselves in the marketplace.
Pricing's impact on perceived value and results: Proper pricing creates emotional investment, perceived value, and results for both the business and the customer. Higher prices can lead to better experiences and outcomes, while lower prices may attract more clients but decrease value and commitment.
Pricing plays a significant role in the perceived value of a service or product, and ultimately, the experience and results for both the business and the customer. When you lower your prices, you may attract more clients but decrease their emotional investment, perceived value of your service, and their results. On the other hand, raising your prices can increase their emotional investment, perceived value, and results, while also allowing you to invest more in your business and team, creating a better experience for everyone involved. Research shows that consumers perceive higher-priced items as having more value, even if the actual product is the same. This is known as the "Luxury Effect." By pricing your service or product appropriately, you can create a sense of exclusivity and allure, positioning yourself as a monopoly in the marketplace. Additionally, if your service requires customer investment for optimal results, it's crucial to price it in a way that encourages their commitment. Those who pay more are more likely to be invested and achieve better outcomes. Ultimately, setting the right price for your service or product is about more than just making a profit – it's about creating a valuable experience for your customers and team, and helping them achieve their goals. So, if you want to stand out from the competition and provide exceptional value, don't be afraid to charge what you're worth.
Charging a premium price leads to extraordinary results: Deep conviction in your solution and charging a premium price can help gyms grow, increase revenue, and attract committed clients.
Having deep conviction in your solution and charging a premium price can lead to extraordinary results. The speaker, who built a successful consulting business in the gym industry, shares his experience of providing high-value services and charging premium prices. He flew out to gyms for consultations, turning around their businesses in just 21 days and charging 100% of the revenue he brought in. However, this approach became unsustainable, leading him to discover a more effective and scalable way to deliver his services. He shifted to a "done with you" model, where clients did most of the work, but he guided them through the process. This change allowed him to reach and help more gyms, and he charged a premium price for his intensive 16-week program. Despite the high cost, many gym owners committed, believing in the speaker's ability to help them grow their businesses. The results were impressive, with significant revenue, profit, and client growth. In summary, charging a premium price allows you to provide more value than competitors, create a lure around your offerings, and enable your clients to achieve remarkable success.
Creating value and raising prices for business growth: To fuel growth and expansion, businesses need to increase prices instead of decreasing them, create tremendous value for customers, and learn from the speaker's resources at acquisition.com/forward/training.
That creating value and raising prices are essential for business growth. As the speaker emphasized, 99% of businesses need to increase their prices instead of decreasing them to fuel growth and expansion. Profit, or "oxygen," is crucial for reaching more people and making a bigger impact. To charge premium prices, businesses must learn to create tremendous value for their customers. Additionally, the speaker mentioned that there is a free course available on his website, acquisition.com/forward/training, for visual learners who want to explore the concepts further. The course includes a full slide deck presentation, checklist documents, and other resources related to the book. In the upcoming episode, the speaker plans to discuss the value equation, which is one of the most famous chapters in the book. He also hinted at a special surprise at the end of that episode. Overall, the key takeaway is that creating value and raising prices are essential for business growth, and the speaker's resources can help entrepreneurs learn how to do it effectively.
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