6 Hacks To Make More Money [Increase LTV] Without More Customers

Summary

• To increase lifetime value, understand it as lifetime gross profit (LGP) which is more precise than the term 'lifetime value'.
• Focus on how much gross profit you can get from a customer over time, not just net profit, which comes after expenses.
• Here are six strategies to increase LGP of your business:
  • Increase the price of your product or service even if it sounds counterintuitive because higher prices can attract customers seeking quality or prestige.
  • Decrease the cost of goods sold by investing in technology or processes that make fulfillment cheaper, thus increasing your margin.
  • Increase the purchase frequency by encouraging customers to buy more often, increasing the value of each customer across your business.
  • Include upsells by offering more expensive or larger versions of your products, encouraging customers to spend more on each transaction.
  • Cross-sell by offering related products or services that customers might need next, which can also be where the majority of your profit comes from.
  • Offer downsells or alternative products for those who can't afford your main offerings, using excess capacity or referring them to a partner business for a commission.
• Remember, pricing is one of the most underutilized levers in business; don't base it on broken models but look at successful businesses for guidance.
• Pricing changes can double or triple lifetime gross profit without increasing workload, so don't shy away from adjusting your prices appropriately.
• Consider these strategies as part of your client journey to make each customer more valuable and grow your business efficiently.

Video

How To Take Action

I would suggest focusing on understanding the concept of lifetime gross profit (LGP) first. It's the gross profit you earn from a customer over time. Here's how to grow it with small efforts but big impacts:

• Increase Your Prices: Don't be afraid to raise your prices because it can make your product seem more valuable. You don't need more customers for this, just change the numbers.

• Cut Down Costs: Look at how you make or buy your product. Can you find a cheaper way without dropping quality? If you use a computer instead of doing something by hand, it could save you money.

• Get Customers to Buy More Often: If you have a cafe, maybe start a loyalty card to get folks to visit more. One extra visit from each person adds up.

• Upsell More Expensive Items: Sell bigger or better versions of what you have. Like if you sell a small coffee, ask if they want a large one.

• Cross-Sell Related Products: Have things that go well together, like if someone buys a burger, ask if they want fries too.

• Offer Downsells: If someone can't afford your main product, have a cheaper option ready. Maybe an online course instead of live coaching.

Remember, you don't need a lot of money to do these things. Small changes can double or even triple your LGP. Think of these strategies not as extra work but as enhancements to the journey you're taking with your customer. They make each person more valuable to your business.

Quotes by Alex Hormozi

"There's two ways to grow business. Number one is you get more customers. Number two you make those customers worth more"

– Alex Hormozi

"If I can get someone to come to my restaurant today and tomorrow and then continue to come forever, then that's going to be a much more valuable client"

– Alex Hormozi

"Pricing is one of the most underutilized levers in the entirety of business"

– Alex Hormozi

"A lot of times we're still paying for this traffic, these eyeballs are still yours"

– Alex Hormozi

"Don't model small businesses, look at the pricing models of big businesses"

– Alex Hormozi

Full Transcript

good morning everyone it is alex from ozzy here from gym launch prestige allen and the many other companies that we have in our portfolio they did 110 million dollars in sales and i am going to tell you how we did that without further ado the purpose of this video is to show you the six ways to increase lifetime value all right and i'm going to show you my favorite one at the end of this that i think is the most powerful of the six all right and so first thing we have to do is define lifetime value all right so there's two ways to grow business from uh from a fundamental standpoint number one is you get more customers number two you make those customers worth more that's it that's it so it would behoove us as business owners who are trying to make more and grow our businesses that we should know all of the different ways to a get more customers and b make them worth more all right now when i say make them worth more lifetime value is a very loosely defined term you can look on the internet there's lots of different definitions for it and what i'm going to do is redefine this as lifetime gross profit all right so lt gp which is what i care about all right because for example if i'm selling a meal for ten dollars and i make uh it cost me nine dollars to deliver the meal i mean i make a dollar so if i sell someone and it cost me five dollars to get somebody to buy a 10 meal is that a good business proposition for me well you're making ten dollars it cost you five you're getting two to one well my cost of delivering it's nine out of the ten dollars which means i spend five dollars to make one dollar of gross profit all right and so that is why it's gp all right that's why i don't like lifetime values in a more it's a very amorphous term and so what we're looking for is how much juice how much gross profit is there over the lifetime of the customer for us all right now that's not net profit net profits after you've paid all of your all the other expenses your rent your payroll all the other things um but this is just the gross margin that comes in if it costs you two dollars to buy a thing and you sell it for six then the gross margin's four now you still got to pay you know your warehouse and whatever other things you have going on now hopefully you understand lifetime gross profit so i can get into the goodies all right so there's six ways to increase ltv the first one is increase the price sounds crazy but believe it or not price in and of itself is something that can actually draw alert to your your products do you think if a chanel purse sold for twenty dollars people would think they're as cool no price in and of itself can create alert around a product it can put you in another category so much so that people say this is so much more expensive there must be something different about this i'm going to look at this more closely right number two is that you can decrease the cost all right so if i can find a cheaper way to do the thing i can invest in technology invest in processes i can invest in outsourcing all these different ways that i can deliver the same thing for less i increase my gross profit so if i had that meal thing that i was talking about earlier and it cost me nine dollars to make the meal but i found this new automated robotic process that allows me to do the meals for two dollars that very much increases the lifetime gross profit of my of my bit of my of my products and my business but i didn't change anything besides decreasing the cost all right uh the next one is to increase purchase frequency all right so what this is is getting people to buy again and again and again if i can get someone to come to my restaurant today and tomorrow and then continue to come forever then that's going to be a much more valuable client right and so that increases if i can get all my clients to come in additional one time right that would increase my lifetime gross profit per customer across my entire business all right so if you're tracking with me number one you can increase the price number two you can decrease how much it costs you to fulfill the thing right number three you can get people to buy more times all right and then four five and six are slightly related but different all right the first is that you can upsell people all right now upsells very important here i'm going to define this for you is selling the same thing but a more valuable version so if you upgrade right from uh from a honda to a lexus then you're getting up sold right important and i think it's important to find these terms because they are different types of sales and if you can be more nuanced in how you think you will think better all right especially when it comes to your business so the next so that's that's buying so i'll give you a a food example so if i go from a you know 20 ounce soda to a 32 on soda that is an upsell it's more of the same it's either better of the same or more of the same but either way it's the same category of stuff um i'm just i'm just buying a bigger better version of it all right the next is a cross sell all right across cell is an adjacent need that i am solving all right so in the burger or sorry in the in the coke example if i sell a burger with the coke then that is a cross cell right so upsell is small coke to big coke or you know uh normal lemonade to to organic whatever lemonade you know espresso sun-kissed lemonade or whatever it is right that's an upsell across that would be uh what do you want with that lemon do you want a sandwich with that lemonade what do you want with that soda you want a burger with that so do you want fries with that soda right that is a cross-sell all right that's a cross-sell so you're selling an additional thing this is usually the next natural need that the person is going to have as a result of their first purchasing decision oftentimes these cross sales are actually where the majority of the profit happens so sometimes there are strategies and businesses that are called loss leaders everyone needs this one thing but the next thing they need is gonna be the thing that has all the margin and if you know your numbers you can build a model around that very successfully all right and then finally this is one that's overlooked is down sells right so a lot of businesses that i'll talk to or consult with um they don't have any down cells and so that means that there's all this traffic that's coming to their site or getting on the sales calls with them but those those people have needs too and it might not fit in your primary uh category this is especially true if you sell a higher a higher level service or a more expensive service a lot of times we're still paying for this traffic right this traffic these eyeballs are still yours and i like to think of this as one person's trash is another person's treasurer there's always a business that can do something with uh some of the kind of the sawdust the excess capacity that we have that exists within our business right and so downsells you can either down sell to someone else's product and get affiliate commissions get referral partner commissions for for for sending business their way or right and i like that a lot because you're you have a nice relationship with another business you think they have a good product they specialize in serving that type of customer um and you both benefit you make money they get free customers everybody wins the customer gets solved right and they're gonna thank you for making the introduction as long as you have good partners which you obviously should the other way to do this is to have lesser um you know lesser lesser cost of fulfillment but it's solving the same need so um i'm trying to think an example of this so yeah if you had like a done-for-you service of some type right um and the person couldn't afford your full suite of services you could downsell a kind of a done with you or do it yourself uh version of that right and so making those products taking the one-time investment of making that product or making that you know done with you version of your of your primary done-for-you service or whatever it is a lot of times can serve as a really good downsell right if someone walks into a facility for personal training and they can't afford personal training obviously there's groups and things like that they could do that would be a natural downside but maybe they want to stay at home you give them an at-home version right so there's all these different ways that you can you can slice and dice this but fundamentally if we have people that were normally not giving us money because they would say no but now we're able to monetize them in some way we have now made more money per customer all right and it's really per per person who walks into our business all right so six ways to increase lifetime value of a customer lifetime gross profit one is you can increase the price and automatically you make more money number two is you're gonna decrease how much it costs you to fulfill the thing that you're promising number three is you can increase purchase frequency or getting the amount of time someone buys from you get them to buy more right over time number four is upselling them that means having structured upsells where they can get buy more of the same stuff or better versions of the same stuff all right cross-sells is selling the next adjacent needs you have to think yourself someone buys my service what's the next thing they're normally going to need i'm going to sell them that too right and it also makes their life easier because they can get all their stuff from one place makes you more money everyone wins and then finally what can i do with the sawdust what are all these people who are coming into my business who can't necessarily afford my main thing and how can i how can i create something still going to solve their need but doesn't cost me that much so i can still make a good a good margin on this stuff or how can i refer the business out to someone else and still get a kickback from it and so those are the six ways to increase lifetime gross profit now i told you the beginning i was going to tell you the thing that i think is the most powerful it's this guy understanding price pricing is one of the most underutilized levers in the entirety of business most people figure out their pricing by looking at the marketplace taking an average saying i guess i'll charge that the secret that they don't know is that everyone else is broke think about it everyone else is broke and especially if you're entering the small business ownership the reason that small businesses are small is because they think like small business owners not big business owners that's why they stay that's why they stay small and so don't model small businesses look at the pricing models of big businesses now strong word of caution here there are market penetration strategies that businesses can do because they have funding and things like that but if you look at mature businesses businesses that have gone through the rapid growth phase and then have sustained look at the pricing model they have because what the model that they had they have already tested and obviously has produced sufficient margins that they are able to continue to grow their company all right and so don't look at the small guys don't look at the person who's out of shape and try and model what they're doing right that's a probably fitness is a horrible example because people have great genetics or bad genetics and anyways but point is don't look for the dentist who had bad teeth right look for somebody who's got nice teeth and i'm sure there's genetics there too these are horrible examples but hopefully you get the point all right is that pricing is the most important lever and i'll give you one quick example on this if something cost me 10 to fulfill right and i charge 20 for it cool i'm making you know 50 gross margin but if i say you know what i'm going to charge 50 for this thing or you know what we'll say 30. so i go from 20 to 30 right i just doubled the lifetime gross profit of my business doubled right there are very few of these other mechanisms that can double or triple or quadruple the lifetime gross profit of your business or per client rather than price right which is also why it's one of the ones that people have the biggest limiting beliefs around and the ones that most people struggle to increase and the good thing is if lots of people struggle to do it it means there's plenty of opportunity for all of us all right so six ways to increase lifetime gross profit there's two ways to grow business one of them gets is getting more customers the other one is increasing how much those customers are worth and here are six strategies that you can think about within your business of how you can apply these things um to your client journey so that you can make those clients worth more without doing any extra work lots of love keep being awesome catch you guys soon bye