7 Million Dollar Lessons I Wish I Knew Earlier

Summary

• Treat your team with positive reinforcement rather than fear; it fosters a better culture, reduces turnover, and improves performance.
• Remind the team often of the impact their work has on customers to maintain enthusiasm and a sense of purpose.
• Align customer expectations with the actual product or service to reduce churn and increase customer satisfaction.
• Create a culture where problems are not hidden due to fear; use a 360 feedback loop to catch and resolve issues quickly.
• Use new team members as an opportunity to challenge the status quo and improve systems and processes.
• Once you're not selling to customers directly, focus on 'selling' the company vision and culture to attract and retain strong team members.
• Maintain a robust talent funnel to match your customer acquisition funnel to ensure consistent service as your company scales.

Video

How To Take Action

I would suggest implementing positive reinforcement with your team instead of instilling fear. You could start by thanking them regularly for their hard work, and show them how their work helps customers. This can build a strong culture and make your team want to stick around.

A good way to keep the team's spirits high is by frequently reminding them of how their work impacts and benefits the customers. Share customer success stories in meetings or emails to keep everyone motivated.

To reduce customer churn, align what you promise with what you actually deliver. Review your product or service descriptions to make sure they are accurate. If you notice a gap, update your materials or improve your service to meet customer expectations.

Create a culture where it's safe to speak up about problems. Ask for feedback from your team in meetings or through surveys. When people feel heard and not scared, they're more likely to share useful information that can resolve issues faster.

Use new team members as an opportunity to see things differently. Ask them to write down what they think works and what doesn't, and then go over it with you. This fresh perspective can help identify areas for improvement that you might not see.

Once you're not selling directly to customers, you need to 'sell' your company vision to your team to keep them. Share the company's goals, how their roles contribute to that, and how it can benefit them in the long run. It's like telling a story that your team wants to be part of.

Make sure you have a strong process for finding new team members. Like you attract customers, attract new talent. Maybe post job ads, ask for employee referrals, and always look out for people who can join your team. Having good people ready can help your company grow without too much stress.

Quotes by Leila Hormozi

"People work harder for leaders they love over leaders they fear"

– Leila Hormozi

"People need to be reminded more than they need to be taught"

– Leila Hormozi

"You can beat everybody if you simply meet expectations of the customer"

– Leila Hormozi

"Scared people hide problems"

– Leila Hormozi

"Every new teammate is a chance to break status quo"

– Leila Hormozi

Full Transcript

today I want to share with you $7 million lessons that I wish I had known earlier that are responsible for building our multiple n figure portfolio and all the eight figure companies within it the first lesson is that people work harder for leaders they love over leaders they fear when I got a job fresh out of college I actually packed up my car and I drove across the country and I got a job at 24-Hour Fitness I had graduated from exercise science I had a degree and understood like how to help people lose weight how to teach people how to work out but I didn't understand business I didn't know marketing sales as soon as I got a job at 24-Hour Fitness what I realized was I actually needed to learn marketing and sales I think that one of the main reasons that I was able to succeed is because I actually was really lucky to have this great boss his name was Mike Mike always asked me how I was feeling mike always would stay extra hours to help me train he was always there to be like dude you just got to try again like this is part of the game like this is normal you're not a failure he was always able to be a positive source of reinforcement for me and I don't even think I realized how lucky I was to have found him until he's like hey I've actually got to go start a new location and so we're bringing in somebody else and I'll never forget the day that not Mike came in the first meeting he had with our team and by the way we were number one in the region we were overperforming and he said no more of this we better post some numbers this week or else y'all are fired it was just so not received by the team that was there you know we're all high performers we all want to win we're all already posting great numbers it felt very punishing you know the first thought that I have when somebody talks to me like that is I was like I'll just leave everybody else happened to share that same mentality and so guess what happened everybody over time stopped selling people because they knew they were going to take their personal training businesses elsewhere he continued to threaten us more and more with what he was going to do I remember uh specifically telling me that he was going to run me over with his truck and light me on fire that was a fun one and as that happened slowly top performer 1 2 3 4 all Leave Myself included what you saw happen was that that that team that was number one in the region and overperforming went to being in the bottom 30th percentile and the only change that was made was that they brought in a leader who led with fear rather than the leader who had led with positive reinforcement and that was a Hallmark of my career because I thought to myself I never want to be that you know if I have this responsibility to lead people I don't want to abuse it and to treat them badly and put them in a sense of fear what people don't see is they say okay well tell me the hard how much money did it make you how can you say it's a million dollar lesson well if you look at most organizations and how many people churn out because they have such a terrible culture because people are in so much fear the only reason they're staying at the job is because of how much you pay them right and so then one you have to continue to pay people more and more and more if you want to be able to keep them and then two even with that people are still going to leave once they can get paid more somewhere else because they're in a constant state of fear and because they're in a con state of fear even though you're paying them more than you would have to if you were using positive reinforcement you're not getting the most out of them because because they're constantly stressed you're accessing no discretionary effort and so it's all these hidden costs that people don't see that cause the company to take on this extra burden when you lead that way how do you actually deploy leading with positive reinforcement rather than fear you will reward behaviors that you want rather than punishing behaviors that you don't want think of it like this if a dog jumps on the couch do you swap the dog to get off the couch or do you reward the dog for staying on the carpet it's a very small Nuance right but the issue is that if you swat the dog and then he jumps off the couch then in your presence the dog will stay on the carpet but every time you leave he will jump on the couch again and that is exactly what happens when you lead with fear when the threat is there aka the boss people adhere to the rules but the moment the boss is gone they don't and so I like to say like if you want to see what your culture is really made of see what people do when you're not around so there's two ways you can do this if you want to lead with positive reinforcement rather than punishment which is either remove something that is already a negative to them or add in something that is a positive for example removing a negative would be a relief to somebody so if somebody is overperforming at work and you have a hybrid culture and say that you require people to be in the office 3 days a week a relief or reward might be because you are overperforming you only have to come in one day a week now on the other side the more obvious one is that you reward or you give something for something someone does so it could be that A salesperson is overperforming and so you reward them with a two-day vacation you know two days off that you plan you give them a cruise whatever it might be I actually tend to talk a lot about adding in something that's a positive but what I actually like to do the most is removing something that's a negative because I think that most people the quality of their lives and their work lives continues to get better as things that are prohibiting them from performing and from being excited and happy at work are removed and then after you've removed a lot of those things adding on more things makes sense to further reinforce how serious this is every time you lose an employee you're paying anywhere from 90 to 200% of their annual salary when you lose them some of the things that factor into this would be how much it costs to onboard somebody train somebody and then something that we call time to productivity which is that you will be employing somebody when you hire them for a period of time and they will not have been doing the job yet because they're not trained up and so all of those factors including the time that other people on the team spend training someone factor in to why it cost so much to replace somebody the second million dooll lesson is that people need to be reminded more than they need to be taught and I don't think that I really understood how important this was in business until there was a quarter where our sales team was underperforming and this was I want to say 4 and 1/2 years ago when we owned gym launch q1 is traditionally the best time for Fitness sales it's like it was January and we're looking at the numbers and I was like holy crap you know we're not selling anything more than we normally would and then I looked at the percentages across the team and I was like man the close rate has actually dropped so then I started thinking I'm like maybe we're not tracking the right kpis you know maybe we need to go over objections like I said you know what this isn't my job we've got a sales manager so I'm going to go sit on the sales meeting and I'm going to go Shadow and watch and as I sat on the sales meeting I realized it wasn't people didn't know the script it wasn't that people were veering off the script there was no enthusiasm on the team and what enthusiasm translates to in a sales team is conviction remember I got off and I asked the sales manager I said when's the last time that you told them the impact the product has on our customers and I remember he was like I don't talk about that and I was like holy of course what I did the next day was like I said let's get a meeting together I'm just going to give them like a PumpUp meeting I'm going to remind them of how much impact they have on these people's lives when they sell them into this product because if you're just getting on the phone all day and all you're doing is trying to help people make a decision that's really hard for them to make you know they're giving you all these objections all day every day if you're not seeing what happens on the other side then you're only seeing this and you have no idea what happens after the way that I do this is I have a framework that I've developed called the three Rs which is remind resell and reinforce remind remind them of the results we are delivering so I was like Hey guys wanted to remind you of all the things that we're doing on the back end all the initiatives all of the work that everybody's doing to improve the product improve the customer experience and all of these results that we're getting for people and so the first thing I did was show them the pipeline for our product as well as the customer journey and all the things that happened after the sale now the second thing I did is I resold them why what they do is so important I got the stats of the average client Cent return in the first 30 days and I showed it to them I said here's the average the average person makes not just their reinvestment back but their reinvestment plus 50% in the first 30 days do you guys feel good when you hear that and they were like holy is that really what that would return is and I was like oh my God yes it's been that for forever and then the third piece to the equation is I reinforce this which is all I'm doing right now is I'm telling people I got together all the testimonials from the last quarter of all the clients and all the before and afters of their stats and I put a presentation together and I went through 10 slides and on those slides all it had was testimonials positive comments the ROI of what people got on the program you know what happened after I did that they sold triple the units the next day than any other day for the quarter prior and it continued to Trend upward and then we crushed q1 and it wasn't because I was like oh I've got to rewrite the script I've got to fix fix this sales flow I've got to change the lead nurture because that's always where people want to look they want to say Let Me Go tweak things it's like level up one oh my gosh have we reminded them of what we really do here have we been casting the vision have we been telling them of how much we impact customers lives because that is why people wake up every morning that's what keeps people excited to sell something at every point in time employees in your company are going to forget the impact they have and it's your job as either their boss or the CEO of the company to remind them of the impact the third million dollar lesson is that you can beat everybody if you simply meet expectations of the customer there was a time when I remember we got our quarterly report and we had rolled out uh a new program in gym launch and I got the report and I looked and though we were making more sales our turn had spiked and it was specifically it was our turn in the first 3 weeks of the customer journey I was like how could that be like what what is going on you know we changed it so that people could get wins faster I thought to myself well gosh uh I have to figure out what's going on here so I'm going to go watch some of the sales calls and I'm going to go watch some of the onboarding calls the expectations of the customer were much higher than the reality of what was being delivered and the reason for that was that things had changed right like I said we launched a new product but the sales team remained in the dark about how that changed the customer journey and so they were setting the expectations that we would have had with the old product but then selling people into this new product people were oversold and they were sold on something that actually was just completely Incorrect and so I got the team together and I said cool so here's what we're going to do we're going to do something called a gam tape review now a gam tape review is usually something you do in sales but I have seen it work really well across Marketing sales and customer success because it can help bridge the gap of of all of them so the framework I call the gam tape review framework it's the four RS okay so it's record rewatch respond and redirect so I'll break each of those down so the first piece is what you want to do is you want to record all of your sales calls all of your onboarding calls and all of your consultation or coaching calls or it could be ongoing support calls the second piece is that one time per week you rewatch one of those calls with all of the teams week one you're going to watch a sales call with the marketing team the sales team and the Cs team week two you're going to watch an onboarding call with the marketing team with the sales team with the customer success team like what are the core touch points you have with the customer those are what you're going to cycle through in the recordings and you're going to have all of those teams watch one time per week for 60 to 90 minutes and then you're going to respond to it with this you're going to write down the wins of them right so every Department writes down what was great about this call and then you write down areas of opportunity meaning where is there an opportunity either in this call or in my department in response to this call to improve so I'll give you what happened with ours so we watched the sales calls and the first thing that our customer success team said is they go oh gosh if I had known that was you were saying on sales call I would have never onboarded them this way and then we watched an onboarding call and the sales team said I didn't even know we did have these things this would make my pitch so much easier if I just knew we actually did these things I didn't even know we did so I was just kind of going with the flow and so what you see is that people start to see all of these departments more holistically they start to see the customer as a shared responsibility rather than I am in charge of sales I am in charge of customer success I am in charge of marketing and so the fourth piece to this framework is redirect you're going to get a lot of feedback from a lot of the Departments and what you want to do is that each department has one takeaway every time you do it one action item not three not four not five you you constrain them it's good to have more but you say cool I love that you have five ideas I want you to pick one that you're going to implement from this and if you do that every week imagine how much better the team's going to get that framework alone didn't just improve our close rate and improve our onboarding and improve our lifetime value that improved our entire team it took them to the next level and if you can get your team from working in silos which creates mismatched expectations for customers to working together where they can meet the expectations of the customers you can be everybody the fourth million dooll lesson is that scared people hide problems I'll never forget the day I was just on my computer working and I got an email from my director finance and the email said hey I made some miscalculations and didn't realize that taxes aren't due in September we actually need to pay them Monday the total right now is $9 million and so I guess you're going to have to move some stuff around let me know how it goes and keep me in the loop and I about my pants cuz I was like what the even just like moving $9 million from all the bank accounts into one is going to take more than a business day I mean not to mention I didn't know that we owed $9 million I was really taken aback by this event and really took time to reflect and say like why did this person not tell me that they thought this might be an issue what I came to find out was that this person had actually known of this sooner but they were scared to tell their boss and so what they did is they avoided addressing the issue as long as possible until the very last minute because they finally had to that incident is what really led me to developing a 360 feedback loop essentially what you want to do is make sure that it at any point in time with somebody in the company there's four sources of feedback you can get about that person most companies say cool I want the manager to get feedback about their direct reports but in reality you can have the manager give feedback about a person you can have their peers give feedback about this person you can have people below them give feedback about this person and you can have clients give feedback about this person I have found that if you're able to gain all those perspectives What it lets you do and allows you to have is a holistic perspective of that person's performance and how they're perceived within the team because you can see the Common Thread throughout all of the feedback you get and you can also see if there's any anomalies that are outlining the nice thing about this is if you're able to do it on a I would say like quarterly basis then you can catch problems while they're small and so the goal of this is to make sure that if people are feeling scared you can figure that out and then you can change it quickly you could use like a job form or a wooo form or something like that that you can just just throw together there's a lot of softwares that you can use too like you could use lattice you could use culture amp you know there's a office Vibe all of those are ones that can help facilitate the feedback so there's not so much administrative work behind it the fifth lesson is that every new teammate is a chance to break status quo so here's what I mean by that I was on boarding a new marketing manager this person came in and I'll never forget we were on a meeting and I said hey just be noting down observations we had a meeting and I pinged him and said like what do you think of the meeting and he pinged me back and he said I don't even know why we have it and I thought to myself I was like what do you mean and then it was like I was pulled out of the Matrix when I looked at it I uplevel and I said like what did we get done in that meeting like if I was a new person coming in this company and I was on this meeting would I be like why the are we like why the are they wasting my time and I looked at it I was like I would think that this is a waste of time and then I thought to myself I was like why did this meeting used to be so good and what has happened happened and I went back and I started looking at okay here's what happened we changed the structure here this person came in this person went to another meet and now this has changed with the company which makes this meeting irrelevant and so I said you are completely right I think this meeting has become irrelevant over time and we actually need to do this instead do you think that would make sense he was like yeah that would be amazing and so then I said you know what I'd love is if you could pull together a document and I what I'd love you to do is just notate everything and then once you've been here for 60 days I want you to turn it into me so I can look at it and then I want to over it together and what I've found from doing this exercise is that it is invaluable as somebody who runs a company and even as somebody who runs a department to get feedback from people who have no context you're so involved in everything that all you see is the trees whereas they're able to see the forest and so what I've implemented for people is that what I say is a 60-day observations which is four questions that I ask somebody to answer and so usually what I have them do is they take notes for the 60 days and there's certain things I'm going to ask based on their role that I'd like them to take notes on and then I have them answer these four questions the questions are what is working well here what doesn't make sense to you what activities seem to drive Roi and what activities slow us down honestly this is something I do all the time I recently did it I had somebody come in uh in a leadership position I asked them to give the observations and they gave observations and I was like holy I've got to change a lot of stuff and it's not because I don't know what I'm doing it's but it's because we get into habits and then we don't realize that at some point and with a company that is new and growing it happens probably on a every couple months basis the activities that we did to drive value for a quarter change and then for the next quarter those activities actually slow us down and don't drive value they're actually operational drag it's a great way to get feedback from people so that you can pull yourself out of the content and gain context on like does this even matter should we even be doing this the sixth million dollar lesson I had is that as soon as you stop selling customers you start selling your team so in the beginning when we started gym launch I remember when I hired the sales manager and then it was like very quickly my time freed up somebody else was managing the team other people were selling customers and I thought to myself what could I do that would be higher value than what I was just doing and I was having a conversation with an entrepreneur I think they were worth probably like half a billion and at this point you know I'm new into my career and I have all open ears and I'm telling him you know now that I've stopped selling customers and stop managing the sales team it's performing just as well you know I'm not really sure what I should be doing and I remember he looked at me and he was like Lea you don't sell customers anymore you sell teammates I was like interesting just like you market and sell customers you also market and sell employees but you're selling people different things here you're selling people a product that's going to help improve their life here you're selling people a job that will help them achieve their goals and that was when I realized also that all the Frameworks that we use in a sales department can be used with building a team actually there was one that Alex wrote in his first book that was the first framework I think ever was created for our sales department which we called the closer framework and I actually took that framework and applied it to the hiring and recruiting process and that framework was literally the word Clos which is clarify the why label the problem you solve overview the pain sell the vacation of where you will go explain away the concerns and reinforce the decision with proof so a lot of people hear that and they think about selling customers and I think about selling employees on the vision of the company and what that looks like is clarifying the why why did you apply to work here why do you want this job why are you looking for a job why do you want to leave your current job labeling the problem you solve amazing so here's what we do here and here's how we do things differently than other organizations a lot of organizations lead with fear and they like to micromanage people like to we like to lead with autonomy we like to give people freedom and we try really hard to Lead With Praise rather than punishment I'm sure you know what it's like to show up to work and feel anxious and stressed every day I used to feel like that too which is why I'd like to build a company that we don't do that sell the vacation of where you will go you're coming into this position here's where the company is going here's where your position could look within that greater vision of the company is that what you want for yourself explain away the concerns oh I'm concerned just like I'm not going to be to be able to have work life balance because you know we work from home okay well here's the things that we do here you know you can put up your slack away message on your calendar we ask you to put what your working hours are so somebody can go check and make sure that they can see what your working hours are we don't expect you to respond out those workingout so there's always things that you can explain and then lastly is reinforce the decision with proof have people talk to other people that are already on the team the last lesson lesson seven is if you want want to win in business you need an equally strong Talent funnel to match your client acquisition funnel so when we were first growing gym launch I remember that when we finally got product Market fit the calendars continued to fill up to the point where like myself and our salespeople could literally not do anything else in the day I was looking at well where's the next bottleneck of the business going to be and what I realized was that deal flow or client acquisition flow was not the problem but the problem was holy crap who's going to keep servicing these clients because the five people we had on the team were not nearly enough for the rate that we were getting people into the program just like we understood how to generate leads nurture those leads and sell those leads we needed to learn how to generate applications nurture the talent flow and interview people well enough to get them on the team and so the moment that I realized that Alex and I established this framework where we realized that Alex was going to handle the external funnel while Lea handles the internal funnel because if you have two equally strong funnels then you can grow a business without heading up against one of those constraints because what happens for a lot of businesses is they really hone in on the client acquisition and then what happens is they start to see everything's going really well it's amazing all stuff and then all of a sudden one day they look and they're like oh my gosh the turn is getting really high ah the testimonials there's less of them as we grow things start to get worse yes because we have not scaled the infrastructure of the company 80% of company's internal strategy does not accurately support their go to market strategy or customer acquisition strategy the 20% of businesses that do have a strategy tend to make 30% more profit than those that don't and so a lot of people would say okay well Leila how do I do that then well I would say if I were trying to improve something in a business I would probably increase the amount of measurement on that area so for example if you want to improve sales you want to make sure you're measuring all the right metrics right okay how many leads do we have how many are qualified how many get booked a call how many of those calls are qualified how many then move to Second call how many then move to close on the same side if you want to get really good at having a talent acquisition funnel right where you can acquire talent to help grow your business then you want to look at the number of applications the number of screened candidates the number of qualified candidates the number of candidates get to a first interview second interview third interview the number of offers that you present the time to fill a hire and the quality of that hire and so a lot of people don't have one of these sides of these funnels and so quality drops on either end as the business gets bigger but if you're able to assign ownership of each funnel to different people and then put equal amounts of attention and tracking there then you can scale these at the same time without quality dropping I hope these seven lessons were valuable for you honestly if I had known these lessons prior to starting a business I just wouldn't have been so stressed