Cash Flow Consulting (ALEX HORMOZI)

Summary

• If a business can't afford to pay $100-$200 to acquire a new customer, it's not just a marketing problem; it's a fundamental business problem, specifically a cash flow issue.
• To increase money made per customer, focus on four cash flow quadrants: products, add-on services, prepayments/financing, and continuity.
• When customers come in, immediately look to add product purchases to their initial service package. High-margin products serve as a powerful revenue booster.
• Offer add-on services to increase the customer's lifetime value. This enables the business to earn more from each customer over time.
• Encourage customers to prepay for services with a discount, as it increases cash flow up front. Even a small percentage opting for this can significantly raise the average order value.
• Implement continuity by down-selling the upsell. Offering a service they're already getting at a discount for recurring payments increases customer retention and extends lifetime value.
• Increase front-end revenue to afford spending more on customer acquisition. The more you can spend on acquiring customers, the more channels become affordable, unlocking growth potential.
• Businesses must excel at monetizing and choreographing customer acquisition processes to maximize lifetime value. Aim to make as much as possible in the first 30 days to support acquisition costs.
• The big picture involves serving the customer to the highest degree while creating an efficient, low-drag operational process that outperforms the competition.
• Continually refine the sales process through the lens of the cash flow quadrants to increase revenues and serve customers better, leading to a more successful business.

Video

How To Take Action

Here's how to make more money per customer and solve cash flow issues. First, when a customer comes for a service, always try to sell them a high-margin product as well. This can quickly increase what you earn right away.

Next, look to add services. Like if you run a gym, besides the regular workouts, offer personal coaching or nutrition advice. This will make customers come back more and spend more over time.

Then, get customers to pay in advance by giving a little discount. Even if just a few people do this, your money up front will grow a lot. This helps a lot with covering costs when you find new customers.

Lastly, create a way for regular payments – continuity. After you sell the first service, offer the same at a discount if they pay every month. This will keep customers longer and you'll earn more from each one.

To really grow, work on getting good at making as much money as you can in the first 30 days after getting a new customer. Then, you can afford to spend more on finding even more customers. And keep making your selling process better. Look at these steps often and keep thinking of how to fit them into your sales. You will make more money and beat competitors.

Remember, the goal is always to give the best service to customers while keeping your business working smoothly and doing better than others.

Quotes by Alex Hormozi

"If you can't make a hundred dollars on a customer coming in a service-based business, you're not going to succeed"

– Alex Hormozi

"It's about expansion revenue, it's about ascension, it's about selling them more things over time"

– Alex Hormozi

"if you can get that cash per show high enough then you can spend on multiple different channels of acquisition"

– Alex Hormozi

"it comes from the back not the front"

– Alex Hormozi

"at the end of the day what you are always going to be paid for is the value that you create the marketplace"

– Alex Hormozi

Full Transcript

cash flow process that i've i've been consistently walking through for the last couple months part of this started with the book that i'm still currently working on called building a better mousetrap and all of that is around how you can increase how much money you make per customer that comes into your business and so the easiest way to know if you have an issue um is thinking about this single question so i'm dealing with a lot of agencies on our software side and what i'm essentially walking them through is a cash flow quadrant but not the same cash flow project that you'd have in like robert kiyosaki's rich dad poor dad but a cash flow quadrant for how you can increase the value per customer because fundamentally um it's my viewpoint that if a business cannot pay a hundred dollars or two hundred dollars to get someone in the door they don't have a marketing problem they have a business problem right they have a cash flow issue and they don't know how to acquire customers and make cash flow up front and so what i'll do is i want to walk you through the four-step process that i look at when i'm looking at a customer that's coming in the door and that doesn't matter what they're coming in on they could come in on a a free offer they could come in on a lowberry offer like a a new client special or something like that that's a 29 i think 21 doesn't really matter or it could be a straight up value offer where there's no discount whatsoever there's no no free no nothing um simply value being provided so those are fundamentally the three types of offers that exist in the marketplace free discount and value right but all of them can still lead to the same mousetrap right and so the first thing that i'll look at is products right is there something that we can add on in this sales choreography when someone comes in the door so we can immediately add a product purchase to bolt-on to additional to an initial service package right so initial service package could be x period of time x number of sessions uh or a single session done at a discount or even a single session free like an evaluation or or whatever right the point is is and this works in any industry right you could come in and obviously in the gym and fitness space the next natural cell for products would be supplements right uh if you were in a a chiropractors clinic the next natural cell might be orthotics or a special pillow or some sort of brace or whatever right it's a physical product someone can immediately purchase from you at a very high margin specifically to go with the service that you're also selling them another example might be if you're in the beauty space you might sell uh masks or serums or creams all of those things would be the first quadrant of how you can increase how much you make per customer right so let's say i'm going to use 100 as the average like if you can't pay 100 for every person who walks in the door in your marketing then you're not going to have a business right you can't make if you can't make a hundred dollars on a customer's coming in a service-based business you're not going to succeed and has nothing to do with your market it's because you don't have this process down so even if they come in for free boom you sell 100 200 per person in product all right you've already broken even on that but if you still want to really beat and dominate everyone in the market you go to the second quadrant which is how can i get them to add on additional services right so this might be introducing them to uh upsells within your core offer so if you were a facility the gym facility for example you might have your large group training but you might also have accountability nutrition coaching um semi-private training all of those things would be add-ons to the initial core offer all of this will increase the average lifetime value and investment of the new customer that's coming in which allows you to make more money all right that's in a gym space if you were looking at a med spa someone comes in for a botox you know treatment or whatever first thing you're going to do is try and get them to buy a package that's more of the same thing but then also give them what i would consider a menu close which is let me show you what other things we have to offer we have coolsculpting we have filler we have microdermabrasion we have skin tightening we have whatever right all of those things would be showing them what other services and offerings you have for that exact customer so that they can so that they can become more valid you and that you can become more valuable to them right so cash flow quadrant number one is product cash flow quadrant number two is add-on services number three is more from a uh for somebody who's more capital constrained and wants to make more money per customer up front you can add on prepaid or financing and so if you can if you're in a really established industry you can get financing companies to do this for you care credit is massive in the healthcare industry people get you know get boob jobs finance they get anything financed through care credit right if you can establish it in your business you can get uh sometimes half or more to finance the packages that they may have purchased from you so the third piece there is just simply asking and offering a 10 discount to get someone to pre-pay and there's a key note there you don't say paid in full you some offer someone to prepay that's the language around that uh to drag some of that revenue up front uh or certain cash up front so that you can further liquidate the cost of acquisition now let me let me show you how powerful this is with a single math example if you have 10 people who walk in your door and let's say you sell five of them all right and one of those five does a prepay on your service right and let's say everybody else averaged out to 500 um for the for the initial purchase but one of them paid 2500 right that one 2500 sale increases the average ticket from 500 to 1000 across all of the customers that you had in the door so even if a small percentage take that offer it can be a massive increase in the average order value average cart value average cash per show whatever way you want to call it um and can change the game in terms of how you can acquire customers and beat out the people in your competitive space all right so i went for i've said three so far so product is number one add-on services number two getting people to pre-pay for services that are happening in the future number three and then number four is continuity so is there a way that we can also tie continuity into this acquisition process right so uh i'm gonna i'm gonna not do the gyms uh because everything i do is about gems so i'm gonna try and apply this in a different setting so uh let's say we have i mean a med spa is an easy one to use because they just brought it up so someone comes in for a discount botox right first thing there they might not make the surgeon or the med spot center might not make a lot of money in that first transaction they might make a couple hundred dollars but that should at least cover the cost per show the next thing they're gonna do is give them uh products right the products that are gonna go with that might be uh the serums the macs at home because everything that someone's coming in for there wants to look younger and more beautiful right and so all all the products that would go along with that would immediately be sold from like a take-home kit standpoint like if you want to maintain these results or extend these results you should have these things the next would be our menu clothes right do you want to do microdermabrasion you want to do the coolsculpting do you want to do filler whatever right then we're going to prescribe a package that's going to be their total beauty package which might take six months or whatever to get them to where we where they want to be and then the continuity that we're going to tie into this is a process that i like to call down selling the upsell all right and so what that is is typically you'll want to have people pay more in the beginning because it costs more to acquire a customer it costs more to onboard a customer than it does to maintain a customer and so if we're getting more cash up front for these customers they're going to be more invested in our process and it also allows us to cover the overhead of getting them activated getting them on board and giving them a great experience but then you can simply offer them the same thing that they've been getting but just on a recurring basis and do it at a pretty decent discount and most people will jump at that offer what it does is then locks that person into regular recurring cash flow for the business and then massively extends the lifetime value of the customer and so i'm going to walk you through one single math example that i'll sign off but hopefully you can look at that quadrant within your existing sales process and say how can i implement each of these four things into the sales choreography in my business so that i can outspend my competition so that um i can spend five hundred dollars per person who walks in the door a thousand dollars per person who walks in the door and the reason that's so important is because if you can get that cash per show high enough then you can spend on multiple different channels of acquisition you can have referral partners you can have uh you can have cold traffic you can have uh affiliates you can have all of these different venues you can have you can have direct mail you can have uh social media stuff you can like all of these different venues cost different amounts but at a certain point all of them become affordable and that is what unlocks the huge amounts of growth that are available for a business owner and it comes from the back not the front and so everyone thinks they have a marketing problem but typically it's because they have a monetization issue they're not good at cash flowing or choreographing the the money that they're making per customer right so to to bring this all home what we're trying to figure out is how much can we make up front in the first 30 days and then what's the lifetime value of the customer the cash value for the first 30 to 60 days is going to be important for how you spend money to get them in the door the lifetime value on the back end is going to be how much money you're going to be able to extrapolate and how much revenue you make per month based on your sales volume so for example if you sell 20 people every single month and you know that your lifetime value per customer is 2 000 total and you sell 20 customers per month total then it means that your business should cap out at 20 times 2 000 which should be forty thousand dollars a month and that's an easy way to back into like if you feel like your business has not been able to grow it's because one of t is two numbers either you're not you're not capturing enough on the back end or you don't have a big enough inflow that is it that's all there is to it you can massively simplify this now if we're looking at trying to back into that number so let's take a business a that can only pay a hundred dollars per show which means they're not making a lot of money and then option b is we've got a business to pay a thousand dollars to show let's see if we can reverse engineer a thousand dollars per show uh into a business model so if someone comes in and let's make it an attractive friend and offer let's make it a let's make it a a 19 new client special whatever right evaluation it doesn't really matter what industry it is it works the same way all right so someone comes in for a 19 thing they show up all right from there let's say that we know that we're going to close half onto uh the next service package right now that next service package let's say the average is going to be two thousand dollars all right now that's gonna be over an extended period of time cool let's say that our minimum that we can get down is 500 because that's what we say is minimum in order to buy and that's why we're closing half and not 100 right the next thing we do is we sell 200 per customer now if two thousand dollars was what the package was we closed half we're at a thousand dollars in lifetime value all right just from that first transaction half times two thousand is a thousand all right now of all those people that say yes now let's say we sell each of those people 200 for the product all right now we added 200 now we're at 1200 lifetime value then let's say uh two out of those five people that we you know that we sold for example um decide to add on an additional thousand dollars for the services all right from your other service offerings that you have all right so now we've got two-fifths times a thousand uh which would be four hundred dollars uh that we add again to the customer so now we're at sixteen hundred dollars per show all right and then again on the back of that we say hey we know that from every of the five that we have um we can get uh let's say another two to sign owns a continuity at two hundred dollars a month and we turn out at ten percent which tax another two thousand dollars onto two of those customers all right and so that would add yet another eight hundred dollars on top so you'd be at twenty four hundred dollars per person that walked in the door for a free offer all right that is how you can beat everyone in your marketplace is that you consistently execute the process right it means every single time you have a choreographed handoff between service a or service one and sale number two so number two and cell number three so number three and cell number four and if part of you is like man i feel like i'd be selling all the time yes is the answer but but the secondary correlate to that is that if you look at the research that exists on how to maintain a customer over the long haul it's about expansion revenue it's about ascension it's about selling them more things over time so that they can continue to be reminded of the value that you provide because over time people always want new things and so it is your duty if you believe in the value that you provide to make the offers to those people and communicate that process in a seamless way so that every part of your business knows my objective is passing the baton from point b to point c from point c to point d and all of that choreographed process ultimately results in a front end that allows you to spend whatever you want per customer uh because your back end is so strong and that process that cash flow quadrant is the reason that jim launch has been able to stay number one in this industry despite the saturation despite the charlatans despite the many people who would claim that they're doing the same thing but they're not because they don't execute that process and at the end of the day what you are always going to be paid for is the value that you can create the marketplace we've been able to choreograph that process for the businesses that we serve so that they make more per customer and so that their customers are better served and that's ultimately what you have to do what we have to do as entrepreneurs and business owners is how can i serve my customer in the highest and best degree ever um and how can i do it in as seamless a way as possible so that i can have as little operational drag as possible so that um i can outmarket my competition and continue to play the game so anyways uh that cash flow uh quadrant is is how i think through the choreography around creating selling systems so that our gyms and our businesses can beat out their competition and i would encourage you to print that out put it put it somewhere so you can think about every single sales process that you have through that lens and i guarantee you that you'll make more money that's what that's what when i do my consulting days and i sell consulting hours this is the process that i walk those business owners through and nine times out of ten we can almost double or triple the amount that they make customers simply following that process so i hope that was valuable for you i hope you have an amazing saturday execute that make more money serve at a higher level and crush it lots of love catch you soon [Music] you