How To Close Prospects By Saying “No” First (ALEX HORMOZI)

Summary

• I learned a valuable sales technique from observing Richard Schwartz's fur business, which dominated the market by doing the everyday things better.
• In upselling, it's crucial to get customers to say no in a way that leads them to say yes, increasing the likelihood of upselling successfully.
• Upsells are important as they drive bottom-line profit and help in liquidating acquisition costs, especially in simple sales adjunct to the core offer such as supplements in fitness or night serums in beauty.
• Richard Schwartz's fur storage business used a strategy that involved offering a free pair of fur earmuffs as an incentive for customers to store their coats.
• Customers who came in for the free earmuffs were asked if they wanted anything else, subtly introducing the coat conditioning service which added hundreds of dollars to the transaction.
• This technique works because people are pre-programmed to say no to avoid being sold to, but positioning the offer right makes them agree to what you are actually selling.
• Expect a dramatic increase in uptake on upsells from the standard 20-30% to over 90% by using this 'assumptive close' tactic.
• People tend to align their previous choices with new ones for consistency, as seen when customers conditioned their free earmuffs with their coats.
• Small upsells can significantly impact profit, similar to the high margins that fast food businesses earn from fries and drinks, not just the main burger.
• I advise business owners to think creatively about how to apply this sales strategy rather than dismissing it, as there are always opportunities to increase profit in any business.

Video

How To Take Action

I would suggest implementing a simple yet effective upselling technique I learned from a successful business – getting customers to say no in a way that makes them say yes. Start by identifying a low-cost, high-value item that complements your core offer. For example, if you run a fitness business, think about offering a supplement.

Offer this item as an add-on in such a way that your customer is inclined to say no to further options, thus confirming their choice of the initial upsell. You could say something like, "You've got your gym membership; you wouldn't want to add a personalized meal plan for faster results, would you?" When they say no, you've got them agreeing to the gym membership they just chose.

Try using the 'assumptive close' tactic. This involves making subtle suggestions that assume they've already chosen the upsell, leading to an incredible increase in acceptance rates. It plays into people's desire to be consistent with their choices, so when you give them an option, they'll likely take it to maintain consistency.

Remember, it's all about the small upsells that can make a big difference. Just like fast food places make their real profit from fries and drinks, you can find high-margin items to boost your bottom line. Keep an eye out for these opportunities and don't dismiss this strategy thinking it won't apply to your business. Be creative and adapt it to your needs. This approach will help increase profits without significant investment.

Quotes by Alex Hormozi

"The reason he gets 90 plus to take his upsells because they don't know they're being sold"

– Alex Hormozi

"You don't make your money on the burger, you make your money on the fries and the coke"

– Alex Hormozi

"Winners always think, 'Man, I wonder how I could use that in my business'"

– Alex Hormozi

"Losers think, 'that wouldn't work in my business, my business is different'"

– Alex Hormozi

"People are so contrarian, people always feel like they're being sold"

– Alex Hormozi

Full Transcript

quick and tactical training this is one of my favorite stories of all time from selling stuff and this comes from the volts of richard schwartz and mano schwartz furriers they're a fourth generation furrier uh in baltimore and they took over the entire market really the larger like maryland pennsylvania market um just simply doing the boring work and being better at the everyday things and so richard schwartz unknowing unbeknownst to him was a a mentor of mine in terms of i just observed a lot of the things that he did in his business and i started doing back of napkin math when i was 17 or 18 and i was like dude this guy kills it um and he was and i probably still is um and uh there was one he's i learned so many things from him um but one of them uh was getting people to say no to say yes all right and so this is a very very real world tactical um tidbit that you can use to close sales now there's a specific type of sale that this really applies to which is a lot of times bolt-on or upsells right and these upsells can be incredibly important to the business in terms of driving bottom line profit liquidating acquisition costs and so usually these are sales that are not complex sales these are not necessarily core offer sales these are sales uh you know within the finish world that might be attributed to supplement sales or meal sales or if you were in retail it'd be like getting someone to buy a scarf with the outfit or um just you know anything along those lines you know getting someone to buy orthotics if you're in the in the physical therapy space or if you're in the dental space getting to buy a special kind of extra brace or special toothpaste or whatever or if you're in the beauty space you know night serums that go with your service package whatever it is right the point is is that usually there's going to be you know one or multiple things you're going to want to go with your core offer all right the reason that this this little trick i learned from him is so powerful um is that it closes like crazy all right so if you're used to having like 20 30 of people take up sales that is a normal amount where people take up sales and the reason he gets 90 plus to take his upsells because they don't know they're being sold all right and so here's the trick and here's how it works and i mean you can take this to the bank like it works okay and i'll give you the example uh that they used uh at mano and so somebody would come in and so every year if you bought a fur coat you would have to store it right and they made they killed it on storage but anyways so people would come in so basically they'd sell someone a car essentially because that's how much a you know fur coat is so they sell some in a car and then uh every year they would maintain that customer relationship by getting them to come back in and store their coat uh during the summer because it's not good to you know keep a really expensive fur in uh you know the heat or whatever right that's at least part of the pitch and so uh everybody brings their fur in to get stored in condition so they brush them you know and i was one of the guys who was brushing them in the freaking warehouse and like spraying these things down uh it was my numbing work but i got to learn a lot while i was there and so anyway uh we brushed these coats and so one of the one of the things one of the promotions you ran as an incentive was get a free pair of fur earmuffs when you store your coat for winter or your cup for summer excuse me and so tons of people would come in because they wanted these true real fur uh earmuffs uh by bringing it in and so what ended up happening is david his son would uh the person would come in and they'd say i want to i would want to do this and can i get the the fur for emotes and so he would show them the free ear muffs and then say well um you're like what we're gonna do is uh store and condition your coat you don't want anything else do you uh and they would say no i don't want anything else but the conditioning was an upsell right and it's almost even the way i presented issues now it's like well you're gonna store in your condition your code but storing code versus storing and doing the brush down and doing the uh the shampooing of the coat is obviously an extra service but it immediately added a couple hundred bucks to every single coat and they were doing thousands of coats right and so anywho uh the point is is that they would get people to just agree that they don't want anything else okay so think about how you can use this strategy right there's there's there's many ways you can use it but the something else is the easiest that i can ever see right so let's say you say hey like this is what you're gonna uh this is what you need to take uh for this weight loss program right these are the four supplements you need to take now you might have more supplements right you're like you don't want to buy anything else do you right and then they're going to automatically a lot of times like you don't want to buy any more stuff do you and then they're like no no i don't i don't want to get anything else right and by doing that you automatically close the sale that you just recommended right and you can do the same thing uh in a different way which would be like um hey uh you don't want to pay full retail for that right and they're going to be like no no i don't it's like cool so you want me to send it uh with this discount to the you know the address i have on file and they'll be like okay yeah let's do that right and so by doing that you're getting them to say uh yes by saying no and the thing is is people are so contrarian people always feel like they're being sold that you actually use that psychological like it's subconscious like they can't even think they're not even making the thought process like they're agreeing because they're so pre-programmed to try not to buy things that they end up buying things and so you use that psychological bias to your advantage it's one of the most powerful techniques i have ever seen in sales most people get 20 to 30 uptake on their upsells if you use an assume close tactic like this you can literally see 90 percent plus take rates on this right and so as a as to wrap up the story when uh they give them the earmuffs at the at the furrier they would they would they would say well now that you have those uh you're gonna need to to store those and condition those as well so that'll be you know an extra whatever and so it ended up happening is that people would get the the free uh the free earmuffs but you'd have to pay to get it stored in conditions which would cover the cost of the firm so uh it was just kind of hilarious because what ended up happening is he'd give it to them they'd have it in their hand and be like well you still need to store it because you just brought your coat here and you're not going to keep these out so to be to be congruent with the story of of needing to store the coats they had to wrap it uh right underneath the jacket and they would take both of them into the back and so people would come in they'd get the ear muffs they'd hold on to them and they put them right back on their coat they say hey you don't want us to do anything else besides you know storing and conditioning do you and they're like no no i don't know anything else like okay cool well let's get that taken care of and then they'd inspect the coat real fast like i want to take care of this button it's kind of loose want us to sew this little seam here and be like yeah sure do anything else to be right no no and so every time each one of these things they just keep selling them but people are so subconsciously uh wired to try and say no to upsells that they would say yes by saying no and so uh you can try and utilize that in your business i think it works very well with kind of like hand-to-hand small upsells um but a lot of these little small upsells can be massive profit drivers in the business this is kind of like your fries and coke situation that i'm talking about here like this is a lot like you don't make your money on the burger you make your money on the fries in the cup because there's the high profit margin things even though it's not the core offer and a lot of times there's huge pockets of profit that most especially most small business owners and especially if you're running like a brick and mortar uh service business uh that you're missing out on so um highly recommend using that strategy if you're like oh man i wish i could use it in my business you can uh just use your brain and be creative because uh winners always think man i wonder how i could use that in my business and losers think that wouldn't work in my business my business is different so decide which one you are and then execute accordingly otherwise lots of love hope you guys have an amazing saturday hope that was a value for you if it is you know drop or tag or like or do all the the fun stuff and uh i hope to see you on the next podcast alright catch you soon bye [Music]