How to Get a Customer to Commit for Six Months

0:00Meehan. >> Salaam, Alex. How are you? >> What's up, man? Talk to me. What's the business? What's the problem? >> So, I'm a I do an email marketing for e-commerce companies. Main business model and the main issue at the moment was just I was miscalculating my CAC to LTV mainly. >> Yeah. >> So, our business model was we would do a one-time like email automation setup for e-commerce companies and then try and upsell them on the recurring.

0:29>> Okay. >> was doing that model wrong in the beginning where I would you know, I would sell them on the one-time but I would get so hungry on trying to find more clients where I wasn't focused on the recurring. >> Uh-huh. >> So, now basically like so far this year we've done, I believe, 450,000 >> Okay. Okay. Okay, how are you getting customers right now?

0:54Yeah, how are you getting Yeah, yeah, yeah, yeah, yeah, yeah. I get this it's not going to work unless you keep customers. This model doesn't work. I'm just telling you right now. So, what's the what's the recurring thing that you're selling? >> So, we're selling recurring like email campaigns. So, we do, you >> Okay. Yeah. Oh, email blast or you mean like you're you're nurturing leads like, you know, you set up Klaviyo and all that stuff. >> Yeah, yeah, we set up Klaviyo to Shopify and we do like segmentation and all that.

1:20>> heard. Okay, got it. And you do turnkey like you write all the emails and you send it for their, you know, for their stuff. >> Yeah, I have my team do it. So, we have like a team of copywriters and designers. >> I get it. Yeah, but that's what you do as a business. >> Exactly. >> what's the price point? >> So, our typical price point right now like average across all of our we have like 13 active clients. >> Okay. >> Average is around 2K per month and it ranges between like it ranges between 1,500 to like 2,500.

1:47>> Okay, so 2K a month so you're doing 26K ish a month and then you have your front-end sales which gets you to get you to 40ish, right? >> Exactly, yeah. >> All right, what are you charging on the front end? >> Front end our flow setup, we're doing uh 2950. >> Okay, so 3K on the front and then how many of these you sell a month? >> So, um I was doing this offer for around like a few months or probably around like 8 months and we were selling on average anywhere between 12 to 16. I had to stop it.

2:16>> A >> What's your cost to acquire a customer? What's CAC? >> My CAC for this entire offer from here and I'm pulling up the numbers right now from October all the way up until when I stopped it was around average 2400. >> Yeah, so you break even on the front. >> Exactly. >> But then you're not doing any but you're not really converting people in the back. So, what percentage of people from offer one All right, why don't we just do this, man? So, why don't you just say, "Hey, uh I can do this thing for $10,000 up front, this whole automation, right? You hear me?

2:53>> Yeah. >> Or I'll include the $10,000 for free if you become a customer which you can do today for $3,000 a month. >> So >> And I'll you're saying do the upfront offer is 10K and then lead them into the recurring? Well, it's an anchor. So, this is called bonus continuity. By the way, everyone who's watching, one of the money models.

3:22So, they come in and you say, "Hey, I've got this thing that I do which is you whatever the initial automation setup, right? You say, "So, it costs 10 grand to do that, but if you want us to set it up so that we can do the recurring on the back end, we can do that as well, um and I'll I'll wave the 10K, I'll include it and I'll build it for free as long as you commit to 6 months." >> Interesting. So, oh, okay. So, how does like a Gotcha. So, you position that as like, "Okay, we're just going to do that for you anyway. You have to commit to 6 months on like a 3K a month cuz that's what I'm trying to

3:55>> increase the price to. >> Yeah. What if I want to cancel at month four? What do you What do you do? >> Um typically we just let We just don't do any um long-term contracts or anything like that. We just typically just do month-to-month. >> So, hear me out. Now that you have this offer, what do you think you're going to do? >> Probably if they're if they add the six to it after if they're trying to leave after four months, then probably I'm not sure. I mean, let them, I guess. I don't know.

4:24>> So, when you say the 10K, this is what you do. You say, "Hey, it's $10,000. I'm willing to stomach the $10,000 if you'll commit to 6 months." If you want to cancel between now and the 6 months, you just pay me the $10,000 that you would have paid if you wanted to be month-to-month. >> Gotcha. >> So, it's either >> cancel, they have to go to the like this 10K. >> So, think about it like this. It's $10,000 and then $3,000 a month month-to-month or it's zero dollars and then $3,000 for 6 months.

4:56And the zero dollars is the $10,000 thing. But if you cancel in the 6 months, then you got to pay me what you would have paid for the flexibility being month-to-month. That's the trade. So, if I have to front the risk, fine. I'll front like I'll front the risk if you make the commitment. But if you if you renege on the commitment, then you got to pay me what you were going to pay me originally to have the flexibility. >> Okay, that makes sense. And then Okay, now that I I I makes total sense. So, then rather than just selling 3K packages, doing that, trying to get a result for them, and then upselling them.

5:24>> Yeah. Your cash flow is going to be the same though. Your cash flow is going to be the same though because you're charging 3K right now. You're charging 3K with the other thing. Same same. >> Yeah. >> Right? Except >> total sense. >> Right. Except this way, a Every once in a while somebody is just going to say yes to the 10K, and those will be nice pops when you get them. And the 3K per month on the back end is still 50% higher than you're currently making, and you're currently making 10% margins, which would take your uh your margins from like 10 to if you just did the exact same number of customers you currently are, uh that would add 200,000. Um it would take your margins to 35%.

5:59>> Yeah, that'd be amazing. >> Right. >> Cuz >> Let's do that then. >> great. >> Let's do that. >> cool. Let me know. Sorry, I have one more question just cuz the way that I'm positioning it right now is like, "Okay, we'll build this, you know, 22 email setup for, you know, one-time payment." >> wouldn't say a 22 email setup. That sounds very commoditized, but yeah, go ahead. >> For the actual offer side, when I'm trying to like actually write in front of the ads, all that sort of stuff, would it just be like, "We'll build this crazy automation setup for free." And then or is that like a bait and switch?

6:29>> No, I mean if >> this content, how would you position on the front end? >> Well, what are you saying now? >> Well, right now, this is the ad that we basically is working the best is like, "We'll do this 22 email flow setup for a one-time payment." >> That's fine. Run the exact same thing. Just pitch this instead of what you're pitching right now. >> Got you. So, just pitch the bigger setup for basically one-time Okay, got you. And then

6:54>> 10k. Right. >> Got you. Okay, that makes total sense. Appreciate it. >> Bingo bango. Money mango. All right, rock and roll. Appreciate you. >> You bet. All right. If you liked this video and you're a business owner who wants to break through your current revenue ceiling, I just sold every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling road map that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're a business owner, I appreciate you and enjoy.