Die Angebotsstruktur, die ihm ein Fremder pitchte

0:00So, this is discount plus one-time fee. So, this is a different structure. Um I'll show you guys the visual. This is what this chapter looks like. This is my original hand drawing, by the way. This is uh not AI. This is just just Alex. All right. So, let me uh let me show you how it works. All right. So, I was uh this is spring of 2015. I was walking out the door from my La Habra location, sun-baked in the black asphalt of the empty parking lot. Uh it was midday before the afternoon rush would begin in just a few hours. Before I could step take a step forward uh to my car, a man quickly approached me almost out of nowhere. He said, "Are you the owner?"

0:32And I was a bit startled and I was like, uh yeah. He said, "And before I could ask what he wanted, he plowed right into a pitch. He said, "My name's Owen. I'm a personal training manager of a gym that just went under across town. I've got a group of trainers that just want to sell personal training packages. We do about 100 grand a month in personal training sales. We just need a facility to work out of." And I said, "Well, we don't really offer personal training here." I said half-lying cuz I just didn't want I didn't like the guy's vibe. He didn't seem trustworthy. Uh so, I started to turn my side, uh you know, show him that I wasn't really that interested and began working my way towards the car.

1:03And he realized that he needed to change his approach. He said, "I promise we're a self-sufficient team. I can see through the window that you guys have a lot of dead space even when your sessions are going on. Uh we can just help you monetize that area. It'll cost you nothing. It's just upside." I said, "Well, it'll cost me time and attention. And most importantly, it'll cost me the goodwill that I've accrued with my customer base." He said, "No, no, no. It It won't even cost your customers uh like if you don't want us to. Like we'll we'll go get our own leads and sell them. Uh we just ask that you give us a give them a discounted month up front.

1:30And then we charge an enrollment fee, which I give to my guys as commission for the sale. So, whatever they can close for the fee is theirs. That's how we do it. It'll cost you nothing." I said, "Well, I'll think it over." After thinking it over, I decided I didn't want a foreign group of trainers and sales people that I'd never vetted walking around my gym representing my company. But I did notice the offer structure that he presented, which was a discount plus a fee. So, he'd clearly seen the success with it. That much I did believe. And this is the first I'd heard of this monetization structure. It both attracted customers with the discount and liquidated commissions and acquisition costs through a fee. So, here's how it works.

2:03So, the description. So, you charge a discounted rate for your first term or period of service. You then charge one or more additional fees that you've made up, just like free with fee, which is an old an old name for different thing. Uh which is just also in the Lost Chapters, which you would have read if you have this book. Okay. Uh so, you can wave some and charge others, wave them all, or charge them all. So, it gives you a lot of offer flexibility depending on the strength of the salesperson. So, this offer will tend to surprise fewer people since they already came in expecting to pay something. This is why it's a discount rather than free on the front end, which is one of the key benefits of using discounts over free in general is that people expect to take their credit card out. So, let me give you some examples of this. So, if you have any kind of recurring service, you can offer 95% off the first month, you know, $1,900 off the first month, or first month for $100. So, what I just described there, what I just said, was three different ways of describing the same discount.

2:58So, by the way, for those of you who use discounts, there's multiple ways you can describe it and so you can test out the heading. So, like, let's say let's say I have a $1,000 monthly thing and I offer uh 50% off, okay? Let's keep that, you know, super simple. So, if I'm advertising, I can say 50% off first month. Number one. Number two, I could say uh it's $1,000, so I could say $500 off instead of 50% off. Um I could also say, well, I used an exact 50/50 split.

3:27Um but I could also say $500 for the first month. So, I'll use a different example of $1,000 but now 20% off. So, I could say 20% off first month, I could say $200 off first month, or I could say $800 first month. All three of those are different ways of making the permutations work, okay? And so, if you're doing any kind of discounts, and if you follow the way I do it, I prefer all my discounts to be 50% or higher. And because for me, a discount has to change behavior. So, if someone's if you a 10% discount, 20% discount, like it doesn't like in my opinion, people were already going to buy and you just gave away margin. I have to have a a discount that's sufficient enough that's actually going to get somebody to buy or get interested who otherwise wouldn't be.

4:05And that's how I think through discounts. And so you're like, "Well, I don't want to discount my service that much." It's like, "Well, duh. We don't want to discount our service that much." So, what you do is let's say you've got five things inside of your service, you say, instead of saying I'm going to give you 20% off, we say, "I'm going to peel this thing off and then make this thing 80% off. And then these are still 100%. Does that make sense? So, you give the 80 and then you upsell the four. That's how it works. Now, those are two examples. That's That's That's how you think through uh uh uh uh displaying it. So, monetization, so I give you three examples. Here's how you monetize.

4:37So, they come in for the first month for 100 bucks, uh but they still get charged a setup fee. And so, all in all, they'll get charged whatever you want as your setup fee, even though you gave the big super discounted first month. And then they go straight into recurring. And so, from a monetization perspective, you just add up the discount plus what you charge for the four and then you put that together. And that's how it works. All right, so that's if you have a recurring service.

5:01If you have a defined end or a program like 6 weeks, 12 weeks, whatever, now like we have a physical therapy earlier at my my buddy Cameron. Um like he has a defined end service, like we have to do, you know, X period of time. You would say, to the same degree, 88% off the first month, selling a 12-week program for like $3,000. This is like a perfect for what he does, okay? So, monetization. So, you say it costs $1,000 a month for 3 months, but you get 88% off your first month.

5:28So, that's only $120. And we have a $1,000 setup fee. So, they end up paying $1,120 for the first month and then continuing their next two payments for $1,000 each. And so, we just did this. That's all it is, okay? Now, you have to listen to whatever laws in your area in terms of advertising compliance, all that stuff. It depends on every nation and every, you know, local area that you're in, but as long as you follow the law, that is how that works. Now, let me give you a couple of the details, some of the the specifics.

5:53So, the higher one-time startup fee, the lower the churn. All right? This is where the concept of big head long tail kind of weighs in here. The higher the barrier to entry, so too becomes the higher the barrier to exit. So, um John told me, so John is an early mentor of mine, uh when he had a tanning empire, he said he had a $100 sign-up fee for a $10 month membership. He said the churn on those clients was next to nothing, whereas the clients who signed up for $19 down and then $19 a month turned at a way higher rate. So, this means you can use made-up fees that we've been talking about, well, talk about it in this book, uh to actively decrease your churn and increase the investment of your prospects. So, this helps them and you in the long run. So, everyone wins. So, when people pay, they pay attention. So, this is especially important for services where you require something to be done by the customer.

6:37Getting your information, filling out forms, uh showing up at certain times, making selections, changing behavior. So, like physical therapy would be an example of that. So, if you need someone to do something in order to be successful, then the more than more times than not, it makes sense to charge a one-time startup fee of some kind to get them invested in the long run. All right, so you even have a massive disparity between you can't even have a massive disparity between the setup and the recurring fee. So, a good friend of mine who runs a multi-million dollar online weight loss coaching business, uh charges $5,000 to start and then only $267 a month thereafter. Think about that. Five grand up front and then less than 300 bucks a month afterwards. Now, his client lifespan is more than two years in an industry where people turn out or normally in like three or four months.

7:17Um and so, uh this large upfront sum gets clients invested in the process and makes leaving almost insane. It's like, I just paid $5,000, why would I ever quit, right? And so, you guessed it, if they leave and want to come back, they have to pay it again. So, it keeps these people committed, especially when they have to do their part of the work to achieve the result that you sold them on, whatever that thing is. Now, to be clear, whatever the reason is for the one-time fee, even though it's completely made up, just be clear about it, okay? This fee should not be taken lightly. It's also something that you should bring up with with with every customer. You are doing the work, so you might as well let them know exactly what you're going to be doing for them. So, again, here are the four steps to creating a one-time fee.

7:55You pick You pick your fee name. You pick your fee price. You pick your reason why. And then you start charging it, discounting it, or waiving it. That's how it works. And you know what's really interesting is that even having the fee is incredibly powerful because even if you never even want to do it, you can literally wave it for every person who walks in the door and they'll be thrilled. Like at the very least, like they'll just be thrilled that you did that. So, think about it differently. I could say you get $1,000 off signing up for my thing because I invented an onboarding fee. And then when people come in, I have now invented this fee that I will also not charge them. And then then you can go straight into continuity. Okay?

8:31Again, you have to listen to whatever the advertising laws are in your in your region area. So, consult you know, somebody who does legal stuff like that. >> ask you something? So, there's there's two notes, one a comment and and a question for you. The comment is if you if you noted what Alex said, he talked about the discount actually having to change behavior in some way. So, just don't think that hey, I'm just going to do this 5% discount and it's going to work in some way. If the discount in your opinion is not going to change behavior, as Alex said, you're just giving away margin. So, please consider that. The second thing, Alex, love your comment on this. There are several thoughts on the chat about hey, I just don't discount. So, how do you respond to that is your thoughts around that comment?

9:10>> I think it's fine. I mean like that's a it's a business decision. It also depends on what you do. You know what I mean? Um I like there's promotional so What I don't do is I never present a price and then change it. That is how I That like to me, that is where you lose leverage and then you enter these haggles. So, the price is the price. We've already calculated the price and the discount is also the discount. So, it doesn't go up, it doesn't go down. That is what it is, period. And so, that's kind of how I see this.

9:39Um but now, I my my strongest uh not uh the thing that I'm most against is hey, it's a thousand bucks, and then why can't afford a thousand? You know what? I'll do it for 900. Hate that. Never do it, you'll lose all the credibility. It's like, wait, so you would have just gotten me you would have bought it for 900? Like, now I hate you. Now I think you're like, well, why do I believe 900? Why can't I get it for 800? Right? And you start you open up this can of worms. But if you say, this is a thousand, today it's 500, and then tomorrow it won't be.

10:07You dictated the terms, and so that's up to you. But if you don't want to like, these are all like all of the stuff that we have are mechanisms. They're different things that are suited for different businesses. And you'll also know this is from the Lost Chapters, which is things that I didn't fit fit for every business. The Money Models book contains the um contains the the the mechanisms that I think work for the vast majority of businesses that you won't have a real a real problem with. If you're a business owner and you're not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the 100 Million Dollar Scaling Roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had, and what stages of growth they went through, and more importantly, where they got stuck and how they got past it. And so, we broke it in these 10 stages, and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at, and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct in the business and you're trying to scale, we'd love to help you out. On the thank you page, you can just book a call with my team, and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas, and we'll do this in person live.