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0:00This is an upsell offer. It can also be used on the front end. This is called free with alternate revenue stream. And so you'll notice that I uh my name's the names of the of the mechanisms in the Lost Chapters are not nearly as uh refined, you know, win your money back. I think I called uh I think it was like free deposit with conditions or something is what I called it. So I called these like really technical things. Um and then I came with like win your money back and like pay less now, pay more later, which I used to call invisible free, but no one would know that means. So I tried to make the names more descriptive. Um but without further ado, let us begin. All right. Um let's do it. Okay, so 2019-ish.

0:38The following is a rough paraphrasing from a story Jim Wendler told me that taught me number one, an excellent downsell/upsell strategy, and number two, a really nice way to graciously exit anyone from a sales conversation who doesn't want to buy your main product. So when someone walks in towards the place and says no to joining, which used to kill me, I had this realization. Instead of awkwardly escorting out them out of my gym, why not offer them something free instead? Instead, I say, "No worries." And then I hand them a USB drive. "Here's everything you need to do this program from home, absolutely free."

1:08You should see their faces. In this industry where everyone's trying to lock you into contracts, they they think I'm some kind of saint. But here's the real move. After I give them the USB, I simply add, "To get you a head start, let's just book you for a nutrition consultation so you can see the results you want. The orientation is on us. We just want to get this community healthy and maybe when you can afford it, you'll think of us." Okay? So, almost 100% of people who said no to my gym membership end up in these nutrition consultations. And guess what?

1:38During these orientations, we sell them supplements instead of workout programs. The crazy part, these people who initially rejected working out spend 50% more on supplements than my regular clients. I've basically created a no prospect left behind approach, and my sales team loves it because they help everyone who walks in. Everyone around here calls it the no sale Perfect name, right? I'm selling to people who think they aren't buying anything. And once I started doing that, I thought to myself, why not offer this free USB as my front end, just to get people in?

2:08Then I can upsell them an in-person version for money. Or they can keep buying supplements from us every month and not even use up gym space. Win-win. So that's what I did, and it worked. So it goes to show that people want the same problem solved in different ways. So offering multiple ways to solve their problems gives you a few more at bats. What's more, this strategy allowed him and the gyms who subsequently modeled it in our community a way to turn every prospect into a sale.

2:35There are a few ways to use it, so let's dive in. As a downsell, like in the story, or as a primary offer, which he alludes to at the end. We'll dive into both. So here's the description. This is an offer that depends strongly on the types of monetization {slash} revenue streams available to a business. In the simplest terms, we're providing one type of service or product for free, and then upselling something else. You can upsell something as a one-time service or product to offset advertising costs, or you can make the upsell recurring.

3:04Or you can plan your entire business around giving one thing away for free and monetizing with another. In other words, it works for one-time services or even recurring services, provided the alternative revenue stream has sufficiently high margins to afford both fulfillment types. Both uh but most variations chunk up to two larger buckets. So either you do this one, which is called a paired upsell, so I give you thing A for free in exchange for buying thing B, or an independent upsell. So I give you thing A for free, and I will encourage you to buy thing B. So these are slightly nuanced ways of expressing the same concept or offer, but they'll hopefully generate some ideas for you on how to use this in your business or your clients' businesses. So I'll give you some examples.

3:47So if you had a storage business, the offer might be you get a free month of storage. The paired upsell would be, do you want to buy a lock for your storage unit? The The only locks that fit our doors are the ones we sell and cannot be purchased elsewhere. So, I'm going to give you this, but you got to buy that, right? Um weight loss clinic. So, a free 28-day program. The independent upsell, so the different version, at nutrition orientation, a kickoff program after the first sign-up, you're going to want this $400 supplement package to get the best results for the free 28-day service. So, think about it like this. It's like you Someone comes in and says, "Hey, I I go to a weight loss clinic." And I say, "Hey, we're going to have all these docs on staff, and you know what? We're going to help you for free." They're like, "What?" It's like, "Yeah, but on the next consultation, we'll tell you the supplements and the meal plans and all that stuff you're going to need." At the next consultation, you then upsell all the meals and all this other stuff that's going to go with it. But, you give the service for free. So, this is kind of like that. Um either paired or independent, but it's the core of this is that you've got two things, and the margin from one covers the delivery of the other. So, usually it's like one that's way cheaper and one that's more expensive, but you give this thing for a for free to attract people in the front end, but then you basically pair it or make it so they have to or they should or most likely will buy this thing on recurring. And by doing that, it makes it a super sexy offer. So, I'll give you physical therapist example. So, let's say the offer is four free treatments, which would be a crazy front end offer. The independent upsell would be, you're going to need these orthotics, these bands, these braces, these oils, and athletic tape to maximize the effectiveness of the free treatments. And so, it's like we're going to do these free treatments no matter what. I was like, but here's the stuff you're going to need to get the most out of it, right?

5:23Uh if you had an education business or software. So, um I will coach or onboard you for free indefinitely on your agency or your XYZ as long as you use our software. It's an example of that. So, paired upsell would be, we monetize inherently on the software itself. So, this is literally what I did uh for Alan. So, Alan was our software company, and so what I did was I I basically helped agencies scale for free. I gave them all the education, give them everything as long as you used our software. And so the software, because of the nature of how it worked, basically had I don't want to say a revenue split, but it had a percentage of it backed into a cost a cost I want to get into the the economics.

6:05Basically I would say it backed into a kind of like a royalty or rev share on on the agency that was using it functionally as a CRM. What's up, sweetie? I'm going to finish my chapter. We're all we're all hanging out. We're reading. Okay. So let me give you a real example. So free book on real estate, okay? So upsell number one hold on. There we go. Make sure I didn't my pages weren't stuck together. Uh free book on real estate. So upsell number one would be shipping cost. Upsell number two would be the audio version. Upsell number three would be the deal contract templates. Upsell number four would be where to find deals, which would be a training. Upsell number five, how to find financing if you have no money.

6:40Note, each of these are things necessary for being successful using the strategies outlined in the book. The hardest sale is the first sale, the opportunity vehicle, the book. The rest of the upsells are things that they need along the journey. So you can give the free book away, but then along the path they have these other things, right? So for me, a version of this and the reason I think I I pulled this out of the Money Models book is that it was a little bit similar. Um but obviously the use case that I show in here is a little bit different than the the the core one that I have inside of Money Models, but I included it in here because I thought it would I think it would it'll jog different people's memories in a different way. So um couple details. So you want to use a multi-step sales process with this offer. Uh if you're marketing thing A for free, then you have to be able to give thing away for free. So he was giving out actual USB things to anybody even if they didn't want to buy anything. So if you want to advertise compliantly, you have to like if you're going to say something's free, you have to give away for someone to get it for free. All right. Um Now, that being said, you can give something away for free as and then encourage people to buy stuff. I mean that's the nature of capitalism. Like you come in for the free drink and then we say, "Hey, don't you want, you know, a bigger drink with that? Don't you want to Don't you want a sandwich with that?"

7:45Like, that's just marketing. That's fine. Um you just can't say, "Come in for a free thing, and I won't give you the free thing. You have to buy this." That's the no-no. Okay. So, um I covered that. Great. Um and so, the key is that if you give something away that has low incremental cost, as in adding another unit doesn't cost much. That's why That's how this free thing works. Like, a book um has a lot of costs in terms of developing a book, but the actual like cost of printing a book is low compared to some of the other things that might might that you might upsell. Now, if you're using this as a front end, you want to make the next thing you are selling or upselling them uh to be the next natural thing that the prospect would need. All right? So, it's key to understanding the prospect's problems and solutions um better than they do.

8:23And so, that's where the good money model design becomes really important. Like, you should know all the things that a customer is going to need to uh accomplish. What ba- Every I've talked about the problem-solution cycle. Your first thing will solve a problem, even if they haven't used it yet. But in their mind, because they made the purchase, they've solved that problem. So, now you're like, "Hey, but now that we fixed your teeth or now that we whitened your teeth, your teeth are crooked as hell.

8:49And so, we got to fix that, too, now. And now that they're Now that we fixed your, you know, crooked teeth, and now they're white, and they're aligned, they're not healthy. So, now we got to do the reinforcements, and we got to coat your teeth, right?" And so, every new solution creates another problem that we can then solve with another upsell. And so, we have to think about this ahead of time, because they fortunately, unfortunately, most people only think one decision at a time. And so, we should just think three decisions at a time, and then reverse engineer our offers uh to accommodate that.

9:15Now, in the examples that I gave, the money model does not end there. So, there's still more upsells that occur in each of the scenarios. So, storage, the one I said earlier, will upsell boxes, larger storage units, and commitment. Weight loss clinic would upsell continuity of service, continuity of supplements, done-for-you meals, bars, home and treatment, etc. Right? They'll also likely close a card for the continuity of service to the free service is also a free free plus penalty. This way, you're capturing multiple streams of revenue. Physical therapists will probably also upsell a long-term treatment bundle after or during the four treatment plan, right?

9:44And so, the effectiveness of this play is based on number one, the prospect's perception of of of how essential or required the next thing is. So, kind of like the lock uh in the storage thing where you can't really have a a storage unit without a lock on it rather than the whole point is that it's it's safe, right? Uh but the thing is is when you go into a storage unit you don't you probably if you've ever done this before, you go there and then you're like, "Oh yeah, I forgot. I I guess I'm going to have to have a lock." Like what you don't come in prepared with like, "I've got a lock. I've got these boxes." Like they just don't think about it, right? They go get the storage unit and then they get upsold all the stuff.

10:11Now, number two is what makes this effective is how how seamless the upsell process is for the prospect. So, if you make it frictionless, and this is the key, you can get like 90% plus take rates on these offers because they should feel like it makes total sense to buy it. Again, this isn't guaranteeing it's going to happen for you. I'm just saying like it you should shoot for that. Now, the biggest benefit of using this offer as a free front end is being able to liquidate acquisition cost, meaning cost of getting the person in the door.

10:38If you make $0 on the free thing, obviously, but you know 80% take a $300 upsell with 80% margins, then you know that you're making 300 * 80% * 80%, which is $192 per free thing that you give away. And that's just the first upsell. And so, there will and always should be many others. Now, but since the take rate is so high and it is up front, this is one of the easiest ways to generate cash up front with little to no operational drag. And this is what this what makes this kind of attractive.

11:06Physical and digital products pair very well with services for this specific money model. So, he was giving a digital workout plan with a USB in person because it was still some free value that he could give somebody and say, "I did say that I could give you this free workout stuff." They'd come in and they say, "But you probably want the in person stuff, so let me upsell that." Um and again, this is for people who said no. So, you can use this as a downsell or you can use this as a front end. Both of those work. Um So, we use this all the time for internal stuff. And what I mean is using it to market to an existing audience.

11:37So, you can encourage them to bring friends for a free thing. And so, they'll be excited to do that and participate. So, I'll tell you an example. So, in the fast cash um playbook, which is uh one of the is in the uh profit implementation system, which is one of the free things you get when you donate 200 bucks. Um so, in the fast cash uh playbook one of the one of the biggest, most successful plays that we did at Gym Launch, which honestly the foundation of this play is what built Prestige Labs, my big supplement company.

12:03And the way it worked was this. So, we would we would advertise a 28-day free transformation. And we would say, "Anybody who's a member of the gym can participate in this free, you know, transformation." So, they get a little bit more accountability, a little more help, etc. And they could bring a friend to do it, too. And so, people would bring one, two, three friends cuz it was free. But here's how it worked. So, let's say you've got 100 members, just for simple sake. So, we would email this thing and we would get like 30, 40, 50% people to take the offer cuz it's free, right? It's just like let's just like get you into gear for the holiday season, whatever. But here's the key.

12:39When they'd come in to say they want to sign up for it, we'd say, "Awesome. We'll set you a nutrition consultation. Bring your friend." And then when they come with their friend on the second meeting then at that meeting, we would then sell both of them the supplements that went with the free 28-day uh transformation. And so, this is a classic example of kind of a free with a second revenue stream. And so, we would generate two, three, four hundred dollars in supplement sales per person, even though it might have been harder for us to sell four hundred dollars of service to somebody who's already at the gym. But because they were doing a program or following some specific thing, they're way more likely to do it. So, it's a really good reactivation campaign. It's really good for referrals. And this is why I include this in the fast cash playbook because um I I would slot this in on like one of my four big promotions or six big promotions that I would do per year. And so, just having this on a regular basis um like the thing is is like it's all fundamentals. Like doing this stuff is just doing the fundamentals consistently in the business. And what makes a business owner advanced is their ability to do the fundamentals at scale and do it consistently. So, I'm getting looks from Leila, so I'm going to finish this up real quick. Okay.

13:40Um I think I just gave the I think I just literally just described the example. It's freaky. It's like I wrote this book. Um okay, so I think I covered the main things there. Okay. Um and I added one little pro tip in here, which is that um if you do that kind of bring a friend thing or reactivation thing where someone comes in for that free 28 deal, you really have to casually but succinctly get a good percentage of people to take that upsell.

14:07And we have found that if someone does not take the upsell, even the small little like hey, just buy a supplement when you do the 28-day thing, the likely that they then convert into a customer or member and upsell later drops precipitously. So, all your focus should be on that free to first upsell conversion. Everything else after that makes it way more likely. Okay. If you're a business owner and you are 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 scaling road map, 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 into 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 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.