Book Summary: "$100M Offers" by Alex Hormozi

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The offer: the starting point of any conversation to initiate a transaction with a customer. What you are literally providing them in exchange for their money. That’s where it all begins.

GRAND SLAM OFFERS

Make people an offer so good they would feel stupid saying no.

The offer is the goods and services you agree to give or provide, how you accept payment, and the terms of the agreement. It is what begins the process of getting customers and making money. It is the first thing any new customer will interact with in your business. Since the offer is what attracts new customers, it is the lifeblood of your business.

PRICING: THE COMMODITY PROBLEM

The market is continuously growing. The stock market grows at 9 percent per year. If we aren’t growing at 9 percent per year, we are falling behind. “Maintenance,” in the most generic sense, would be 9 percent growth year over year.

Цhat does it take to grow?

  1. Get more customers
  2. Increase their average purchase value
  3. Get them to buy more times

Gross profit: The revenue minus the direct cost of servicing an ADDITIONAL customer. Lifetime Value: The gross profit accrued over the entire lifetime of a customer.

Commoditized = Price Driven Purchase (race to the bottom) Differentiated = Value Driven Purchase (sell in a category of one with no comparison)

PRICING: FINDING THE RIGHT MARKET - A STARVING CROWD

At the end of the day, if there is a ton of demand for a solution, you can be mediocre at business, have a terrible offer, and have no ability to persuade people, and you can still make money.

There is a market in desperate need of your abilities. You need to find it. And when you do, you will capitalize, all while wondering what took you so long.

When picking markets, I look for four indicators:

  1. Massive Pain. Pain can be anything that frustrates people about their lives. When they hear the solution to their pain, and inversely, what their life would look like without this pain, they should be drawn to your solution.
  2. Purchasing Power. Make sure your targets have the money, or access to the amount of money, needed to buy your services at the prices you require to make it worth your time.
  3. Easy to target
  4. Growing

You will fail far longer if you keep changing who you market to, because you must start over from the beginning each time. So, pick then commit.

PRICING: CHARGE WHAT IT’S WORTH

When you decrease your price, you:

  1. Decrease your clients’ emotional investment since it didn’t cost them much.
  2. Decrease your clients’ perceived value of your service since it can’t be that good if it’s so cheap, or priced the same as everyone else.
  3. Decrease your clients results because they do not value your service and are not invested.
  4. Attract the worst clients who are never satisfied until your service is free.
  5. Destroy any margin you have left to be able to actually provide an exceptional experience.

The goal is to be so much higher that a consumer thinks to themselves, “This is so much more expensive, there must be something entirely different going on here.

VALUE OFFER: THE VALUE EQUATION

There are four primary drivers of value:

  • To increase:

    1. The Dream Outcome.
    2. Perceived Likelihood of Achievement.
  • To decrease:

    1. Perceived Time Delay Between start and Achievement.
    2. Perceived Effort & Sacrifice.

If you can reduce your prospects’ true time delay to receiving value to zero, and your effort and sacrifice is zero, you have an infinitely valuable product.

The Grand Slam Offer only becomes valuable once the prospect perceives the increase in likelihood of achievement, perceives the decrease in time delay, and perceives the decrease in effort and sacrifice.

The dream outcome is the expression of the feelings and experiences the prospect has envisioned in their mind.

People value this perceived likelihood of achievement. Increasing a prospect’s conviction that your offer will “actually” work for them, will make your offer that much more valuable even though the work remains the same on your end.

Time delay is the time between a client buying and receiving the promised benefit. The shorter the distance between when they purchase and they receive value/the outcome, the more valuable your services or product is. There are two elements to this driver of value: Long-term outcome and short-term experience. Many times, there are short-term experiences that occur while en route to the long-term outcomes. They happen “along the way” and provide value. The thing people buy is the long-term value, aka their “dream outcome.” But the thing that makes them stay long enough to get it is the short-term experience.

Decreasing the effort and sacrifice, or at least the perceived effort and sacrifice, can massively boost the appeal of your offer.

VALUE OFFER: THE THOUGHT PROCESS

Math problems are convergent. There are lots of variables and a single answer.

With divergent thinking, you can have multiple right answers, and one answer that is way more right than the others. Every offer has building blocks, the pieces that when combined make an offer irresistible. Our goal is to use a divergent thought process to think of as many easy ways to combine these elements to provide value.

VALUE OFFER: CREATING YOUR GRAND SLAM OFFER PART I: PROBLEMS & SOLUTIONS

Step #1: Identify Dream Outcome When you are thinking about your dream outcome, it has to be them arriving at their destination and what they would like to experience.

Step #2: List Problems When listing out problems, think about what happens immediately before and immediately after someone uses your product/service. What’s the “next” thing they need help with? These are all the problems. Think about it in insane detail. If you do, you will create a more valuable and compelling offer as you’ll continually be answering people’s next problem as it manifests.

Step #3 Solutions List First, we are going to first transform our problems into solutions. Second, we are going to name these solutions.

VALUE OFFER: CREATING YOUR GRAND SLAM OFFER PART II: TRIM & STACK

The trick, and the ultimate goal, is to find a sweet spot where you sell something very well that’s also easy to fulfill.

Step #4 Create Your Solutions Delivery Vehicles (“The How”) The next step is thinking about all the things you could do to solve each of these problems you’ve identified. This is the most important step in this process. This is what you are going to deliver. This is what you are going to do or provide in exchange for money.

“Cheat codes” for product variation/enhancement

  1. What level of personal attention do I want to provide? one-on-one, small group, one to many.
  2. What level of effort is expected from them? Do it themselves (DIY) - figure out how to do it on their own; do it with them (DWY) - you teach them how to do it; done for them (DFY) - you do it for them.
  3. If doing something live, what environment or medium do I want to deliver it in? In-person, phone support, email support, text support, Zoom support, chat support.
  4. If doing a recording, how do I want them to consume it? Audio, video, or written.
  5. How quickly do we want to reply? On what days? during what hours? 24/7. 9-5, within 5 minutes, within an hour, within 24 hrs?
  6. 10x to 1/10th test. If my customers paid me 10x my price (or $100,000) what would I provide? If they paid me 1/10th the price and I had to make my product more valuable than it already is, how would I do that? How could I still make them successful for 1/10th price? Stretch your mind in either direction and you’ll come up with widely different solutions.

Step #5: Trim & Stack

  • Now that we have enumerated our potential solutions, we will have a gigantic list. Next, I look at the cost of providing these solutions to me (the business). I remove the ones that are high cost and low value first. Then I remove low cost, low value items.
  • Put all the bundles together into the ultimate high value deliverable.

The bundle does three core things:

  1. Solves all the perceived problems (not just some)
  2. Gives you the conviction that what you’re selling is one of a kind (very important)
  3. Making it impossible to compare or confuse your business or offering with the one down the street

ENHANCING THE OFFER: SCARCITY, URGENCY, BONUSES, GUARANTEES, AND NAMING

The process of enhancing your core offer is designed to do both of these things: increase demand and decrease perceived supply so that you can sell the same products for more money than you otherwise could, and in higher volumes than you otherwise would (over a longer time horizon).

If we seek to increase the demand (or desire), we must decrease or delay satisfying the desires of our prospects. We must sell fewer units than we otherwise can.

The longer you delay the ask, the bigger the ask you can make.

ENHANCING THE OFFER: SCARCITY

If I have a rare problem, and I must solve this problem for my own pursuit of happiness, it will consume all of my attention. By the nature of my problem being specialized, there will be very few people who can solve it. This means there is not a large supply of solvers. In many cases, I will perceive only one possible “solver” (Supply = 1).

When there’s a fixed supply or quantity of products or services that are available for purchase it creates “scarcity” or a “fear of missing out.” It increases the need to take action, and by extension, purchase your offer.

Three types of scarcity:

  1. Limited Supply of Seats/Slots: in general or over X period of time.
  2. Limited Supply of Bonuses.
  3. Never available again.

It’s better to sell out consistently than over order and fail at creating that scarcity. This method stacks in effectiveness if it is done repeatedly over time (just not too often). Once a month seems to be the sweet spot for most of the companies that I know who do this with regularity.

ENHANCING THE OFFER: URGENCY

Having a defined deadline or cut off for a purchase or action to occur creates urgency.

Adding a deadline and incorporating one or multiple forms of urgency will get more people to take action than would otherwise.

ENHANCING THE OFFER: BONUSES

A single offer is less valuable than the same offer broken into its component parts and stacked as bonuses.

Here’s what to do:

  1. Create checklists, tools, swipe files, scripts, templates, and anything else that would take lots of time and effort to create on one’s own, but is easy to use once created.
  2. Make a habit to record every workshop, every webinar, every event, every interview and use them as additional bonuses.
  3. Proactively negotiate group discounts and a referral commission with adjacent businesses that solve needs your customer will have as a result of beginning this process with you.

ENHANCING THE OFFER: GUARANTEES

The single greatest objection for any product or service being sold is risk. Risk that it doesn’t do what it’s supposed to do for them. Therefore, reversing risk is an immediate way to make any offer more attractive.

For the most part, the stronger the guarantee, the higher the net increase in total purchases, even if the refund rate increases alongside it.

What makes a guarantee have power is a conditional statement: If you do not get X result in Y time period, we will Z.

Here are the four types of guarantees:

  1. Unconditional are the strongest guarantees. They’re basically a trial where they pay first then see if they like it.
  2. Conditional guarantees include “terms and conditions” to the guarantee.
  3. Anti-guarantees are when you explicitly state “all sales are final.
  4. Implied guarantees are any offer that is a performance-based offer.

Reverse their fears into a guarantee. Think of the time, emotion, and outside costs associated with any program or service. The more specific and creative the guarantee is, the better.

ENHANCING THE OFFER: NAMING

The goal must be that upon hearing about your offer, your ideal prospects are interested enough to take action. Naming it properly is an integral part of this process.

Five components

  1. Make a Magnetic “Reason Why.” We start the name with a word or phrase that tells people the “reason why” we are running our promotion.
  2. Announce Your Avatar. You want to be as specific as possible, but no more.
  3. Give Them A Goal. “This is where you articulate your prospect’s dream outcome.
  4. Indicate a Time Interval. This gives an example of how long your results will take to achieve.
  5. Complete With A Container Word. The container word denotes that this offer is a bundle of lots of things put together.

As you market offers, you will need to create variations over time as the tastes of the market change over time. Here’s the order in which you will change things to keep lead flow consistent.

  1. Change the creative (the images and pictures in your ads)
  2. Change the body copy in your ads
  3. Change the headline - the “wrapper” of your offer
  4. Free 6 Week Lean Challenge to Free 6 Week Tone Challenge
  5. Holiday Hangover to New Year New You
  6. Change the duration of your offer
  7. Change the enhancer of your offer (your free/discount component)
  8. Change the monetization structure, the series of offers you give prospects, and the price points associated with them

HOW TO MAKE THIS HAPPEN IN THE REAL WORLD

Entrepreneurship is about acquiring skills, beliefs, and character traits. To advance, I find that we must determine which skills, beliefs, and character traits we lack. Most times, we simply need to improve. And the only way to do that is through learning from experience and/or high quality sources.