$100M Offers: How to Make Offers So Good People Feel Stupid Saying No - Alex Hormozi
The book focuses on how to make profitable offers that reliably convert advertising spending into huge profits.
The goal is to learn how to create "Grand Slam Offers" which are offers that are both very good and very rare, like a grand slam home run in baseball.
Grand Slam Offers have the potential for outsized returns, like scoring 1,000 runs in one at-bat through perfect execution.
Creating Grand Slam Offers takes skill in pricing, value creation, guarantees, scarcity, urgency, bonuses, naming and other factors - which the book will teach.
With practice and experience, it is possible to learn the skills to reliably hit Grand Slam Offers, just as elite baseball players learn to hit home runs.
The goal is to learn how to create offers that result in big payoffs from advertising spending, allowing you to retire from one single successful offer.
The author has achieved high lifetime returns of 36:1 on his advertising spending through creating successful offers over his career.
This book is the start of a series to teach entrepreneurs the skills to achieve financial freedom and "fuck you money".
The author was in a difficult financial situation around Christmas 2016. He had a meeting with a payment processor who informed him that $120k owed to him would be held for 6 months due to "irregular activity."
He had already committed to paying his top salesman a $22k commission, so he wired that money despite only having $1k left.
His girlfriend Leila could sense his stress and worry. He opened up about the troubles and said she didn't have to stay with him. She committed to supporting him.
Earlier he had sold his gyms and put the money with a business partner who then stole all $46k.
He decided to launch six new gyms at once using a last-ditch sales offer and putting the launches on his business credit card, racking up $3.3k per day in costs.
It was a huge risk but paid off - by the end of the month they had made $100k, just enough to cover the launch costs on his credit card. It was a close call but showed promise for the new business model.
The author was struggling financially and nearly faced bankruptcy until he launched his first "grand slam offer" through his credit card. This was hugely successful and generated millions in profits within the first year.
Over the next few years, his business portfolio grew rapidly to include multiple eight-figure companies across different industries. Revenues increased from $1.5M/month to over $120M in sales within 2 years.
His offers allowed him to scale his business tremendously and also connect with famous people like Arnold Schwarzenegger. He is now on the board of Arnold's charity.
The book aims to break down the framework and steps for crafting "grand slam offers" - offers that are so good people would feel stupid saying no. This is the key to growing a successful and profitable business according to the author.
Most entrepreneurs struggle with not enough customers and not enough profits. The author believes grand slam offers can solve both these problems by attracting more clients while also maintaining healthy profit margins.
The rest of the book will delve into the specifics of how to design grand slam offers that can scale a business rapidly and produce significant financial success.
The author argues that maintenance is a myth for businesses, and that they must be continuously growing or they will effectively be declining over time due to market growth.
There are only three ways for a business to grow: 1) Get more customers, 2) Increase the average purchase value of each customer, 3) Get existing customers to buy more frequently.
The author provides an example showing how business revenue is capped based on the number of customers acquired per month and their lifetime value.Revenue can only increase by either getting more customers or increasing customer lifetime value.
Lifetime value has two components: profit per purchase and number of purchases. Both impact the overall value each customer provides.
While the book highlights all three growth paths individually, the author notes they can essentially be simplified down to two paths: getting more customers, and increasing each customer's value through higher profit per purchase and/or purchase frequency.
Some business terminology is defined to help explain concepts that will be discussed further in the book, like lifetime value, average order value, etc.
In summary, the key message is that businesses must continually grow their customer base and/or increase the value of existing customers in order to avoid effectively declining over time, and there are only three core ways to achieve that growth.
Gross profit is revenue minus the direct costs of servicing an additional customer. It represents the profit from each individual sale or customer, before operating expenses are considered.
Lifetime value (LTV) is the gross profit accrued over the entire lifetime of a customer from multiple purchases/recurring revenue. It's calculated as gross profit per transaction multiplied by the number of expected transactions.
A Grand Slam offer is one that cannot be easily compared to other offers and sells on value rather than price. It incorporates things like premium pricing, value propositions, guarantees, and payment terms that benefit the seller.
A Grand Slam offer differentiates the product/service and allows it to be sold in its own "category of one." This makes it a value-driven rather than price-driven purchase for the customer.
Having a Grand Slam offer leads to increased response rates, conversion rates, and premium pricing compared to a commoditized offer. This significantly grows the business through more and higher-value customers.
Real examples are shown comparing the numbers and cash flow of an agency using a typical commoditized offer vs implementing a Grand Slam offer approach. The Grand Slam offer delivers dramatically improved results.
It's important to find the right market to sell your product/service, otherwise your best marketing and sales efforts won't work no matter how good they are.
The ideal market has massive pain or need that your offering can solve. More pain means you can charge higher prices.
Your target market needs sufficient purchasing power to afford what you're selling. Having pain isn't enough if they can't pay.
The market should be easy to target and reach potential customers. No point having a great market if you can't find and access potential buyers.
Growth is important so the market isn't declining over time. You want rising demand.
Competition shouldn't already be dominating the market with similar offerings. There needs to be room to differentiate.
The chapter argues that finding the right painful yet lucrative market to sell to is more important than any marketing strategy or sales technique. It shares examples of entrepreneurs succeeding or failing based on whether they picked the right market or not.
It is best to target easy-to-reach markets where potential customers are already gathered together, such as specific groups or mailing lists, rather than searching for customers scattered across different places. This makes marketing and sales much more efficient.
The example given is that it would be better to target rich doctors rather than nursing students, as rich doctors are a clearly defined group that can be easily reached, while nursing students do not fit the target customer profile.
Growing markets provide a "tailwind" that makes business easier, while declining markets act as a "headwind" that makes everything harder. It is best to find a market that is growing.
The three biggest markets that will always exist are health, wealth, and relationships, as there is always demand to address pain points in these core human areas. Within one of these broad categories, it is best to target a specific subgroup that is growing, has purchasing power, and can be easily reached.
Of the key factors of markets, offers, and persuasion skills, the market is the most important - a great market can overcome weaknesses in the other areas. It is important to commit to and focus deeply on one narrow target niche. Specializing in a small target market allows prices to be much higher compared to a more generalized market.
Here are the key points from the passage:
Niching down and targeting very specific customer avatars/personas allows you to charge much higher prices for what is essentially the same product or service.
The more precisely you can target a niche (e.g. "Time Management for B2B Outbound Power Tools & Gardening Sales Reps"), the more customers in that niche will perceive the products as being "made exactly for them" and worth a much higher price.
Charging premium prices allows you to make far more money than competing on price alone. There is no strategic benefit to being the second cheapest option.
To charge high prices, you need to create a significant perceived value-to-price discrepancy for customers. In other words, customers must feel they are getting much more value than what they are paying.
Rather than just lowering prices to attract customers, the objective of business should be to make money. So the focus is on increasing perceived value and communication of value, not decreasing prices.
By targeting niches precisely and developing compelling offers that provide strong perceived value, businesses can charge prices that may seem high but that customers willingly pay due to feeling they are getting a great deal.
The passage argues against pricing based on what competitors charge and taking the average price. It says this results in an inefficient market where businesses barely make enough to stay afloat.
Instead, it advocates for "premium pricing" - charging a significantly higher price than competitors to be seen as the leader in your category. This increases perceived value and client investment/engagement.
Higher prices can literally cause clients to perceive more value, even if nothing about the product changes, due to psychological effects.
Premium pricing allows businesses to multiply their margins and profitability, enabling superior service, growth, and helping more clients in the long run.
The author provides his own experience charging much higher premium prices in his gym consulting business. This created allure and allowed convincing skeptical clients due to his strong conviction in the results.
So in summary, the passage advocates pricing based on delivering the most value rather than market averages, specifically through premium pricing far above competitors to maximize profits and client outcomes.
The value equation is a framework for quantifying the factors that drive value for any offer. It includes 4 variables: Dream Outcome, Perceived Likelihood of Achievement, Perceived Time Delay, and Perceived Effort & Sacrifice.
The goal is to increase the first two variables (Dream Outcome and Perceived Likelihood) and decrease the second two (Perceived Time Delay and Perceived Effort & Sacrifice). Getting the bottom variables to zero creates infinite perceived value.
In the beginning, the author focused on big promises about outcomes and likelihood. But over time, he realized decreasing time delays and effort creates more competitive differentiation.
The best companies focus on making their offerings immediate, seamless, and effortless for customers (bottom of the equation).
Perception is more important than reality. Changing perceptions of the variables, like through clearer communication, can increase value more than actual improvements.
Using the value equation framework can help quantify and maximize the value proposition of any offer through focus on the right drivers of value. The goal is to charge as much as possible by delivering unusually high value.
The post discusses the difference between logical and psychological solutions to problems. Logical solutions are usually obvious and intuitive, but may have already been tried. Psychological solutions focus on human psychology rather than logic.
It provides examples of replacing logical solutions like making trains faster with psychological solutions like adding maps or hostesses to distract passengers and make the wait feel shorter.
The post encourages entrepreneurs to think more about psychological solutions when problems persist, as the logical solutions may have already failed. Finding innovative psychological approaches could unlock new ways to solve problems. Framing things in terms of human psychology and perceived value rather than objective logic.
The passage discusses different types of problem solving approaches - convergent thinking and divergent thinking.
Convergent thinking involves taking known variables with fixed conditions and converging on a single answer, like in math problems. It follows a single logical path.
Divergent thinking explores multiple potential solutions by considering varied perspectives and ideas. It involves generating creative alternatives rather than focusing on a single right answer.
The author argues that while convergent thinking is useful for school, divergent thinking ability pays off more in life as it allows for exploring opportunities rather than just solving predefined problems.
The exercise proposes using divergent thinking to come up with the "Grand Slam Offer" that could become the cornerstone of one's business by considering varied customer needs, benefits, formats, pricing models, etc. rather than focusing on a single predefined solution.
Divergent thinking is presented as a more creative and opportunistic approach to problem-solving that is well-suited for exploring business opportunities and value propositions.
Divergent thinking involves coming up with multiple possible solutions to a problem, rather than a single "right" answer. There can be multiple viable solutions.
An exercise was proposed to practice divergent thinking by coming up with as many uses for a brick as possible within 2 minutes. Additional dimensions were added like the size/material of the brick to spark more ideas.
When creating an offer or product, it's important to understand the customer's desired outcome and identify all potential problems/obstacles that may prevent them from achieving that outcome. This involves thinking through each step of the customer journey.
Those problems can then be turned into solutions by proposing ways to help customers overcome each obstacle (e.g. how to make something easy, enjoyable, convenient etc.). The goal is to solve for all potential customer needs and problems.
Coming up with a comprehensive list of problems and solutions sets the stage for creating an "irresistible offer" that maximizes value for customers by eliminating all barriers to their desired outcome.
Here are some potential solutions for buying healthy food individually:
In-person grocery shopping assistance - take the client grocery shopping and teach them how to identify and choose healthy options.
Personalized healthy grocery list creation - provide customized weekly/monthly grocery lists tailored to the client's needs and preferences to make shopping easier.
Full grocery shopping and delivery service - shop for and deliver a week/month's worth of groceries for the client based on their goals and requirements.
Some potential group or online solutions:
Online healthy food shopping course - a video course teaching people how to efficiently shop for and choose healthy groceries.
Healthy meal kit delivery - provide recipe cards and pre-portioned ingredients for easy at-home healthy meal preparation.
Group nutrition classes - in-person or online classes teaching principles of healthy eating, meal planning, grocery shopping etc.
Membership website/app - a site or app with grocery lists, recipes, shopping tips, online community support to make healthy eating sustainable long-term.
The key is to focus on convenience and removing barriers like time, knowledge or willpower that make buying healthy difficult for people. Bundling related services together also increases perceived value.
The author discusses different ways to provide support and solutions to customers for grocery shopping, including one-on-one, small group, and one-to-many formats. Examples given include in-person orientations, text support while shopping, phone calls during shopping, personalized lists, buying groceries for customers, etc.
It's recommended to brainstorm solutions for all the perceived problems customers may have before, during and after engaging with your service or product. This results in a "monster list" of options.
So-called "cheat codes" are provided to help with ideation, such as thinking about personalization levels, effort required from the customer, delivery formats, response speed, and 10x/1/10th price testing.
The solutions are then trimmed down by removing high-cost/low-value and low-cost/low-value options. The focus is on low-cost/high-value and high-cost/high-value solutions, particularly "one-to-many" formats which have potential for high leverage.
The goal is to configure a final "high value deliverable" that solves customer problems in a way that is compelling from value, success and effort standpoints. "One-to-many" assets created up front can then provide ongoing value.
In summary, it outlines a process for comprehensively identifying customer needs and innovating a wide range of solutions, then prioritizing the highest value offerings for development.
Here are the key points about enhancing offers that can be summarized:
Offers should be enhanced using psychological levers like scarcity, urgency, bonuses, and guarantees to make them more compelling.
Scarcity creates desirability by limiting supply or availability. For example, only offering a product or service for a limited time period.
Urgency creates a sense that a decision needs to be made quickly before the opportunity is gone. Calls to action emphasize this.
Bonuses provide extra value and reward taking action immediately. Free gifts, additional services, or discounts are commonly used.
Guarantees reduce risk and encourage purchase by ensuring satisfaction or refund of money. Unconditional guarantees give buyers confidence.
Naming and positioning of offers is also important to convey the right image and highlight key benefits in a compelling way.
The goal of enhancing offers is to use cognitive biases and human psychology to motivate buyers and maximize conversions through strategies that increase perceived value and benefits of purchasing. It makes the core product or service more attractive and sales-driving.
Arnold Schwarzenegger held a charity fundraiser auction where he auctioned off unusual personal items. Through clever use of psychological tactics like scarcity, urgency and bonuses, he was able to get extraordinary prices for items, with some selling for $100,000 that otherwise may have sold for $10,000.
The key tactics used were creating a sense of scarcity by limiting the number of each item, creating a sense of urgency by putting time limits on bidding, and offering bonuses like getting two items if bidding passed a certain threshold.
These tactics leveraged human psychological tendencies like the fear of missing out (FOMO) to increase demand and drive prices higher, even though the items themselves did not change. It was a masterful demonstration of influencing supply and demand through marketing/promotion.
Other tactics like commitment, status/peer pressure and celebrity endorsements were also at play, but scarcity, urgency and bonuses are the three that will be focused on in the book, as they relate more to enhancing the offer itself compared to actual selling techniques.
Specialized consultants can charge high fees (millions) for their expertise because they have specialized experience and knowledge that solves major problems for clients, avoiding costly errors. This represents valuable economic exchange.
The author was once offered $50,000 for a day of consulting after speaking at an event, as companies saw his expertise could help them break $1M in monthly revenue. However, he declined as his business was making over $50k per day in profit already.
This experience showed him how truly premium prices can be commanded when there is intense demand but limited supply of one's expertise/time. People will pay top dollar to access unique solutions to major challenges.
Scarcity, mainly through limited availability or quantities, can be used strategically to create urgency and drive higher purchase rates. If something is rare or available only in small amounts, it takes on more value through FOMO.
The author provides several examples of how to apply strategic scarcity to services, clients/seats, bonuses/incentives, products/inventory to increase desirability and maximize profits through high demand. The key is ensuring actual scarcity by having less supply than anticipated demand.
Here is a summary of the key points about using urgency to enhance offers:
Urgency is about time limits, while scarcity is about quantity limits. Both drive faster purchasing decisions.
Rolling cohorts - have regular start dates for clients/customers (e.g. every week or month) and communicate the benefit of starting sooner rather than waiting.
Rolling seasonal urgency - create promotions with end dates that give a sense of limited time (e.g. Valentine's promotion ends Feb 30).
Pricing/bonus-based urgency - highlight discounts, bonuses, etc. that are only available for a limited time to create FOMO.
Exploding opportunities - sometimes the offer itself has time limits, like arbitrage opportunities that will disappear. This forces faster decisions.
Deadlines, start dates, promotions, pricing - using various elements that expire can increase urgency without being disingenuous. It psychologically pushes people to act before it's too late.
Bonuses are a very effective way to enhance an offer and get more people to take action. They increase the perceived value without reducing the price.
Specific bonuses should address perceived obstacles or concerns that may be preventing a prospect from buying. They help show how those issues can be resolved.
When presenting bonuses one-on-one, ask for the sale first before revealing bonuses. This creates a "wow" experience. If they don't buy initially, provide a matching bonus and ask again.
Give each bonus a special name highlighting key benefits. Provide proof of value through examples, statistics or experiences. Paint a vivid picture of how the prospect will benefit.
The total value of bonuses should exceed the core offer price. Continually adding valuable bonuses expands the "price-to-value discrepancy" in the prospect's mind.
Consider using scarcity/urgency techniques to enhance bonuses and motivate quicker action. For example, by limiting availability or having an expiration date.
Leverage other businesses by securing their products/services as bonuses in exchange for promoting them to your audience. Negotiate affiliate commissions as well to generate additional revenue.
Here is a summary of the key points about guarantees from the passage:
Guarantees are extremely important to address the risk objection that prospects have about products/services. Changing the quality of a guarantee can 2-4x conversion rates.
There are 4 types of guarantees: unconditional, conditional, anti-guarantee, implied guarantees.
Conditional guarantees are powerful because they add terms/conditions for the guarantee to apply, making it "better than money back." Conditions can require certain actions from the customer to get results.
Unconditional guarantees are strongest but may result in more refunds. Conditional guarantees can incentivize customers to take actions to get results.
Anti-guarantees explicitly state "sales are final" but must provide a good reason why, like showing vulnerability on the seller's part.
Implied guarantees are performance-based like revenue shares - if performance isn't achieved, payment isn't received.
Guarantees can be stacked, like an unconditional guarantee plus additional conditions for bonuses.
Strong guarantees can increase sales even if refund rates rise, as long as the sales increase offsets the higher refunds. But guarantees may attract less committed customers.
Here are the key points about stacking guarantees:
You can stack an unconditional guarantee with a conditional guarantee. For example, offering a 90-day unconditional money-back guarantee along with a conditional guarantee that they will triple their money in that time if they complete certain actions.
You can also stack multiple conditional guarantees around different outcomes. For example, guaranteeing $10,000 by 60 days and $30,000 by 90 days as long as they complete actions 1, 2, and 3. This makes the desired outcome seem more likely since you are spelling it out clearly.
Stacking guarantees shifts the risk from the customer onto you, making the offer more appealing. It demonstrates your confidence in delivering results for the customer.
When stacking guarantees, the unconditional guarantee should have a short time frame like 30 days, while conditional guarantees can have longer timeframes like 60-90 days tied to specific outcomes.
Proper stacking of guarantees can drive more sales by making the prospect believe the outcome is very likely if certain conditions are met, while also removing their risk through a short-term unconditional refund period.
Here are the key points about using guarantees to reach an objective or result:
Guarantees allow you to reverse perceived risks and address a client's fears, pains, and obstacles. By guaranteeing against those things, you increase conversion.
The most desirable setups are performance-based models, revenue shares, and profit sharing agreements that tie your compensation directly to results. This creates perfect alignment between client and provider.
Strong guarantees can make a good offer great, but cannot compensate for a poor product or service. Guarantees should enhance a quality offering, not cover up weaknesses.
Consider guarantees that address tangible costs a client incurs like ancillary travel expenses, hourly wages if not satisfied, canceling contracts free of charge, etc. These are memorable.
Get creative but also set parameters so guarantees don't become a burden. For example, limit refunds to a certain timeframe or if contingencies are not met.
Testing different guarantees is valuable for finding what resonates best with your market. Over time, you may graduate to less restrictive guarantees to scale.
Most importantly, focus on quantifiable performance and results. Strong performance agreements with implied guarantees of "you only pay for success" are highly desirable setups.
Offers can fatigue over time if used repeatedly in a local market, as it is relatively inexpensive to reach an entire local population with digital advertising.
To avoid fatigue, create new creative assets (videos, images) and change up the marketing hook, story, and copy around the same core offers over time.
A way to refresh offers is to rename them using components like: a "reason why", calling out the target avatar, articulating the prospect's desired goal, indicating a timeline, and using a "container word" to describe it as a program or system.
Examples of renamed offers are provided for different industries like wellness and coaching.
The naming process doesn't change the actual services or business model, just the "wrapper" or perception of the offer.
Testing different names allows choosing the strongest performers to promote going forward. Variations will need to be created as consumer tastes change over time.
Here are the key points from the summary:
The author describes hitting the $100K mark in personal bank accounts as a major relief and feeling of accomplishment after years of struggle and putting money back into businesses.
Making $100K felt like breaking through to a new level of wealth and financial security. It marked the end of the "struggle chapter" and beginning of a new phase.
Getting to that first $100K is difficult but pivotal. After that, it's easier to maintain and continue growing wealth.
The feeling of wealth came more from the relative increase than the total dollar amount. It showed years of effort had paid off.
The summary emphasizes keeping at it and not giving up as the key to eventually achieving financial goals, even if it takes time. Small steps forward are still progress.
Hitting $100K personal wealth was the richest the author had ever felt, starting a new chapter of freedom from financial anxieties of the past. It proved the path was working.
So in summary, the passage celebrates achieving the first $100K milestone as a major psychological relief after years of work, signaling the end of struggle and beginning of greater financial security and opportunities through entrepreneurship. Perseverance is emphasized as the way to eventually succeed.
Here's a summary of the key points:
Use urgency to decrease buyers' action threshold by communicating scarcity or time sensitivity to increase demand.
Strategically use bonuses to add perceived value and further incentivize people to buy your offer now rather than later.
Completely reverse buyer risk by crafting a creative, reassuring guarantee that removes all doubts and concerns about purchasing.
Name your offer in a way that resonates deeply with your target audience/avatar to appeal directly to their wants, needs and motivations.
With these techniques, you can create a high-value, differentiated "grand slam" offer that people desperately want and that solves their problems, allowing you to generate more sales at higher prices and profits.
The author states this first major offer could potentially earn you your first $100,000 in revenue. Further books will delve into additional techniques for acquisition, lead generation, and scaling beyond $100,000.
The key is to apply urgency, bonuses, guarantees and strategic naming to fully optimize your offer and remove objections for your ideal customers.
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