6 Hacks To Make More Money [Increase LTV] Without More Customers

Good morning everyone. It is Alex Ramoszi here from Gym Launch Prestige Allen and the many other companies that we have in our portfolio. They did for $110 million in sales and I am going to tell you how we did that. Without further ado, the purpose of this video is to show you the six ways to increase lifetime value. All right. And uh I'm going to show you my favorite one at the end of this that I think is the most powerful of the six. All right. And so first thing we have to do is define lifetime value. All right. So there's two ways to grow a business from a fundamental standpoint. Number one is you get more customers. Number two, you make those customers worth more. That's it. That's it. So, it would behoove us as business owners who are trying to make more and grow our businesses that we should know all of the different ways to a get more customers and b make them worth more. All right. Now, when I say make them worth more, lifetime value is a very loosely defined term. You can look on the internet. There's lots of different definitions for it. And what I'm going to do is redefine this as lifetime gross profit. All right? So, LT GP, which is what I care about. All right? Because, for example, if I'm selling a meal for $10 and I make uh and it cost me $9 to deliver the meal, that means I make a dollar. So, if I sell someone and it cost me $5 to get somebody to buy a $10 meal. Is that a good business proposition for me? Well, you're making $10. It cost you five. You're getting two to one. Well, my cost of delivering is nine out of the $10, which means I spend $5 to make $1 of gross profit. All right? And so, that is why it's GP. All right? That's why I don't like lifetime value is an it's a very amorphous term. And so what we're looking for is how much juice, how much gross profit is there over the lifetime of the customer for us. All right? Now, that's not net profit. Net profits after you've paid all of your all the other expenses, your rent, your payroll, all the other things. Um, but this is just the gross margin that comes in. If it cost you $2 to buy a thing and you sell it for six, then the gross margin's four. Now, you still got to pay, you know, your warehouse and whatever other things you have going on. Now, hopefully you understand lifetime gross profit so I can get into the goodies. All right. So, there's six ways to increase LTV. The first one is increase the price. Sounds crazy, but believe it or not, price in and of itself is something that can actually draw a lure to your products. You think if a Chanel purse sold for $20, people would think they're as cool. No. Price in and of itself can create a lure around a product. It can put you in another category so much so that people say, "This is so much more expensive. There must be something different about this. I'm going to look at this more closely. " Right? Number two is that you can decrease the cost. All right? So, if I can find a cheaper way to do the thing, I can invest in technology, invest in processes, outsourcing, all these different ways that I can deliver the same thing for less, I increase my gross profit. So, if I had that meal thing that I was talking about earlier, and it cost me $9 to make the meal, but I found this new automated robotic process that allows me to do the meals for $2, that very much increases the lifetime gross profit of my bis of my products and my business, but I didn't change anything besides decreasing the cost. All right. Uh, the next one is to increase purchase frequency. All right. So, what this is getting people to buy again and again. If I can get someone to come to my restaurant today and tomorrow and then continue to come forever, then that's going to be a much more valuable uh client, right? And so that increases if I can get all of my clients to come an additional one time, right? That would increase my lifetime gross profit per customer across my entire business. All right? So hopefully you're tracking with me. Number one, you can increase the price. Number two, you can decrease how much it costs you to fulfill the thing, right? Number three, you can get people to buy more times. All right? And then uh four, five, and six are slightly related but different. All right? The first is that you can upsell people. All right. Now, upsells, very important here

here, I'm going to define this for you, is selling the same thing but a more valuable version. So, if you upgrade, right, from a Honda to a Lexus, then you are getting upsold, right? Important. And I think it's important to define these terms because they are different types of sales. And if you can be more nuanced in how you think, you will think better. All right? Especially when it comes to your business. So the next So that's buying. So I'll give you a food example. So if I go from a you know 20 oz soda to a 32 oz soda that is an upsell. It's more of the same. It's either better of the same or more of the same. But either way it's the same category of stuff. Um I'm just buying a bigger better version of it. All right. The next is a crossell. All right. A crossell is an adjacent need that I am solving. All right. So in

the burger or sorry in the in the Coke example, if I sell a burger with the Coke, then that is a cross-ell, right? So upsell is small Coke to big Coke or you know uh normal lemonade to organic whatever lemonade, you know, espresso sun-kissed lemonade or whatever it is, right? That's an upsell. A crossell would be uh what do you want with that lemonade? Do you want a sandwich with that lemonade? Uh what do you want with that soda? You want a burger fries with that soda? Right? That is a crossell. All right, that's a cross-ell. So, you're selling an additional thing. This is usually the next natural need that the person's going to have as a result of their first purchasing decision. Often times, these cross-ells are actually where the majority of the profit happens. So, sometimes there are strategies in businesses that are called loss leaders. Everyone needs this one thing, but the next thing they need is going to be the thing that has all the margin in. And if you know your numbers, you can build a model around that very successfully. All right. And then finally, this is one that's overlooked is downells. Right? So, a lot of

businesses that I'll talk to or that I consult with, um, they don't have any downells. And so, that means that there's all this traffic that's coming to their site or getting on the sales calls with them, but those people have needs, too. And it might not fit in your primary uh category. This is especially true if you sell a higher level service or a more expensive service. Um, a lot of times you're still paying for this traffic, right? This traffic, these eyeballs um are still yours. And I like to think of this as one person's trash is another person's treasure. there's always a business that can do something with uh some of the kind of the sawdust, the excess capacity that we have that exists within our business, right? And so downells, you can either downell to someone else's product and get affiliate commissions, get referral partner commissions for for sending business their way or right, and I like that a lot because you're you have a nice relationship with another business. You think they have a good product. They specialize in serving that type of customer. Um and you both benefit. You make money, they get free customers, everybody wins. the customer gets solved, right? And they're going to thank you for making the introduction as long as you have good partners, which you obviously should. The other way to do this is to have lesser um you know, lesser lesser cost of fulfillment, but solving

the same need. So, um I'm trying to think an example of this. So, yeah, if you had like a done for you service of some type, right? um and the person couldn't afford your full suite of services, you could downsell a kind of a done with you or do-it-yourself uh version of that, right? And so making those products, taking the onetime investment of making that product or making that, you know, done with you version of your primary done for you service or whatever it is a lot of times can serve as a really good uh downell, right? If someone walks into a facility for personal training and they can't afford personal training, obviously there's groups and things like that they could do. that would be a natural downell, but maybe they want to stay at home and you give them the at home version, right? So, there's all these different ways you can slice and dice this. But fundamentally, if we have people that were normally not giving us money because they would say no, but now we're able to monetize them in some way, we have now made more money per customer. All right? And it's really per person who walks into our business. All right? So, um six ways to increase lifetime value of a customer, lifetime gross profit. One is you can increase the price and automatically you make more money. Number two is you can decrease how much it costs you to fulfill the thing that you're promising. Number three is you can increase purchase frequency or getting the amount of time someone buys from you. Get them to buy more right over time. Uh number four is upselling them. That means having structured upsells where they can get buy more of the same stuff or better versions of the same stuff. All right. Cross sales is selling the next adjacent needs. So you have to think to yourself, someone buys my service, what's the next thing they're normally going to need? Well, I'm going to sell them that too, right? And it also makes their life easier because they can get all their stuff from one place. Makes you more money. Everyone wins. And then finally, what can I do with the sawdust? What are all these people who are coming into my business who can't necessarily afford my main thing? And how can I create something that's still going to solve their need, but doesn't cost me that much so I can still make a good margin on this stuff? Or how can I refer the business out to someone else and still get a kickback from it? And so those are the six ways to increase lifetime gross profit. Now, I told you at the beginning I was going to tell you the thing that I think is the most powerful. It's this guy. Understanding price. Pricing is one of the most underutilized levers in the entirety of business. Most people figure out their pricing by looking at the marketplace, taking an average, saying, "I guess I'll charge that. " The secret that they don't know is that everyone else is broke. Think about it. [snorts] And especially if you're entering the small business ownership, the reason that small businesses are small is because they think like small business owners, not big business owners. That's why they stay small. And so don't model small businesses. Look at the pricing models of big businesses. Now, strong word of caution here. There are market penetration strategies that businesses can do because they have funding and things like that. But if you look at mature businesses, businesses that have gone through the rapid growth phase and then have sustained, look at the pricing model they have because what the model that they had, they have already tested and obviously has produced sufficient margins that they are able to continue to grow their company. All right? And so don't look at the small guys. person who's out of shape and try and model what they're doing. Right? That's a pro fitness is a horrible example because people have great genetics or bad genetics and anyways, but point is don't look for the dentist who has bad teeth, right? Look for the somebody who's got nice teeth. And I'm sure there's genetics there, too. These are horrible examples, but hopefully you get the point. All right? Is that pricing is the most important lever. And I'll give you one quick example on this. If something cost me $10 to fulfill, right, and I charge $20 for it. Cool. I'm making, you know, 50% gross margin. But if I say, you know what, I'm going to charge $50 for this thing. Or, you know what? We'll say 30. So, I go from 20 to $30, right? I just doubled the lifetime gross profit of my business. Doubled, right? There are very few of these other mechanisms that can double or triple or quadruple the lifetime gross profit of your business or per client rather than price. All right, which is also why it's one of the ones that people have the biggest limiting beliefs around uh and the ones that most people struggle to increase. And the good thing is if lots of people struggle to do it, it means that there's plenty of opportunity for all of us. All right. So, six ways to increase lifetime gross profit. There's two ways to grow business. One of them gets is getting more customers. The other one um is increasing how much those customers are worth. And here are six strategies that you can think about within your business of how you can apply these things um to your client journey so that you can make those clients worth more without doing any extra work. Lots of love. Keep being awesome. Catch you guys soon. Bye.