Transcription
We use a term that we call nail it then scale it. All right? And it's really nail it in order to scale it. And the problem is most people learn how to advertise. They learn how to sell a little bit and then think, "Oh, I just need to do more of that."
But here's the problem with that. Until you find out what the compounding vehicle is within your business, you're bound to plateau. And so I've done this example before, but I think it's so powerful that it's worth repeating. All right? So let's say that you have company A and company B. All right? And both of them sell 100 people per year. Okay? So 100 new customers per year. Sorry. A sells 100 per year. B sells 100 the first year, 200 the second year, 300 the third year. Well, which company would you rather have at face value? You'd think, "Oh, I'd rather have B." But wait, there's more.
Let's say company B loses 100 customers every year because they're not that good at what they do or they don't have a very good model. And so that means that next year they lose 200 and next year lose 300. Now let's say company A keeps 100% of their customers. So year two they actually have 200 customers and year three they have 300 customers. They have the original 200 plus this 100. So now it's 300 in total. So both of these look like they're 300 sales per year businesses. But which of these would you now rather have? This guy. Because the margins are going to be better because you don't have to pay to acquire all of these extra customers. They had to pay to acquire 600 customers, right? This one only had to pay to acquire 300. All of that added cost drops straight to the bottom line.
But on top of that, this is a business that literally will always keep growing. If you think about it, every year they you could sell another 100 customers and it would just keep growing. This business next year, if you sell another 300, the only way to grow is to sell 400 customers next year just to keep up with A. And I can promise you one of the laws of nature is that advertising to acquire customers only becomes more expensive in time because you are going out to colder and colder audiences that are less and less of a fit. You're you're not getting the early adopters, you're actually getting the laggards and the late adopters. And so it costs you more to reach them. They're harder to sell. They're more price sensitive. Like it has all the negative things. And so this is common when companies look that are bigger if they're looking to exit. The acquirers, any who's an investor is going to look at this and say, "How much runway is there that's left?" And is there a way that we want at the very least can maintain the customers we have? And ideally have some sort of vehicle inside of it that allows those customers to bring us more customers.
And so imagine that let's say you're here and then you watch this video. And unfortunately I've had a lot of business owners who watch my stuff like realize this is that they're like, "Oh no, I'm this business and I'm selling 300 people every year and I'm losing 300 people every year. Well, what do I do now?" It's tough because you're in a rock and a hard place scenario. And this is why it's so important to nail it then scale it. And so you just want to advertise and sell enough so that you can figure out what is required in order to keep customers, keep them happy, keep them referring, keep them paying. If you can't figure that out, there's basically no point to scaling. It's going to get more and more expensive. Your margins are going to get thinner and it will feel more volatile because you probably rely almost exclusively on paid ads. That's tough. And so having a different way to think about it, which is you want to get the foundational unit right. Once you get that right, everything else gets much easier.
You know, I'm a I'm a huge consumer of software startup, you know, founders. And one of the things that they talk about a lot is it's so much better to just build your product or build your service for 100 people to absolutely love you than to have a million people who kind of like you. I think part of this is that it's very difficult to to build something for the amorphous for like the faceless masses. But it's much easier to build something for a specific person of which there happen to be many and many of those people. And so I think getting really crystal clear, this is why having like an ICP or customer avatar, whatever you want to call it, um some sort and you can like name them. It's like this is Jenny. This is our customer. She has three kids and she, you know, wants to lose weight or whatever it is, right? Would Jenny like this? Like what would Jenny think about this? Right? And some of the best companies that I've seen from a product and branding perspective always basically have Jenny sitting at the table or their customer avatar and they're like, "Well, what do you think Jenny thinks about this?" Right? And that's what allows them to make the best long-term decisions for both the customer and the brand. Like for the love of God, if the economics that you have when you're small aren't amazing, they're not going to get better when you get bigger.
And so if you're like, "Okay, that's great, Alex, but how do I tactically improve my offer or like my offering to the marketplace?" So inside the offer book, I talk about this um which is creating a grand slam offer part one and two, which is basically the problems and solutions. And so I think one of the best exercises that anyone can do with their team is and if it's if you're just the team, then it's just you, right? Is to sit down and say, let's write down what here I'll walk through I'll walk I'll walk you through it. So the first thing we're going to say is what's the dream, right? What does Jenny want? What is what is her big outcome that she wants to have happen. Okay, now that we define that, we want to be as crystal clear about that as we possibly can. It also feeds in the messaging, sales scripts, copy, etc.
The second thing is we're going to talk about what are the problems. What are all the things that are getting in the way of her getting her dream of accomplishing what she wants to accomplish? And we want to be as again as specific as possible here. Now, typically there's really one big dream, right? But there's many problems that get in the way of that dream, right? It's very simple to just say, "Oh, I just want a six-pack." That's a dream, right? But what are all the things that are preventing you from uh getting your six-pack? It's probably like you don't know how to cook food. You don't know how to grocery shop. You don't know how to weigh yourself. You don't know how to count calories. You don't know how to lift weights. You don't have time to go to the gym. You don't have you have to make different food for you as you do for your spouse. Like there's almost unlimited problems that can that can manifest. And all you have to do is ask somebody who's give just give listen to their excuses. Those that's what the problems are going to be.
All right. Now once you have the problems what I want you to do and this is a mental exercise is you list them as solutions. So you take so after you have all the problems you're then going to list them as solutions. So the solution is going to have two parts to it. One is you want to have some sort of name around it that's like okay you don't know how to cook food. So we have our you don't have to cook food system. All right. Now underneath of that we're going to have every possible way that we can think of. This is probably the most creative fun part right. You're going to list every possible creative way that you could solve it. And I'm saying like you can't think about cost. You you have to be purely brainstorm. And so by the way, fun rule for brainstorming is that you never say no. You just add to things. You say that's amazing. And so it's not it's a lot of and thinking, not or thinking. There's a lot of good ideas are on the third or fourth iteration. All right? And so for example, with this meal thing, I could myself drive to their house and I could cook their food for them. I could do that, right? Like let's write it down. What else could we do? We could hire a chef to do that. Okay, cool. What else could we do? Maybe we hire chef for lots of people. Okay, that's kind of interesting. Oh, what else could we do? We could do a grocery store where we actually take them shopping. Okay, well, could we do a recorded version of that? We could do a recorded version of that, too. Right? And so all the things you think about all the different ways you could solve it. When you think about this, you're like, "Wow, there's like 20 ways I could solve this problem, right?"
Which then leads you to step four, which is I call the trim and stack. And this is probably the most business-oriented part of the five steps. All right? Which is you have this big list and you say, "Okay, if we were to rate these on which of these are very high value and which of these are low cost, we want the ones that are super high value, super low cost to be our first priority." Now, the second bucket, and this is something that I've probably changed that's that might be a little different than uh what I have in the books. This is a little bit of an update is I am more okay with what about some things that are incredibly high value that have some cost because a lot of people immediately go to zero cost solutions because they want to just have something cost nothing. The thing is is it's very crowded in the zero cost solution market but you know what's not that crowded the little bit of cost solution or the medium cost solution but very high value. And so the thing is is that this process is an unconstrained ideation process. And the reason for that is we have yet to determine our price. And so you might be like, well, I can't drive out to their house. Could you for a million dollars? Probably. Well, then it's not off the board yet, right? So we just want to think what is the most valuable combination of these things.
Then we go to step five and we say this is now our valuable thing, our valuable grand slam offer. For whatever amount of money that you want to charge that makes sense relative to your trim and stack. And this process, I'm telling you, if you're like, "Man, my customers aren't in love with my product yet."