Transcription
If we were to just triple and get to a million this year, would you be okay with that? All we're going to make you so much money. This is Ashley; she runs a personal styling business. My name is Alex Mosy, and I own Acquisition.com, which is a portfolio of companies that makes more money than I will ever need for the rest of my life. And so today, Ashley will be explaining to me her biggest business challenges, and I'm going to try to help her scale her business—$2 million in revenue and beyond. All right, hi.
I'm Ashley Caps. I'm the founder of AC Styles. So we are a professional wardrobe and personal styling service that helps transform our clients' confidence and save some time. So revenue, we make about $309,000 annually, $130,000 in profits; that gives us about 42% in net margins. So we've been in business for about four years, and so far we've served over a thousand clients.
Thousand clients? Yeah. How'd you get a thousand in four years? That's over my whole, uh, career. The business has been for—you've done a thousand yourself? Awesome, super cool.
So my immediate reaction was, she serves luxury clientele, and a lot of people who serve luxury clientele don't charge enough because they sell out of their own wallet rather than out of the wallet of the person they're serving or the value that they're providing. So that was something that was in the back of my mind. 42% profit margin—you know, healthy, a little bit low, given the fact that I figured this was like a solar printer thing, so I was going to—I'd be curious what the other costs of the business were to make this happen. So who do you help?
Right now, about 50/50 men and women, typically in their 40s all the way to their mid-60s. These are folks that are stay-at-home moms; they could be frequent flyers; they could be going up in their career into the C-suite—those that really value their time and really also value having expertise. So how do you help them?
We transform our clients' fashion, style, and confidence and also help save them time. So we have two different phases in the way that we do things: onboarding phase, phase one. So we do a style assessment; so basically, we establish a baseline with their current style—a low style. You look terrible; like look at the mirror, you look horrible, pretty much. Okay, we establish a baseline, and then we show them where they can go. So once we show them they can go, that's when we go in; we gut the closet; we get rid of everything, and we get them into some new outfits, looking, feeling good. And then from there, that's when we determine, you know, just based on their lifestyle, does it make sense to work together on like a monthly level, on a quarterly level? At that point, we know we have ongoing styling sessions; we put lookbooks together.
Okay, cool. And we have like an on-demand service as well that they can text us if, like, "Oh, I got—" if you will, pretty much.
So when you say you show them what the future looks like, is that just like, here's a—like looks of like other models or something like that? Or like putting together a style mood board? And then we also, prior to that, we say, "Hey, just based on your complexion, here's the colors that are going to complement you," and then based on your dimensions of your figure, here's like the silhouettes that are going to work best for you.
Oh, cool. And then a big component of it is lifestyle—like what are they doing on a day-to-day life and making sure that whatever they buy fits the life that they're living today and not just like, "Oh, that looks really cool on a mannequin."
Got it. Initial reaction seeing phase one and phase two that Ashley put together was good. Every quality business has recurring or reoccurring revenue. Recurring means some sort of membership or subscription; reoccurring is like Coca-Cola—you buy some Coca-Cola this month and next month, even though you're not on a subscription. And so the quality of a service or product is dictated by the percentage of customers that want to buy it again and again and again. The idea is that you want to acquire a customer once and have them pay you for the rest of their lives. So how do you make money? Important question.
So onboarding package that I mentioned, $8,500—that's over the course of 60 days—then it goes into either monthly at $2K a month or quarterly at $4,500 a quarter. And then right now we also make about 10% of our revenue from commission from clothes; we get about 10% margins from the vendors that we work with. Okay. And right now we just actually focused on having just this luxury tier. In the past, we had two different tiers, and we focus more on one time, and you realize you make more money on the luxury tier, so you do more of that.
Yeah, love it. All right, so that's what you sell; that's how you make money. Where do you find them?
So right now we're doing AdWords; we're spending about $300 a month with Google, and then we're also spending about $300 a month with Thumbtack. We have affiliates with other luxury-like services, so like matchmakers and things like that; we host events; and then also, of course, client referrals. Do you know what percentage of customers come from each of this? Uh, roughly? You don't know? Worries. Four are coming from affiliates; I think about a third is coming from the other two, and then a third is coming from referrals. So kind of like evenly split between referrals. Would you consider affiliates referrals or not?
No, I kind of segment those out. Okay, so referrals is one; affiliates is another; then paid ads between Thumbtack and Google. Yeah. I like to understand what percentage of customers are coming from every source so that I can see like, is—sometimes there's one where it's like, "Oh, 90% of my customers come from this," and then when I ask where they're allocating their time, it's like, "Well, I'm putting half my time and this thing is getting me 10% of my customers," and then the other half my time is getting me 90%; it's like, "Okay, well, then let's double down on that thing." And the next following question is like, "Okay, well, is this tapped out? Is this an exhausted source, or can we do more?" And most times you can do more.
Okay, so that's where you get them from. How many do you get a month?
So right now we're looking at about 12 total leads, eight appointments, 100% show for those appointments, total sales four. So close rate is 50%; show rate is 100%. 40 clients currently and uh, one churned in the last year.
Okay. These 40 clients still pay you monthly? These are active? Yeah. Okay, okay. So they're coming in from different timelines, so some are monthly, some are quarterly, some are annually—just from different package testing. We're going to probably talk about that in a second, the 40 clients thing, because I think you probably have a big revenue opportunity there. So what's the goal right now?
All right, so you know, just the easy five million revenue. And really, I think what we can do is because it's easy for me to get stylists, to train them, is to build like an education component—just like a totally different business.
I know. Yeah, but have stylists in major metros. Okay, so have stylists in other metros, and then the long term is to be able to create a training program for them—like super long term, like super, super long term—super, super long—next lifetime. Oh, I'm just messing with you. But fundamentally, for this business, the goal is five million—doing what you currently do or a scaled-up version of what you do and in other major metros.
Yeah, yeah. No, that's cool; that makes sense. Five million—big number. We can do it. What's the problem? So what's—what's—what's holding you back? What's getting in the way?
Leads. Okay, we need lead flow; we need more of them consistently, and we just—we need more at-bats; that's really what it is. And also, I haven't been able to be as consistent with content creation, and I think there's opportunity missed there.
For most small business owners, as long as the core economics are good—which a lot of times they're not—once you have the core economics of the business, you have your price properly, so you have enough gross margin, you have good stick rates, and people want to keep paying you over and over again; they come back; they refer their friends—which actually has all of these things—then it's kind of shifting back to the front and saying, "We just got to get way more leads in the door; we got to let more people know about it," which is going to come down to advertising.
All right, understand all that. Show me the numbers. So $309,000 in total revenue, $130,000 in profit, 42% net margin, blended CAC of $600, um, LTV is $10,000 annually, so that gives us a 16-to-1 LTV-to-CAC ratio, $600 in marketing spend, show rate is 100%, close rate is 50%.
Okay, got it. From a basic economic standpoint, her business is actually really healthy. The fact that she's only lost one customer over a year out of 40—that's whatever, 2.5% churn annually—is phenomenal. The fact that she has, you know, decent show rates and close rates, all of that's good. And so me looking at these numbers shows me that she's delivering some core value to a key audience, and honestly, it's just the N is low; she just needs to do way more volume. And then do you have any other stuff by platform?
So Google, we're looking at $3,400 for the year for 2024, cost per click $189, total clicks 1,800. Do you have prices on the site? What do—when they click, where they click, does it show your prices, or is it just like an opt-in page?
I do not show prices. Is there a video that's being implemented right now? Okay, okay. But I think that that's the uh, big problem is it's just like—he—and you don't give them anything right there; there's no reason for them to opt in. All right, we're going to make you so much money; it's a lot of fun. So when I saw 1,800 clicks in eight sales, it was clearly a conversion issue. And so she's leaking a huge amount of prospects who aren't immediately ready to buy. CU—that's all she has available is like click, you know, click here, schedule call, and basically buy, and there's no incentive. And so I'm very interested to see what we can do to solve that conversion issue because it could be a massive unlock for the business. So despite like basically no incentive for someone to actually book a call, you're still making eight sales. And so I think that what's happening right now is that like you—the show-up rate and the close rates you have—like you're just basically skimming the absolute people who are like are in such a dire pain, and they don't—and you don't know them because they're coming from ads, right?
Right, right. Like if you—if you're in that situation, then like—like this may sound exciting for you, but like you could probably 5-to-10x the sales of the business just by fixing this. Like we could do nothing else, and you could just do that. So we'll get into that in a second, but okay. The good news is that even with the massive amount of inefficiency that's there, your LTV to CAC is still really strong; it's really good, and I think we're just losing—we're just leaking a lot in the—in this process. Okay, show me the Thumbtack one.
Okay, also people that are in pain right now, CU; they know that they're searching for it. So $6,000 total spend, leads here 58 leads, $38 a lead, total sales eight, CAC $750, same LTV. Okay. Thing is, Thumbtack is like 90 to 95% unqualified in terms of purchasing power, M, so it—it's good because it was a way for us to rank higher for SEO through this page—through your Thumbtack page that you then pay extra to promote, yeah, on Thumbtack.
Okay, cool. I mean, $38 a lead—not bad, um, given the price point that you have, but the issues that they are unqualified. So do you actually—do you have a minimum income requirement?
I would say for this new model, a million a year in income. Yeah. Okay. So yeah, so this is definitely a top 1%, 1%, because $8,500 plus what is—like it's about $25,000 all in for the service—the other—the thing is, they have to have money for the clothes as well, so you're looking at about a $40,000–$50,000—let's just even say $25,000 yearly spend in clothes. Average Joe Schmoe cannot.
Yeah, I love that Ashley is going after high-income earners. I think a lot of business owners are afraid to go after high-income earners, and I'm very happy that Ashley's already identified—rather than trying to say like, "I'm trying to come up with this diet light, really mini versions"—she's just leaned into what she's obviously really passionate about and just trying to find the customers who can actually afford to do the type of work that she wants to help them with. She doesn't compromise her quality to meet lower-end customers, and I think that's really cool. To be clear, I'm not saying that there's not a space in the market for something like that; it's just obviously not her passion, and so she should stick to what she loves. Is there a specific like life event or something that happens that triggers people into like getting—getting into this buying cycle?
Yeah, so it is typically a—a—a transition moment: I had a baby, my body has changed, none of my clothes fit—that's for women; I got divorced—both men and women—or I'm just—I'm getting—I want to start dating, period. My image doesn't match my status as a C-level person or even VP. Yeah, so that—those are—those are the typical triggers.
Okay, I feel triggered.
Um, no, you're good. Okay, so that's the Thumbtack data. Tell me more about the affiliate side—the—the—the—because you've got—I've got—I get both of these—these—I understand the referral side; I understand both your paid acquisition parts; I think the continuity is lacking; we can work on that; I think there's efficiency ad funnel; we'll talk about that; I think affiliates is kind of the last piece uh, before we dive into like figuring out what we're going to do. So for those of you who don't know what an affiliate is—come closer; I've got a book, "$100 Million Leads," and inside I'll—I'll read you the definition. So affiliates are independent businesses that tell their audience to buy your stuff. And so affiliates seem like referrals on the outside but are actually much different under the hood. First, they have their own businesses and do their own advertising; second, they agree to offer your stuff to their engaged leads in exchange for money, free stuff, or both—both. So she has these social clubs and these matchmakers that are existing businesses that advertise their own services, and she can kind of harness those businesses to just funnel some of their leads her way for free. Now she has to do some sort of deal with them to make it worth their while, but sometimes some businesses are like, "Oh, you help my customers too, and I don't want to do that." So here—so basically, they—we—it's just like a lead pass-through, so they make the introduction, and we offer a complimentary style assessment to help—help them get their dating profiles ready; it's really just a glorified sales call.
Okay, yeah. And so you have these matchmakers—how many matchmakers do you have who refer you customers on a regular basis?
So combination of private social club and matchmakers, we have about six.
Okay. How did you find them?
Googling them and reaching—you reach out and did it that way.
Mhm. And what percentage did they send you?
So as of this year, it's about a third.
Ooh. Interesting. So when I see that she's got only six people that are sending her a third of her business, and then when I asked how she got them, she just said, "Oh, I just kind of like Googled them and reached out," I was like, "I had an inkling that she had not done that much work to get a third of her business." That sounds like one-time effort, and then ongoing new business—like that's the type of high-leverage work that I love to see because then each of these affiliates become consistent nodes of business for you. So even though the customers themselves may or may not recur—obviously she is—is a recurring revenue model—but the affiliates themselves become consistent traffic sources where they send every month one or two customers, one or two customers, one or two customers. And so all we have to do is say, "How do we go from 6 to 60?"
Okay, cool. It's cuz it's like very aligned audiences; yeah, they're literally already buying the types of services related to what you want; it's great. I feel like I'm pretty clear on what—what he said.
Okay. Yeah. But if you were to become an AC Styles client, okay, here's an outfit. You've got these really nice olive undertones, dark features, so navies, browns—these are your tones, and there it is in action. I like the—we want to look like the one on the right; we actually look like the one on the left, you know what I mean? I could be GigaChat; this could be me. Thank you all. I got—no, I appreciate it; this is good. Okay, so you want to make five million, right? And we're at 300, so that's a 17x from where you're currently at, right? And so if we were to just triple and get to a million this year, would you be okay with that?
Totally down.
Cool, cuz then going from a triple to a 5x from there is like—because the thing is, the business will usually change; there's—there's something called the Chinese rule of three and 10, which fundamentally just means that systems break when they triple. And so I like to think in—in triples in terms of—unless there's some massive order of magnitude change that we can do, but the things that we have right now, a handful of these are triples independently, and so when put together, I think we—we absolutely could get the five, but I just like setting goals and expectations kind of—kind of that way so that you're not like, "Oh my God, I only made a million dollars this year, poor me." So Ashley's about to come over to this side of the table, and I'm going to walk through a bunch of solutions I think can help her grow our business, but before I do that, comment below, and would love to see how you guys think and how it compares to what we ultimately end up doing. All right, that was awesome; you did great. I've got some notes; why don't you sit over here, and we'll game it out. I think what I want to do is break this down in terms of who. So let's talk about the avatar a little bit because then that'll inform the offer and paid ad stuff a little bit more to get it targeted and then clean up the funnel.
Okay, so first thing I want to talk about is going to be the avatar—is getting it on who you are going to serve, cuz right now you serve a lot of people—not to say that it's a bad thing, but I think over time we are going to get narrower so that we can make our value proposition a little bit more compelling for them. The next is going to be paid ads uh, funnel, which we're going to look at the pages, and we're going to look at the offers so that we can see, okay, can we tweak something? We add a lead magnet here that would get the right people and ward off the bad ones, and is there kind of some process things that we can do that just will stop the leakage. The third piece is still acquisitions; it'll be affiliates that I want to cover, and then the fourth uh, what I want to hit on is uh, continuity. And so those are the big four that I want to hit on; we can talk about the corporate thing that you mentioned in between. My initial gut reaction is not yet because the thing is is like, if we can get to a million, probably we could probably—given the things that I think that we're going to uncover here—you could probably get to like two—is two to three just from some of the things I'm going to show you in a second.
Cool. Okay, then maybe you get to there; you're at three; you might be like, "Wow, what if I just kept doing this rather than the other thing." Um, okay. So avatar clarity—do you have any idea if there are some customers that are like way better than others or that you enjoy—enjoy working with more—like what's your dream customer, and just like work backwards from there?
Stay-at-home mom. Okay, frequent traveler, kids with many social events—mom who has kids with many social events. Yeah, okay. Like one daughter just got married; son is having a baby—that kind of thing. So usually mom, so it's mom, right? So there's kids obviously cuz it's mom. Okay, got it. There's a few of these women plus money.
Got it. And they just want to have new outfits for all of their trip—like socials—kind social—lights—private—not public people.
Yeah, yeah. I understand. Okay, so mom socialites—is that the number one—your favorite avatar? And then men CEOs. Okay, by percentage of revenue, is it 50/50?
Yeah, it is. Interesting. Okay, CEO man, huh? Do you ever get cross-sells? CEO men gets wife—wife starts or husband starts—typically wife starts.
Interesting. This is kudos to Ashley that she really understands her avatar, and she understands kind of the—the part of their life that they're going through and what path to status they're seeking to fill with her services. And the reason I was pushing on this is because sometimes you'll find a business owner who serves two types of customers, hates one, loves the other, and then still feels like kind of beholden to keeping that one that they don't like because maybe it starts paying the bills. And then also the reason I asked for the split is this—as silly as it sounds—sometimes it's like, "30% of my business is this customer I hate, and 70% of the business is customer I love," and in those instances, it's like, "Great, get rid of those ones and double down on these ones that you love." Now she happens to love both, and so maybe in the future—maybe at three million, maybe at five million a year—I would maybe look at this to revisit and say, "Hey, now that we've had way more reps, do one of these customers stay longer? Are they worth more? Some of these, you know, people refer more than others," but right now, given the data we have, I don't want to have her pick; I'm cool with sticking with both.
Pay ads funnel—can we pull up her uh, Google ads? Oh, so they're not running right now? Oh, they're not running right now. Okay. Do you know what page they go to?
Let's go to the Work With Us page. Personal styling—it's probably the closest. Okay. Is it Get More Info? If we click that, will that take us there? No. Okay, click on that though. That takes us to—so right now they're filling out this Airtable form that—and then I send them—MH—kind of a brochure that breaks down our services and then gets them to book a call. So that's a very simple funnel. All right. And so this is them filling out—they basically check these boxes and then scroll down. Okay. So then we have the contact—first—this is just a big application. Yeah. Okay. So first thing that we can do on this one is—is—and obviously this isn't—I mean, you could—okay, there's a lot of things here, but um, wherever you're driving your traffic to—so whether it's the homepage or it's this page—you should probably have some big lead magnet that people are going to want. What's something that somebody like that would want a lot? So that's been my thing after reading offers and thinking about a lead magnet—it's like, what appeals to these people? And they don't want to sit there and like get a checklist of how to go through their closet themselves. So the only thing I could think of—and this isn't very scalable—is the complimentary style assessment, but that's one-on-one with somebody.
Mhm. And that's okay though cuz I mean, you're still getting them—to more of them to opt in, but right now is the assessment the thing that they're booking on the Google Ads page today? It's just a—a call. Okay. So it's not being positioned as—as that. So for like the—the 1.0 version is uh, style assessment is what you can basically promise them uh, on the landing page, but I was thinking more something like really tactical—like the perfect outfit for you—like one perfect outfit or something to match their skin—like—like your ideal colors—like that would be a cool one cuz like that doesn't—you have to like put a whole thing together; it's just like, "Oh, this skin tone"—you know, there's like 10 tones, and you just pick the one that's appropriate for them.
Yeah. Okay. So we—we're going to—we were going to do that next, and—and also something else we were going to do—the one perfect outfit, but it's—it's so nuanced, but then we were thinking, "Okay, what if we just share with them, hey, here's how—B—like what are some of the steps that they do to prepare—to—if—if they were to work with us—how are they invested?" So we were thinking like—take their measurements—having them do some of these steps—like creating uh, creating a—a mood board themselves. So we want them—so for a lead magnet to be really valuable, we want it to be risk-free, easy, and fast. And so those things require effort. Okay. And so we don't want the avatar to work to get the value; we want them to just click and get the value. Okay. And so I think what we think about is like—I like—I think this is actually really interesting—this is just me—me personally—so maybe I'm a CEO man, but it's like there are some—some skin tones that combination—basically, it's like you have a combination of hair and skin tone and eye color that is unique to you, and between all these different permutations, there's a hundred different variations people can have, and they have a different color palette that would be unique to them. Now you'll know behind the scenes that there's probably like eight different, you know, color stylers or whatever, and so I think either doing color cuz that feels like the easiest one—degree more nuance than that would be a specific style—being like, you know, streetwear, hip-hop—like whatever—you know what I'm saying?—like you know that better than me—professional casual.
Yeah, exactly. And so I think that this is like—you could do this tomorrow; you don't have to change anything—just by repositioning lead magnet. So the reason that I'm hitting so hard on lead magnets, and I have a whole chapter about this inside the Leads book, is lead magnets—how to engage your leads—is that she has this huge leak in her—in her funnel, right? 1,800 clicks and only eight sales, so it's like—we can solve this with the right lead magnet. Now most people give terrible lead magnets, so—so a lot of people give no lead magnets; the—the few that do give lead magnets often give terrible lead magnets, and so we want to have an exceptional lead magnet, which typically means we have to work more on the front end so that our prospect has to work less. And so it's kind of like pre-digesting the food so that they can just immediately get the value. Think about you as a baby bird—just kind of feeding your prospects the value. And as a little pro tip for you, if you have the choice between two lead magnets, one thing that's more valuable but takes longer, and the other is less valuable but immediate—this is the one that customers will rather have, especially as a lead magnet, which then can lead to a service that looks more like this. I would experiment with the different headlines there, and then we need to measure the conversion rate of the page. I know that you've turned them down; can you pull up the um, the uh, numbers? The interesting thing here is like 1,800 clicks; I think we could be able to get somewhere in the neighborhood of like—if we're doing this right—like 500 leads from that amount of spend. Oh, and just—if literally we just need to nail this because on a Google Ad—high-intent search like this—you should be able to get like 30% of people to opt in. So from a benchmark perspective to this—to something that is right for this audience—the only reason we were able to identify this whole and huge opportunity in Ashley's business is because she actually had her data. And so it is amazing to me the amount of business owners who have no data on their business, and they're like, "Man, I don't know what to do." Well, once you get the data, the data can often tell you where your opportunities are. And so here there was a clear leak. Now she might not know the benchmarks for this, but having been in the industry of business, typically an opt-in page for some sort of lead magnet with qualified traffic can get somewhere between 20 and 50—sometimes 60%—of people to opt in for it if it's very clearly defined and there's a good match between the traffic that's coming in. And so for her, me saying, "I think 30% is a good benchmark," is kind of where that came from. Like, so if someone's looking for personal stylist near me or personal stylist LA, then it's like—what is the first piece? And like I always think about like—our offer is—you've got all these steps that someone has to take—can I peel off the first one, even though it's something that I normally charge for? What's my actual cost? It's going to be time. Can I template some of these things out so that I can still provide a lot of value but not have it take too much of my personal time? And the cool thing with these um, like kind of like more costly or unscalable lead magnets is that you only have to give it to people who are qualified, so you are not obligated to—like you can choose to do this only if someone who meets these qualifications, and you just say that in the landing page. Okay. So it's like, "Hey, if you're a mom with kids and a socialite or you're a CEO guy and you're not getting um, what you want, then like schedule one of our style assessments where we'll go through personally your skin tone, your hair color, your eye color, and find the things that will immediately make you look better just within your existing closet," cuz that's like—again, they don't have to do anything, and they'll immediately look better—that's like immediate value—not a lot of work. Okay. So I'd be like, "Okay, that's what we're going to offer." So now I can get more people to apply. Now they're going to fill out their stuff, and again, if they're not qualified, it's like, "Well, you didn't read the headlines, so don't worry about it," and then for them, I would probably just send them some free things so they feel—you know, they still gave them something, but that would be the thing that I would do to improve the funnel right off the bat without really even seeing the funnel—is clear headline around what they're going to get—subheadline is either an image of like almost like a before and after of style or some sort of image that shows, you know, white skin, brown hair—don't do this—okay—and then they're like, "Oh, shoot, I do that," and so just like a simple thing that they're like, "Shoot, I do that," and then they're like, "Oh my God, I need help," and so all we're doing is increasing deprivation so that they—they take the next action. Okay. So that would be the lead magnet component that I would do for these paid ads. Now I think that you have the scheduler, so they—they apply, then they schedule. I know you're going to put the video together. Yeah, there's the video before the call that gets them to book, and then I would probably consider sending them a second video between booking and showing. Okay. And then that does a little—a little bit of the pre-sale for you. And I think about this in terms of like—what are those things that you repeat on a regular basis on the call? So there's usually like—in every call—there's kind of like a little bit of a sales pitch that occurs where you're like, "Okay, so let me tell you about what we do." I just try to put as much of that before the call okay so that I can spend the—the majority of the call on the person—the decision-making process—rather than basically have this like pre-recorded script that I have to keep reading over and over because it tires out—you—ties out your sales team eventually. And so I would just—I—that's how I would—I would try to do it. I think that if we can do the lead magnet, we can capture more leads. I think if we add the video to the—to the landing page, so it would look like this—so we have our page—there we go—we've got a little video here, and so then we have our little scheduler underneath. Now this Booker—we should have our qualifications. So we want to have like income, right? Do you—do you ask for income?
No.
I would ask for income or budget. If you only knew two or three things about them to make them qualified, what would you want to know?
Are they open to—it's a good one. Okay. Uh, open to change. Yeah. Okay. What about start date? Yeah, that too. Okay. The budget's
Sales call okay, but I thought that with this skin tone thing, well we'll we'll deliver it on the sales call, delivered on the sales call, right? I'm just trying to think how that would, how do you, how do you fit that into the script?
So the way I would think through this is that I'm going to have like 10 templates that I know that are color palettes that work for these 10, you know, characteristic people. And if I have asked their skin, hair, whatever up front, then I know I'm going into the call which template I'm going to be using when I talk to them. So it's like, hey, oh you're blah blah blah, actually, you know what, I would describe you more as Olive than white, and I think this might actually be a better thing for you. Cool, okay. And then you go into your normal sales process, which obviously works. I don't, I don't even want to talk about sales SCH, you're closing 50%, okay, right now it's like book a cost a sales call basically, and that's like obvious what I'm speaking about.
But then this feels like, oh, just have a call about skin tone. Well, this is sales, yeah, and then it, it's not an issue because we're, they're already qualified. MH, you're only taking the calls with people who have the income, so you're going to take more calls, you're also going to hear more nos, but you're going to make more money, like fundamentally. I could, I could just say like, I could run an ad that just said, hey, I have this really expensive thing, book here if you want it, and this is the price, and the people who hop on those calls will be incredibly qualified. But if I just said, I have this really free amazing thing that'll help you with the first problem, let me help you with that, and then people are like, oh, but do you do any of ah, you know what, I do do that stuff. It's so funny you ask, and I get 10 times the calls. And so if I close 30% of a 10x number, I still close three times the deals. Okay, does that make sense?
And so there's a little bit now, part of it is because you're selling out of your own wallet in terms of time, yeah, and so it's because you're like, I, I have my time and I understand that, but all we have to do is just tweak these things. So like if you have somebody who you have the information about them, you have the income, and so what I try to do for these is band, so budget, this is kind of like the um, Authority, can you make the decision? Need, how bad you want it, which is your biggest problem, and then timing, when do you want to start? If I were to accept you, when, when you get started? And so you want somebody who says immediately, I'm in, high need, I can make the decision, and I have the money. And so that's fundamentally what these are. And if you want to add your personalization of like skin and hair and what, you know, this better than me, you know, eyes, upload your photo. Yeah, oh really? Yeah, that one's going to be a lot of friction, so I would consider having that in the Fallout process, okay, because someone's like, take their phone out, they got uploaded pictures. Oh, what? Because think about this, there's a decision they have to make, they're going to be like, what picture am I going to pick? And then it's, and then they're gone, they're like in another world, and they're in their phone, and they're like, oh yeah, I forgot I have to call Sandra back, and then it's like they're off. I mean, I can really just, and train somebody to just do it live.
Yeah, I mean, as many things as possible you can do like, we want to decrease the friction here for qualified people, right? So there's good friction, bad friction. So good friction is something that increases the overall quality of the lead and gets out people who uh suck. Bad friction gets everyone out, a slow page load time, for example, everyone leaves, good people and bad people. We want to get the type of friction that only bad people leave and good people stay, okay. And so if we have budget, Authority, need, timing, we have the specific, spe, ific things relative to the lead magnet, then your followup, if you want like, hey, if you can send me a picture, it'd be great, if not, I can just go off of your Facebook profile or something like that, then they show up to the call, you have your one of 10 plates that you already figured out ahead of time, that then sets up the sale, which is for you it's like, oh, you don't have this, this, this, and this, all we're doing is expanding the gap of like, you're here, you want to be here, oh, you're missing all this stuff, oh, you know what, so funny, I think you'd be a perfect fit for we have, can I tell you about it? And then you're in. Got it, makes sense. Yeah, okay, so this is what I would do to change the paid ads funnel. Can you spend more on this? Yeah, well, I'm like, dude, if you, if I had a machine in front of me where you, and this is without you doing any of this, that's the crazy thing, that's without you doing any of this, right? So if I said, okay, um, instead of paying $3,400 uh a year, what if we paid like $3,400 a month? Yeah, well, that would 12x your business, that'd be chill, right? Yeah, I mean, it beats the S&P 500 where you put a dollar in and get $23 back within the next week. It's not bad, right? A lot of business owners are scared to spend more money on marketing because they don't have the data to show what the return is. If you have a machine in front of you where you put a dollar in and, and it spits out $16 back in 30 days, why would you have any kind of limit on that budget? You'd put as many dollars in that machine as you possibly could, right? Of course. And so she has one of these machines and probably just in preparation for this show, uh, she got the LTV to CAC ready so she could see what a discrepancy there was. And if you don't know what LTV to CAC is, it's the lifetime value of the customer relative to the cost you acquiring them. So basically, how much money does it cost me to get a customer, and then how much money do I get from that customer once I got them? The cheaper it is to get a customer, and then the more money they give you, the greater the discrepancy between those two numbers, the more money potential there is in the business. And so this is fundamentally the economic Arbitrage that exists at the core of every business that then fuels all the growth of everything. And here's the craziest part, Ashley is getting $23 back for every $1 she puts into her machine, and she's only spending $3,400 per year in this machine, but that $3,400 times 23 is generating $78,000 in income within a year. Like imagine investing in the S&P 500, put $3,400 in, at the end of the year it's 78,000, you'd be like, holy cow, this is the most amazing investment in my life. Her business has that inside of it, and she's like, hey, I don't want to put too much in. I'm just, I'm pulling her chain, but a lot of businesses have these huge treasure troves that are just sitting there and not being leveraged. I, I'm going to put an order of actions here, so I'm going to tear this off because, and we're going to save it, and at the end we're going to order everything, okay?
So the next thing um that I want to go over is the Affiliates, cuz I think that's really important. You would not touch Facebook ads, well, you already have an acquisition Channel that's working and super profitable, so I'm less likely to want to do that now, okay? So um, because you can spend more if you wanted to. Yeah, yeah, let's spend more, okay, but we'll do that, I'll do, actually put that as a note for me, so I'm going to put steps in here for you, okay? Um, all right, let's talk about Affiliates, so matchmakers, yes, okay. So you have six matchmakers right now, uh, four matchmakers, two private clubs, okay, so I'll go, I mean, whatever, it doesn't matter, yeah, you're good, okay. So you got six Affiliates, yeah, you've got four, four matchmakers and two private clubs, okay, got it. So how much time did it take you to get each of these Affiliates? Not much time, okay. We did a cursory Google search of LA and found that there were multiple hundreds of the people who do this, so in a magic world, what would it take for us to go from 6 to 60? Yeah, I think not that long, okay. And each of these sends you people on, on a consistent basis, yeah. What was the process that you did integrate with them? I met with the owner. And so you did Outreach to get them, manual Outreach, okay. Is it like phone calls, text, email, DM, email? Okay, manual Outreach, um, explained that we can offer a complimentary service to their new clients, oh cool, and you know that we, we could close them. Love this, almost like it's directly out of the affiliate section in the book, wherever it is, here it is, kly gutter sits in there. All right, anyways, keep going, and that's, and that's, and then they would, and what percentage do you close to the people that you talk to, um, that's been the hard part is like talking, getting them. Okay, do you know how many Outreach attempts you did to get to the six? Um, probably about 40, okay, and I, I want to, I want to paint something for, cuz I think it's going to be interesting. Okay, it's not often that you find, you know, a single point of Leverage in a business that's as clear-cut as this one is for Ashley. When I do find them, I get very excited about it because it's like, these are the things that can change people's lives, right? It can change the income they can have, the, the, the neighborhood they live in, the schools their, their kids go to, and just completely can change a family tree for generations. And so when I find these types of opportunities, I just like, I, I light up because I'm so excited about it because I know what, what's going to happen, I know what's going to happen later once this lever gets really pulled. When she said that she'd only emailed 40 people to generate a third of her Revenue, I'm like, 40 emails, because I have a context of what kind of response rates cold email gets, and it's certainly not you closing 15% of cold outbound, normally if you get 1% or half a percent you're thrilled. And so she's at like 10 times the efficiency, 15 times the efficiency of what normal outbound does. And so as soon as I saw that I was like, this is it. So you sent 40 emails and you were able to close six, right? Yeah, okay. Now how much money do those six, so it's a third of your Revenue, right? So it's $100,000 a year roughly, okay. So think about this, so every one of these emails nets you $2,500. Yeah, that feels like pretty good return, yeah, for sending emails, probably copy and paste, right? H two more of them, what I have, I have a wild idea, what if we sent 400 emails? Yeah, that's it. Yeah, if Ashley just goes from six to 60 Affiliates, and they're currently a third, then that would be a 10x of something that's 1/3, so that alone would more than triple her business. And here's the crazy part, what's the cost of sending 400 emails? It's even less than the paid ads, so her LTV to CAC on this particular channel is even better than her paid ad Channel, which is already insane. I don't even want to mess with the affiliate process that you have right now, yeah, you're reaching out manually is obviously effective, you sent out 40 emails, like if you did that for 4 hours every day, right, that, I mean, you'd probably be able to send, even if you did them completely personalized, completely manual, the way that you probably did, you don't have to buy any software, like you can just send the emails, you'd be able to do that in like a week or two weeks, if you want to spread it out, it's like not a lot, you know, we'll give you, we'll give you, we'll give you the weekends off, so we'll go, so it's 40 emails a day, 40 emails a day, I'll give it to you in a month, how about that? So we'll do 20 emails a day, 20 emails a day, that feels like, that's, that feels reasonable, yeah, okay, cool, let's do that. Best place to like pull the data? Good question, cuz I think it's the matchmakers, but it's also could be executive coaches, M could be, um, high-end fitness trainers, people going through a transformation, weight loss, weight, y they need, they need, yeah, for sure. I would think about, about, I think you have them, these in segments, right? And so you've got high-end trainers, high-end PTs, number one, you've got exact coach, right? Mhm, you've got the dating people, right? Yep, you've got, I'll give you one, divorce [Music] attorneys. So that's four lists, these ones you can find probably from Google, this you can find also from search and Instagram, there's also like list Brokers, so you just like Google list broker, whatever City, and then you can usually, they'll have this massive National list, and then you can whittle it down to a, a localized area. Can you do any remote Services? Yeah, yeah, we definitely, I'd say 50% up, like especially during Covid, we only work virtually, but I, I prefer, you prefer in person, that's fine, that's cool. I like doing this stuff in person because there's, there's so much more richness to the interaction. I can see someone's, I can see, I can see minor expression changes, and I can gauge how my, you know, recommendations, like, are they confused by what I said, or like, are they, I can, I can sense if they're like, not, they don't want to push back cuz they're like, they don't want to insult me or something like that. I can see if they like, they don't really believe it, it's like, okay, I need to dive in here more and make sure that like, I can break any belief that's here, or maybe explain something a little bit differently. I don't think I get as much of that online or in like a Zoom setting, and honestly, I just like, I mean, I love business, and I think that when I have like kind of the talking head videos, which there's plenty of on this channel, I am a little bit more intense in those settings because I'm, when I talk to a camera and there's no one else there, I'm basically talking to myself, and I talk to myself a little bit more rough than I would talk to somebody else. And so I think in this setting you can see that like, I don't like, I'm pro-entrepreneur, you know what I mean? Like it doesn't matter whether you're making $100,000 a year or you're making $100 million a year, like you're in the game, and for that you're eternally somebody that I, you have my respect, okay? Um, so this obviously makes money and doesn't require any Financial Risk, yeah, and is also a compounding way of acquiring customers because you did this work, think about this, you sent 40 emails one time, and then you got six people to send you business for good, not bad. Now what do you do to continue to reactivate them? Host events, okay. So you do, so you do events, okay. So for the Affiliates, yep, okay, cool. Um, I mean, especially for like the matchmakers, they're happy because their clients are getting made over, they get better pictures, therefore they get better matches, so I love that. Yeah, really good. So I think, uh, do you do that like regularly, like it's on a calendar, or is just like, okay, good, cuz that's obviously, that's why part of why it's working. So normally one of the things that, that falls off with Affiliates is that they don't stay activated, they don't keep referring you, and so you have to like work them like customers, like it's another set of relationships, but if you can put them all together an event on a regular Cadence where like all of the dating coaches bring all of their people, and they all look good, and they all get to meet each other, like that's value for everybody. It hasn't quite turned out like that, but just like more one-off, okay, like hosting events with the individual company, okay, well, still that works. Yeah, yeah, and I think if you do like one or two of those a year or three a year, I think that's like more than enough to keep them activated, and I would, I would try and figure out a way to put them in the same room, just because I think you'd be like, I would be pitching on collaboration rather than competition, which is just like, hey, you have single people, so do they, maybe they, that's true, actually, yeah, they're all single, yeah, they're all single, and obviously looking to mingle and trying to look at their best life, like, um, it would also be desperation City, but anyways, uh, so that's, so that's the affiliate piece, okay? I, I feel, I feel really good about that, okay. And so in terms of list, I would go list brokers, social media, and Google first, that'd be like my first thing, and then I would look at list Brokers once I ran out of those, but between like these four sources, you need to send 400 emails, it's not that bad. And then what's crazy is like, if you send it and then they don't respond, you could send it again. Okay, next one's continuity, so let's talk about that, okay. So this is about increasing LTV, right? So you already have pretty good LTV, but I have this feeling like there's something that we can do better, okay. So right now, now LTV is $10,000, right? Yeah, okay. So walk me through, so someone comes in, so I come in, I'm CEO, $88,500, I pay you for my whole lookbook, etc., transformation, y, okay. And so the delivery of that transformation is like a lookbook primarily, and then like, yeah, walk me through it a little more. No, so uh, this assessment, figuring out where we're going to go with your style, your look, then going through your current closet, right, getting rid of all the old stuff, actually go to their house, yes, okay, get rid of all the old stuff, reorganize the closet so that it makes it works for their life, okay, so closet tear down, yep, and then we document, we do an inventory of everything in their closet, so that way when they text us or they say, hey, I'm going to Turk St, Kos, hey, great, pull this, pull this, pull this, uh-huh, and we can give it to their, um, housekeeper or whatever, here's your packing list, okay. Then we get new outfits, new clothes, right now our promise is about 5 to 10 new outfits, okay, we don't want to get the whole new wardrobe, right, but you know, enough to like, okay, I'm excited, I feel good, mhm, and then that's when we make the determination, okay, does this make sense given your lifestyle? You travel all the time on a monthly level or quarterly level? Yeah, in terms of the continuity, you mean, well, do you have turn on the continuity? Do a lot of people, so people stay and they keep paying, if it's in front of these people, not the one-time people, these people, they don't, what was the one-time thing? So it was priced at 3500, uh-huh, and you just did this but then didn't have anything else, yeah, okay, and it was, um, it could be all virtually, oh, okay, got it, or it could just be like a one-day shopping, way better to do in person, it's a different relationship, yeah, yeah, no, I like that, I'm, I'm, I'm a fan, okay. So, and then the ongoing price point is what, on the back end, uh, 2K per month, per month, or 4500, so LT, so $88,500 and then $22,000 per month, so, so we should be at, now I'm guessing that you have a lot of grandfathered people of those 40 customers that are paying less, yeah, okay. What are they paying? Um, 1,500 monthly, yep, week or per month? Month, okay, o was like, wow, okay, uh, and then, uh, some are on like 1,500 quarterly, okay, got it, got it. I'm guessing the majority of them are 1,500 quarter, yeah, okay, got it, because then it's 500 bucks a month, because this just all transitioned in September, we only have like two people currently on the new system, okay. So most people are at $1,500, so if you have, call 38 customers who are at, I'm just going to say in general, right, $500 per month, because it's 1,500 per quarter, I'm just looking at Revenue, yeah, okay, because this now makes sense with the revenue that you're doing, okay, cool. So the vast majority of the money is actually in a recurring Revenue base, MH, that's not bad, that's good, yeah, that's really good, and the turn's low, so all that stuff's good, okay. So I actually don't really want to mess with this that much because you have a low turn, what's the percentage of people go from here to here? Now that I've just said, hey, we're only working with you on a recurring basis, it's, it's good, right? Um, the thing is, I'm almost wondering if I, did you say that? Yeah, good. I'm almost wondering if we kill this and just do the quarterly, because this seems to be not most people, okay. Do you think that it's better to simplify things or just still keep it? No, I think you can have it, what happens, it serves as a price anchor, okay. So even if only 10% of people take it, it increases the people who take that one, okay. So I don't think it's actually a mistake that it's there, okay, cuz if you're like, cuz they had the reaction I did, I'm like, $6,000 a quar, I'm like, Jesus, like, or just do $1,500, like, oh no, that works, I'll do the $1,500, no, no, no, it's 2K a month or 4500 a quarter, uh, with this one, yes, okay. So you're saying at the, at the new price point, yes, it's at this, okay, but this is brand new, and here you have all the retention that you have, so I dove into her continuity because there's oftentimes a lot of opportunity here in terms of billing Cycles, in terms of pricing, in terms of Ascension process to get more people to go from front end to back end. Most of her stuff here was working, and I'm trying to be mindful of the fact that she's, she's a very small business, and she has limited resources, limited time, limited capital, and so I want to be really selective about the things that I recommend that she do, and in what order, so that we select the things that have the highest likelihood of working, that have the lowest, you know, initial cost in time and effort to make uh happen. Even though I probably saw some opportunities here that I think we could exploit later, for now I was like, this is good enough to scale, we'll deal with it later once we achieve more volume, and then we'll have more data that can make, that can inform our decisions even better, and most importantly, we'll have the resources in the cash flow to be able to enact those changes without overwhelming Ashley. Yeah, yeah, okay. But you haven't had any issue with sending people into that, into the $4,500 a quarter either. I mean, the few that we've had, no, but it's the same take rate, yeah, okay, yeah. So I'm fine with quarterly billing, okay. So if you have monthly and quarterly, that's fine, okay, I'm good with that. Yeah, so it's if it's now, um, 2K, more SL, 4500 per quarter, um, but even if like 90% opt into this versus this, oh, that's fine, totally fine, totally fine, that's great, no big deal. Yeah, all that, I mean, honestly, we'll just like, I feel comfortable with that, but I always let the market tell me, so like, I just keep edging up the price until people stop saying yes, and then I'm like, okay, that's about right, and then, and you kind of back down a little bit, and you're like, that's my price now. I know that this for these, for these types of people, that's the number that they're willing to pay, unless we change the Avatar, the marketing, or the messaging that's going to attract these people, and they're willing to pay us at that price, okay? Okay. So from a continuity perspective, I don't think we change that cuz I think we just changed it, so that stays the way it is. I think the $8,500, I know LTV is $1,000, but $8,500 for the tail down and then you have the quarterly, and so this LTV that you have here is probably going to go up, it'll just keep going up over time, right? Okay, great. So I mean, honestly, the, so the good news is the actual business is strong, okay. So you have goodish margins, uh, 42%, continuity has almost no turn, that's great, LTV to CAC strong, and so the real leverage with this business is that we just need to do more, all right. So this is, this is going to be the priorities in terms of how we're going to do this, all right. Now you stopped spending money on ads, why? Cuz we were adding the video and we were adding in the, you're fixing that stuff first and then, okay, cool. So this is what we're going to do, so video sales letter plus lead magnet, so plus the B qualification, so budget, Authority, need, timing, budget, Authority, need, timing, plus skin tone, color analysis, personalization, yeah, yeah. Okay, cool. So that's number one, so once we fix that, that's a, that's a conversion mechanism, so then what I want you to do is increase your ad spend. So currently you're spending 600, was it $300 a month? So why don't we just go to 600? How much, actually, let me ask a question, how many can you handle, like how many more leads could you handle than you currently are? More like how many more like that convert into new clients? Yeah, well, like how many calls basically, it's a call thing, so how many calls can you take to turn customers? You're currently taking 12, right, something like that? Yeah, easily could double or triple that, okay. So let's go with uh, 600 to 900 per month, cuz sometimes the lead cost might go up a little bit, that's okay, just like, so basically you might get a little bit less efficient, but that's fine, cuz you're still, you have really strong LTV to CAC, so it's not a big deal. All right, number three is we need to send the 20 emails per day to Affiliates, plus one event per quarter to keep them activated, plus four affiliate types that we went over, all right. So this is a big three, so the reason that I put it in this order is that uh, she was already working on the video sales letter, and so it didn't need like, I wasn't really going to change anything she was already doing, so I was basically like, go put this in place and just add the lead magnet, which is really just like, you know, you put a PDF together, it's an afternoon, and you change the headline on page, it's not a huge lift there. Increasing the ad spend is literally clicking a button, so the first two things required basically no effort, maybe a half day of work, maybe one day total, that could in of themselves double, triple the business, then I was like, okay, the next big lever, which is the affiliate play, is to then let's 10x the Affiliates that we have using the tried and true Channel you already are doing and just do way more of it, but that requires work and focus and effort, she has to Google the people, she has to find them, then she has to reach out, and she has to personalize those responses, and so that's going to take more time, and so I wanted to just knock out quick wins that she could just do with a click of a button in a day before getting to the kind of like the more meatier things that might take a few weeks. And then I don't want to mess with the continuity, so those are, those are the like, so if we're looking at like how much could this do, it's like, okay, here we have a 2 to 3x here, actually, I'm going to do this because Michael will ask me to do this, so we've got a 2 to 3x here that we have from this guy, yeah, I think this, if I knew what the conversion rate was on your page, so if you sold, can you go back to the, um, yeah, okay, so here, so we got eight sales this year, so it's like one, like a little bit less than one a month, right? So, so I just wish I knew how many leads were coming from Google, I just really wish I knew that number, and those eight sales were those just like phone calls and closes, so 16 calls created eight sales, kind of thing? Yeah, okay. So, and they weren't from the ads, they were from search, got it, but then they clicked on your ad, you got, I don't even know if they clicked on the ad, okay. So we're also going to do this before we put in the ad spend, so 1.5, so this is 1.5, we need to get attribution tracking, okay, because we have to know like the first step of running ads is know what happens, otherwise you're just spending money in the dark, so obviously I think you're, you're getting a return by accident rather than on purpose, okay. And so let's get the attribution tracking in place, so this is going to go, we'll use blue, this will go up here, all right. You'll fix the funnel, yeah, you get the attribution tracking in place, I think the funnel lift could very well like, this, this, this is going to sound wild, this could somewhere in the R of like 2 to 5x the lead flow you have just doing this, especially with a good lead magnet, okay. Now the next piece is that each of your Affiliates were a third of your revenue, and if we were to 10x that, then we would 10x 1/3, which would be a triple, if we did this, and so the result of a, called a 2X to 2X and a 3X would be a 12X, which would take us from 300K per year to 3.6 million. Great, we're on our way, excited? Yes, boom, thank you. Now you bet you're going to crush it. So Ashley was amazing, I'm super stoked to see how this pans out for her in the next 6 to 12 months, and you know, see how her numbers uh go, I'm very bullish on it, I think she's great. If you like this type of content of actually diving into real business owners, real stories, I personally loved making this, I prefer making this type of content, but if you guys like this title, please let me know, I'll probably end up just making more anyways cuz I really like it, but either way let me know, and then it'll make me feel better about making more of it for you.