From: alexhormozi
The speaker, having built four businesses that each surpassed $10 million in revenue, shares frameworks and lessons learned from past mistakes to help others achieve similar or greater success [00:00:00]. A key focus across these ventures was developing effective customer acquisition strategies [00:02:28].
Core Principles for Customer Acquisition
- Exceptional Product: The product must be exceptional, with customers truly loving it [00:02:05]. This fosters powerful word-of-mouth marketing that compounds [00:02:21]. Building an exceptional product takes time, as it took six years to assemble the pieces for one of the speaker’s offerings [00:02:10].
- Client-Financed Acquisition: This model allows customers to finance the acquisition of subsequent customers [00:02:44]. If the first sale generates more revenue than the cost to acquire and fulfill that customer, plus the cost to acquire and fulfill the next customer, capital ceases to be a constraint [00:02:51]. This enables aggressive acquisition, outspending competitors [00:03:09].
Strategies by Business
Gym Launch (Licensing Business for Gym Owners)
Gym Launch, which peaked at a 46.2 million [00:00:23], used several innovative customer acquisition methods:
- Early Outreach and Manual Follow-up:
- Hired a VA in the Philippines to scrape CrossFit’s database for emails [00:00:37].
- Uploaded emails to Facebook to create a lookalike audience [00:00:42].
- Marketed a webinar, which no one watched, resulting in 80 opt-in leads but no sales or scheduled calls [00:00:46].
- Manually looked up every email, friended them on Facebook, messaged them, and got a few to pay $500 for an in-person gym turnaround [00:00:55].
- Facebook Ads Arbitrage: Gym Launch leveraged a period of “wild west” advertising on Facebook in 2013 [00:03:48]. This allowed them to create a turnkey system to monetize Facebook ads [00:03:50]. The average gym partner earned an additional $30,000 cash in their first 30 days [00:04:03], making their return on marketing a hundred to one for the first 18 months [00:04:21]. This strong value proposition minimized the need for traditional marketing [00:04:17].
Prestige Labs (Sister Company to Gym Launch)
Prestige Labs, a supplement company, was built on an affiliate base acquired through Gym Launch [00:04:46].
- Affiliate-Driven Acquisition: The business started with $1.7 million in sales its first fully operational month by leveraging the existing Gym Launch affiliate network [00:04:50].
- Cost-Covering Product Sales: Gym owners were taught that selling supplements to their members could cover their customer acquisition costs for the core gym services [00:05:19]. This integrated strategy meant no added fulfillment burden for the gym owners, as Prestige Labs centrally managed shipping directly to consumers [00:05:35].
- Exclusive Distribution: The brand was exclusively sold by gym owners [00:05:41], with prices 30% higher on the main website to incentivize gym sales [00:05:45].
Alien.com (Scheduling Software)
Alien.com (Useallen.com) was founded to aggregate data from small businesses to predictably optimize appointment scheduling and show-up rates [00:07:24].
- Solving Throughput Problems: The software helped gym owners increase lead show-up rates from 9% (manual) to just under 20% (automated) [00:08:02], significantly cheaper than a front desk person [00:08:10]. This improvement in throughput can add 20-40% to ad performance [00:07:50].
- Leveraged Distribution through Agencies:
- Initially, customers were acquired through the existing distribution base, but expansion beyond that proved difficult [00:08:17].
- The breakthrough was shifting to selling to agencies instead of directly to small businesses [00:08:26]. Agencies already had clients (small businesses) who needed lead generation solutions [00:08:31].
- This provided another degree of leverage, as one agency could represent 50 small business owners [00:08:37].
- Two webinars with large agency audiences led to acquiring a thousand customers with just two pitches [00:08:43], quickly scaling the business to $1.7 million per month [00:08:51].
- Aligned Incentives: The business model had aligned incentives: small business owners wanted people to show up, agency owners wanted people to show up, and Alien.com got paid based on show-ups [00:09:52].
- Availability for Appointments: Maximizing the days and hours open for sales calls or in-person appointments, along with flexible time increments, can increase throughput by 50-200% [00:10:08]. Businesses with higher availability predictably secure more schedules and show-ups [00:10:30].
Acquisition.com (Investment Firm)
Acquisition.com is the speaker’s fourth business, currently overseeing a portfolio doing over $200 million annually [00:10:44].
- Personal Brand and Inbound Content: This business was built on a personal brand and inbound content [00:11:22], a significant shift from previous transactional models [00:11:25].
- Strategic Investing: The firm seeks to partner with businesses looking to scale beyond $50-100 million [00:13:37].
- Top-Down Hiring for Talent Acquisition: A key to Acquisition.com’s rapid growth was hiring top-tier talent from the outset [00:12:13]. Unlike previous ventures where hiring was bottom-up [00:12:29], this firm prioritized bringing in experienced directors in sales, marketing, people, IT, and portfolio operations [00:12:20]. This strategy is capital-intensive but allows for faster progress by avoiding “ignorance debt” [00:13:47].
- Recruiting Talent as a Core Competency: Acquisition.com has made recruiting talent its single core competency [00:13:01]. They leverage their inbound flow, prestige as a private equity firm, and in-house training to attract and onboard talent more effectively than most companies [00:13:10]. This ability to infuse expertise into portfolio companies is a major value proposition for growth.