From: alexhormozi
In any service or product-based business, understanding how to manage customer demand and goodwill is crucial for long-term success and profitability [00:00:04]. Rather than constantly seeking new demand, the goal is to cultivate and strategically utilize existing demand to ensure continuous sales without exhausting the customer base [07:22:00]. This approach contributes to building sustainable business models and increasing overall enterprise value [04:50:00].
The Pitfalls of Liquidating All Demand
Many businesses make the mistake of attempting to sell out all available demand at once, pushing for the biggest possible ask from their audience [07:17:00]. While this might lead to a large initial sale, it “liquidates” or exhausts the goodwill and pent-up demand within the audience [07:20:00].
Strategies for Maintaining Pent-Up Demand
Instead of liquidating demand, the strategy should focus on maintaining the vast majority of demand as “pent-up” [06:57:00].
- Controlled Selling: If a business knows it could sell to 20 people, it should only sell to five. If it could sell to 100, it should sell to 20 [06:52:00]. This means maintaining approximately 80% of the demand as pent-up [06:57:00].
- Growth of Demand Pool: As the business grows, the number of people in the demand pool will naturally increase [07:08:00]. This allows for an increase in the total number of slots available for future offers while still keeping a substantial portion of demand pent-up [07:11:00].
- Compounding Goodwill: It is much easier to maintain goodwill and multiply it, “skimming a tiny amount off the top” each time [07:29:00]. This contrasts with constantly needing to build up new demand from scratch after each large, exhausting sale [07:47:00].
Leveraging “Access” for Controlled Liquidation
One of the most effective ways to generate quick cash flow while maintaining goodwill is by selling “access” [05:11:00]. Access-based offerings often have almost 100% margins, particularly digital access [04:23:00].
This strategy involves selling a highly individualized, higher-touch version of a solution, often for a limited number of participants [05:22:00].
Key Elements of an Access Offer:
- Limited Capacity: Announce that only a small number of people (e.g., five) can be taken for a one-on-one or small group experience [05:30:00].
- Time-Bound Commitment: Offer this for a specific period, such as one year [05:37:00].
- Guaranteed Outcome: Guarantee a significant outcome that clients desire [05:40:00].
- “Work for Free” Guarantee: Offer to continue working with the client for free until they achieve the promised outcome if it’s not met within the initial period [05:48:00]. This motivates the business to achieve results quickly while providing strong assurance to the client [05:58:00].
- Full Prepayment: Require clients to prepay for the entire period upfront [06:09:00]. No discount is needed, as the value comes from direct access and expertise [06:14:00].
Benefits of Access Offers:
- Rapid Cash Flow: This is one of the easiest and fastest ways to generate significant cash flow (e.g., 5k, 10k, 20k, 50k) for a business [06:27:00].
- Maintains Pent-Up Demand: It allows for a “controlled burn” of goodwill, using implied urgency and scarcity with a very high-ticket premium, without exhausting the entire audience [07:55:00].
- Attracts Ideal Clients: These offers tend to attract the “best customers” who are typically less needy and more committed [08:03:00].
- Generates Testimonials: Successful outcomes from such offers lead to powerful testimonials, further enhancing the business’s credibility and customer relationships [08:08:00].
This strategy effectively uses a small portion of an existing audience to generate substantial income while preserving the majority of demand for future opportunities, ensuring sustainable growth [06:36:00].