Scaling a personal styling business

From: alexhormozi

Ashley Caps, founder of AC Styles, operates a professional wardrobe and personal styling service aimed at transforming clients’ confidence and saving them time [00:00:25]. Alex Hormozi, owner of Acquisition.com, assists Ashley in her goal to scale her business to $2 million in revenue and beyond [00:00:16].

About AC Styles

AC Styles has been in business for about four years, serving over 1,000 clients [00:00:43].

Financial Overview

• Annual Revenue: Approximately $309,000 [00:00:35].
• Annual Profit: $130,000 [00:00:39].
• Net Margins: 42% [00:00:40]. This is considered healthy, though potentially a bit low for a solo-preneur business initially [00:01:11].
• Customer Lifetime Value (LTV): $10,000 annually [00:07:00].
• Blended Customer Acquisition Cost (CAC): $600 [00:06:59].
• LTV to CAC Ratio: 16:1 [00:07:03]. Alex considers this “really strong” [00:09:02], indicating a very healthy business model [00:07:14].

Clientele

AC Styles primarily serves luxury clientele, typically men and women in their 40s to mid-60s [00:01:20]. These clients include stay-at-home moms, frequent flyers, and individuals advancing in their careers to C-Suite positions [00:01:24]. They highly value their time and expert advice [00:01:30]. Ashley explicitly targets high-income earners with a minimum income requirement of $1millionperyearforhercurrentmodel<aclass="yt-timestamp"data-t="00:09:51">[00:09:51]</a>,requiringabouta$40,000-50,000 annual spend including clothes [00:10:05].

Triggers for Clients

Clients typically seek AC Styles during “transition moments” in their lives, such as:

• Post-pregnancy body changes [00:10:54]
• Divorce [00:10:58]
• Beginning a new dating phase [00:11:01]
• Advancing in their career, where their image needs to match their new status (e.g., C-level, VP) [00:11:03]

Services and Pricing

AC Styles offers a two-phase approach:

1. Onboarding Phase (Phase One): This involves a style assessment to establish a baseline and show clients their potential [00:01:43]. Services include gutting and reorganizing closets, and providing 5-10 new outfits [00:02:01]. This initial package is priced at $8,500 over 60 days [00:03:26].
2. Ongoing Styling Sessions (Phase Two): Based on lifestyle, clients can opt for monthly or quarterly engagements [00:02:07]. These include lookbooks and an on-demand “SOS” texting service [00:02:16]. The ongoing pricing is $2,000permonthor$4,500 per quarter [00:03:31]. Historically, a lower-priced one-time virtual option was offered at $3,500 [00:45:53]. A small portion (10%) of revenue also comes from commissions on clothes purchased through vendors [00:03:36].

Ashley previously offered two tiers but now focuses exclusively on the luxury tier due to higher profitability [00:03:48]. The business aims for recurring or reoccurring revenue, with the quality of service dictated by the percentage of customers who repurchase [00:03:02]. AC Styles has very low churn, with only one client out of 40 leaving in the past year (2.5% annually) [00:07:13].

Current Marketing and Lead Generation

Ashley currently utilizes several channels to acquire clients:

• AdWords: Spending about $300permonth<aclass="yt-timestamp"data-t="00:03:59">[00:03:59]</a>($3,400 annually for 2024 projections) [00:07:37], with a cost per click of $1.89 and 1,800 total clicks [00:07:41].
• Thumbtack: Spending about $300permonth<aclass="yt-timestamp"data-t="00:04:03">[00:04:03]</a>($6,000 total spend for 58 leads) [00:09:13]. Leads cost $38 each [00:09:17]. However, 90-95% of Thumbtack leads are unqualified in terms of purchasing power [00:09:25].
• Affiliates: Partnerships with other luxury service providers, such as matchmakers and social clubs [00:04:05]. These account for roughly one-third of clients [00:04:19]. Currently, Ashley has six such affiliates [00:12:01].
• Events: Hosting events [00:04:10].
• Client Referrals: A significant source of new business [00:04:11], accounting for approximately one-third of clients [00:04:24].

Current lead generation statistics:

• Total Leads: Approximately 12 per month [00:05:02].
• Appointments Booked: 8 per month [00:05:05].
• Show-up Rate: 100% [00:05:06].
• Total Sales: 4 per month [00:05:09].
• Close Rate: 50% [00:05:10].

Challenges and Goals

Ashley’s primary challenge is a lack of lead flow [00:06:17] and consistency in content creation [00:06:24]. Her current goal is to reach $5 million in revenue by scaling her current model into other major metropolitan areas [00:06:03]. This includes building an education component to train stylists in these new metros in the long term [00:05:52].

Proposed Solutions for Scaling

Alex identifies that AC Styles’ core economics are healthy, with good pricing, gross margins, and customer retention/referrals [00:06:31]. The main issue is low volume, which can be addressed by increasing lead generation through advertising [00:06:44].

Alex’s proposed strategy focuses on four key areas:

1. Avatar Clarity (refining target audience) [00:15:27]
2. Optimizing Paid Ads Funnel (conversion mechanisms) [00:15:38]
3. Leveraging Affiliates (expanding partnerships) [00:15:52]
4. Continuity (customer retention and LTV) [00:15:58]

1. Avatar Clarity

While Ashley serves both men and women CEOs and “mom socialites” [00:17:01], Alex encourages identifying a dream customer for more compelling value propositions [00:16:28]. Ashley enjoys working with both segments, and given the data, Alex advises sticking with both for now [00:17:55].

2. Optimizing Paid Ads Funnel

The current ad funnel, which sends clicks directly to an application form without showing prices or offering immediate value, is identified as a major conversion issue [00:08:05]. Alex suggests:

• Lead Magnet: Implement a valuable, risk-free, easy, and fast lead magnet to capture prospects not immediately ready to buy [00:19:07]. Examples include:
  • A complimentary style assessment [00:19:24].
  • “Your Ideal Colors” or “Perfect Outfit for You” based on complexion, figure, and lifestyle [00:19:57].
  • “How to best use your existing closet” [00:28:23].
• Qualification: Integrate qualification questions (Budget, Authority, Need, Timing - BANT) into the opt-in process to filter out unqualified leads [00:26:26]. This ensures valuable lead magnets are only given to qualified customers [00:27:18].
• Video Sales Letter (VSL): Add a video to the landing page to pre-sell prospects before a call [00:25:19]. A second video could be sent between booking and showing up to further prime the lead [00:25:23].
• Attribution Tracking: Implement tracking to accurately determine where customers are coming from [00:54:28].
• Increase Ad Spend: Once the funnel is optimized and tracking is in place, significantly increase Google Ad spend from $300to$600-$900 per month [00:51:27]. The current 16:1 LTV:CAC ratio indicates strong profitability, making increased spend a low-risk, high-reward strategy [00:33:57].

3. Leveraging Affiliates

Ashley’s affiliate program is highly efficient, generating a third of her revenue from only six partners [00:13:03]. Alex views this as a “single point of leverage” that can dramatically increase income [00:37:24].

• Expand Outreach: Systematize the manual email outreach to find more affiliates [00:36:32]. Given Ashley’s 15% conversion rate on cold outreach (6 closed from 40 emails) [00:38:06], sending 400 emails could lead to 60 affiliates, potentially tripling the business [00:39:10].
• Identify New Affiliate Types: Target other aligned professionals beyond matchmakers and social clubs, such as:
  • High-end fitness trainers/physical therapists (for clients undergoing body transformation) [00:40:16]
  • Executive coaches [00:40:31]
  • Divorce attorneys (for clients seeking image updates post-divorce) [00:40:47]
• Activation: Continue hosting regular events (e.g., quarterly) to keep affiliates engaged and referring clients [00:43:10].

4. Continuity (Retention)

AC Styles already has strong client retention with a very low churn rate [00:47:11]. Alex advises against significant changes to the continuity model at this stage, as it is already effective [00:48:50]. The transition to higher-priced monthly/quarterly continuity (from $1,500/quarterto$2,000/month or $4,500/quarter) is new but shows promise with similar take rates [00:48:07]. Keeping a higher-priced monthly option alongside a quarterly option can serve as a price anchor [00:47:44].

Overall Strategy and Projected Growth

Alex’s recommended order of operations prioritizes quick, low-effort wins first:

1. Fix the Paid Ads Funnel: Implement the video sales letter, lead magnet, and BANT qualification [00:50:42].
2. Attribution Tracking: Ensure proper tracking is in place to measure performance [00:54:28].
3. Increase Ad Spend: Double or triple monthly ad spend [00:51:22].
4. Affiliate Outreach: Systematically send 20 emails per day to potential affiliates, focusing on new categories, and host quarterly events to keep them activated [00:52:06].

Alex projects that these changes could lead to significant growth:

• Funnel Optimization: Could 2-5x the current lead flow from paid ads [00:55:03].
• Affiliate Expansion: Scaling affiliates from 6 to 60 could triple the business [00:55:13].

Together, these changes could result in a 12x increase in revenue, taking AC Styles from $300,000to$3.6 million annually [00:55:28]. The principle of the “Chinese rule of three and ten” suggests that systems tend to break when they triple, so setting realistic goals to triple before aiming for 5x is strategic [00:14:37].