$100M Offers Ecommerce Edition Ep 420

Summary Notes


In a discussion on the application of his book "100 Million Dollar Offers" to e-commerce, the host, Alex Hormozi, refutes the claim that the book's principles don't apply to the sector. He emphasizes the importance of understanding variables that drive consumer value and purchasing decisions, such as dream outcomes, perceived likelihood of achieving those outcomes, time delay, and effort and sacrifice. By examining Amazon's success, Hormozi illustrates how e-commerce businesses can enhance value through scarcity, urgency, guarantees, bonuses, and strategic product naming. He encourages e-commerce professionals to apply these concepts to increase desirability, expedite delivery, and simplify the purchasing process, thereby boosting sales and allowing for higher pricing.

Summary Notes

Amazon's Influence on Consumer Expectations

  • Amazon has set a high standard for shipping speed.
  • Consumers have come to value and expect rapid delivery.
  • The quicker the delivery, the more likely consumers are to make repeat purchases on the platform.

"Amazon has been the pioneer of prime of two day shipping, one day shipping, 1 hour shipping." "And they continue to try and drive this down because they know that the faster they can get people to things that you want, the more that they will value it and like it and repeat buying on the platform."

These quotes highlight Amazon's role in shaping consumer expectations around shipping times. The faster delivery offered by Amazon increases the perceived value of their service, leading to customer satisfaction and repeat purchases.

Building Businesses Worth Owning

  • The goal is to sell more products to more people in various ways.
  • The speaker is documenting their journey to build a billion-dollar business.
  • There is a desire for transparency in the entrepreneurial journey, similar to what is wished from renowned entrepreneurs like Bezos, Musk, and Buffett.

"Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with acquisition.com. I always wish bezos, Musk and Buffett had documented did their journey. So I'm doing it for the rest of us."

The quote outlines the podcast's mission to explore effective business strategies and the speaker's personal goal of building a significant business. It also expresses a desire for transparency in the business-building process, something they feel is lacking from famous entrepreneurs' stories.

The Value Equation in Ecommerce

  • The speaker refutes the claim that their book, "100 Million Dollar Offers," doesn't apply to ecommerce.
  • The book discusses variables that influence purchasing decisions and how they relate to value perception.
  • Understanding these variables can help businesses set prices that lead to profits.

"I disagree. And that is why I'm making this to break down why the value equation and the things inside of the 100 million dollar offers book, which pretty much this visual right here encapsulates or summarizes the vast majority of the pieces in the book."

The quote expresses the speaker's disagreement with the notion that their book doesn't apply to ecommerce. They assert the importance of understanding the value equation to drive purchasing decisions, which is a central theme of the book.

Fundamentals of Consumer Purchasing Decisions

  • Consumers purchase items based on perceived value.
  • The likelihood of achieving a desired outcome influences buying decisions.
  • Reducing the time delay between purchase and fulfillment increases perceived value.
  • Minimizing effort and sacrifice required from the consumer after purchase is crucial.

"And so in the book, I do give a lot of service based examples, both to B. Two B and B to C. But I wanted to take this to do something a little bit different and talk about how it applies to ecommerce, all right? Because at the end of the day, right, people buy stuff because they value them."

The speaker acknowledges that while the book provides service-based examples, the underlying principles about why people make purchases based on value apply to ecommerce as well. They emphasize that regardless of the industry, the fundamentals of consumer purchasing decisions remain the same.

Application of Value-Driven Strategies to Ecommerce

  • The speaker aims to demonstrate how the book's concepts apply to ecommerce.
  • Strategies like scarcity, urgency, guarantees, bonuses, and naming are discussed in the book.
  • These strategies can be tailored to the ecommerce context to influence consumer behavior.

"And so what I want to do is just apply these. And the easiest way to look at this and prove out the"

This incomplete quote suggests that the speaker intends to apply the principles discussed in the book to the ecommerce sector. They mention specific strategies that can be adapted to influence purchasing decisions in the ecommerce context.

Ecommerce Giants as a Model for Value

  • Analyzing ecommerce giants like Amazon reveals key variables that drive value in product offerings.
  • Ecommerce businesses can adopt Amazon's approach to improve their own value proposition.
  • It's important to consider the long-term perspective as Amazon took 30 years to perfect its model.

Specifically, let's just look at Amazon. And over time, they have really nailed down hitting each and every single one of these variables that drive value.

This quote emphasizes the importance of studying Amazon's strategy to understand the variables that create value in ecommerce.

Dream Outcome for Customers

  • Customers have different dream outcomes when purchasing a product, such as a jacket that is both fashionable and warm.
  • The dream outcome of a product should guide the messaging and marketing strategy.
  • Understanding the customer's desired outcome allows for tailored solutions that increase the perceived likelihood of achieving that outcome.

My dream outcome might be that I look good in this jacket. That could be an outcome. It could be that it's very warm. Ideally, maybe it's both of those things, right.

Alex Hormozi uses the example of a jacket to illustrate how customers have specific outcomes they wish to achieve with a product.

Increasing Perceived Likelihood of Achievement

  • Reviews can increase a customer's confidence in achieving their desired outcome, as seen with other happy customers.
  • Demonstrations, such as videos showing different ways to wear a product, can enhance the perceived likelihood of achieving the desired outcome.
  • The approach to increasing the perceived likelihood of achievement varies between services and physical products.

What else can we do? And I actually saw this. Levi's did this for selling a gene jack, which is why I'm giving the example, because it was so masterful in how they did it with.

Alex Hormozi cites Levi's marketing strategy as an example of how showing customers different ways to use a product can increase their perceived likelihood of achieving their desired outcome.

Demonstrating the Product to Reduce Risk

  • Demonstrations, like unboxing videos, help to set clear expectations and reduce the perceived risk associated with making a purchase.
  • By demystifying the post-purchase experience, customers are more likely to be satisfied as the product meets their expectations.

And to literally demonstrate this is probably what you're thinking. And here's how it works. That's why unboxing videos and things like that work, because it decreases the risk associated with making the purchase because they're like, oh, that's what's going to happen.

Alex Hormozi explains that demonstrations such as unboxing videos help customers understand exactly what they will receive, thereby reducing uncertainty and perceived risk.

Time Delight

  • Amazon has pioneered fast shipping options like two-day, one-day, and one-hour deliveries.
  • The quicker delivery increases customer satisfaction and encourages repeat purchases on the platform.
  • This concept applies to e-commerce, where reducing delivery time can add real value to the customer experience.
  • The time delight principle can be applied to both the purchasing and product usage experiences, such as reducing the time to receive and start using custom-tailored items.

"Amazon has been the pioneer of prime of two-day shipping, one-day shipping, 1-hour shipping." "And they continue to try and drive this down because they know that the faster they can get people to things they want, the more that they will value it and like it and repeat buying on the platform."

The quotes emphasize Amazon's strategy of reducing shipping times to enhance customer value perception and promote repeat purchases, highlighting the importance of speed in the e-commerce customer experience.

E-commerce Application

  • The time delight principle is not only relevant to the purchasing process but also to the overall customer experience with the product.
  • For example, a jacket may not have a significant time delay in usage, but for custom-tailored products, faster delivery can be a significant value add.
  • The entire customer journey, from purchasing to unboxing and using the product, should be optimized for speed to help customers achieve their desired outcomes faster.

"There's the actual purchasing experience, but then there's also the experience of using the products." "So there's the purchasing process, and then there's also the wearing it process and unboxing it and actually having them experience, again, the dream outcome."

These quotes highlight that time delight applies to various stages of the customer journey, not just the purchase itself but also the post-purchase experience, which includes receiving, unboxing, and using the product.

LinkedIn Engagement

  • Alex Hormozi and his team are starting to post on LinkedIn and are looking to connect with their audience.
  • They encourage listeners to send connection requests and notes mentioning they listen to the show for acceptance.
  • They also suggest tagging others in their posts for further engagement and community building.

"Been starting to post on LinkedIn and want to connect with you." "There's anyone you think that we should be connected with, tag them in one of my or Layla's posts and I will give you all the love in the world."

These quotes are calls to action, inviting listeners to engage with Alex Hormozi and his team on LinkedIn, fostering a sense of community and interaction beyond the podcast.

Evidence, Sacrifice, and Purchasing Decision

  • Amazon's one-click purchase feature exemplifies the reduction of effort and sacrifice in the purchasing decision.
  • E-commerce platforms like Bolt and Shop Pay have followed suit, simplifying the purchasing process and increasing sales.
  • Making purchasing decisions easier and faster enhances the perceived value of products and increases the likelihood of purchase.

"Amazon has one-click purchases with everything on file saved so you can make a purchasing decision in a split second." "And so that's why the rise of products like Bolt and shop pay are all things that have decreased the effort and sacrifice."

These quotes underscore the significance of simplifying the purchasing process to reduce customer effort and sacrifice, thereby increasing the perceived value and likelihood of making a purchase.

Scarcity and Conversions

  • Amazon displays stock levels to indicate scarcity, which varies by item size and drives conversions.
  • Scarcity is a powerful tool for e-commerce, as it creates a sense of urgency and compels customers to buy before items run out.

"What do they have under virtually every single item? How many they have left in stock is their way of showing scarcity." "So that they can show scarcity at every single level. What does that do? It drives conversions."

The quotes explain how Amazon uses scarcity by showing stock levels to motivate customers to make a purchase, leveraging the fear of missing out to drive conversions.

Urgency and Limited Offers

  • Amazon uses lightning deals to create urgency, offering limited-time discounts to encourage immediate purchases.
  • Limited edition product drops with a set quantity and a first-come, first-serve basis also add scarcity and urgency.
  • Urgency can be further intensified by setting narrow time windows for purchasing opportunities.

"What else does Amazon do? They have lightning deals, right?" "But a lightning deal, for example, where they said we're only giving this price for 60 minutes, that is absolutely urgency."

These quotes discuss Amazon's use of lightning deals and limited-time offers to create urgency, incentivizing customers to act quickly to take advantage of the deals before they expire.

Guarantees and Risk Reduction

  • Amazon enhances customer satisfaction with easy returns and money-back guarantees.
  • The "try before you buy" model, which includes a seven-day layaway, allows customers to try products without immediate billing, reducing the perceived risk of purchase.
  • Such guarantees are forms of risk reduction that can increase customer confidence and encourage purchases.

"Not only did they already have a money back guarantee, right. Because it's satisfaction. You don't have to do anything, you just send it back." "What they did now is try before you buy, right. So they have seven day layaway so you can buy the thing and they charge you seven days later."

These quotes illustrate how Amazon's guarantees and return policies lower the barrier to purchase by reducing the risk associated with buying products online, thereby enhancing the value proposition for customers.

Decreasing Purchase Risk

  • Alex Hormozi explains the importance of reducing the risk associated with purchasing a product.
  • Decreasing risk inversely increases the likelihood of a positive experience.
  • The concept of "try before you buy" is discussed as a strategy to assure customers of the product's value.

"Because what we're doing is we're decreasing the risk of someone purchasing. That's what we're doing here. We're decreasing the likelihood that they have a poor experience, which as an inverse increases the likelihood that they do have a positive experience if they choose to purchase."

This quote highlights the strategy of reducing the risk of a negative experience to make a purchase more appealing, suggesting that a direct relationship exists between risk mitigation and positive customer experiences.

The Role of Guarantees and Bonuses

  • Guarantees, such as money-back offers, are now standard for physical products.
  • Additional guarantees, like "try before you buy" and bonuses (e.g., training videos, usage tips), can enhance the perceived value of a product.
  • These strategies aim to increase the value and the likelihood of a purchase.

"So they technically have two guarantees. They have one, which is the money back guarantee, which has now become almost table stakes for physical products. But on top of that, they added in a try before you buy now bonuses."

This quote explains how companies are using multiple guarantees to reassure customers, with the "try before you buy" model serving as an additional incentive beyond the standard money-back guarantee.

Product Naming and Desired Outcomes

  • Product names should reflect the desired outcomes of the target customer.
  • Naming products with words that resonate with the customer's goals can increase the likelihood of a purchase.
  • It's crucial to be explicit about the product's intended purpose and benefits.

"If I said my dream outcome was that I wanted a warm jacket, then probably having warm or hot or fire or flames or oven right in the name might be something that would increase my likelihood that I'm thinking this is going to be something that will help me experience my dream outcome, right?"

This quote emphasizes the importance of product naming in relation to the customer's aspirations. It suggests that incorporating words that align with the desired outcome can positively influence the customer's perception and purchase intent.

Understanding Customer Avatars and Needs

  • Different customer avatars may be attracted to different aspects of a product.
  • It is essential to identify the "job to be done" for the customer.
  • Explicitly stating the dream outcome in the product's name or description can guide the customer's expectations.

"So we have to be explicit in what we are doing. And I'll also bet you that you'll have different avatars that we'll be attracted to different things, or maybe you same avatar, but they're solving different needs."

Alex Hormozi stresses the need to be clear about what the product is meant to do and recognizes that different customer profiles or the same profile with varying needs will respond to different features or benefits.

Applying the $100 Million Offer Framework

  • The framework aims to make products more viable and desirable in the e-commerce space.
  • It involves ensuring that products have a high perceived likelihood of achieving the desired outcome.
  • The framework includes demonstrating product use, providing guarantees, creating urgency, and addressing various customer problems.

"To apply the 100 million dollar offer framework to make your stuff more viable so that people increase in higher amounts at higher percentages. And they do so willing to pay higher prices because you have checked all these boxes off and the competitors that you have might even have the same products as you, but they haven't increased the perceived like it of achievement."

Alex Hormozi discusses the application of a specific framework designed to enhance product appeal and marketability, which includes a comprehensive approach to increasing perceived value and customer satisfaction.

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