Cash Flow Consulting Ep 217



In the Gym Secrets podcast, the host discusses strategies for increasing customer value and monetization in businesses. He emphasizes the importance of understanding upfront earnings and the lifetime value of customers, proposing a four-step cash flow quadrant: adding products, upselling services, offering prepaid or financing options, and incorporating continuity. By enhancing the sales choreography, businesses can outspend competitors and maximize growth. The host illustrates this with examples from various industries, including gyms, med spas, and healthcare, highlighting that successful monetization, not just marketing, is key to business growth.

Summary Notes

Introduction to Gym Secrets Podcast

  • The podcast focuses on strategies for acquiring more customers, increasing customer value, and retaining customers.
  • The host shares personal experiences, including failures and lessons learned in the process.

"Welcome to the Gym Secrets podcast, where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe."

The quote is an introduction to the podcast's main objectives, indicating that the content will cover strategies for business growth and customer management.

Content Creation and Community Coaching

  • Speaker A acknowledges a recent lack of content creation due to focusing on daily coaching within their community.
  • Emphasizes the importance of direct engagement with the community for creative output.

"I've been very, very bad about, been very bad about my content lately, and that is because I've been doing daily coaching with our community."

This quote explains the reason behind the speaker's reduced content production, highlighting the prioritization of community coaching over public content creation.

Cash Flow Analysis

  • Speaker A is working on a book about improving customer value within a business.
  • They discuss a unique cash flow quadrant different from Robert Kiyosaki's concept in "Rich Dad Poor Dad."
  • The focus is on the ability of a business to generate upfront cash flow and customer acquisition.

"Part of this started with the book that I'm still currently working on called building a better mousetrap. And all of that is around how you can increase how much money you make per customer that comes into your business."

The quote introduces the book Speaker A is writing, which deals with strategies to increase revenue per customer.

Business Problems and Marketing Issues

  • Speaker A argues that a business's inability to spend a certain amount on customer acquisition indicates a fundamental business problem rather than a marketing issue.
  • The problem is identified as a cash flow issue related to customer acquisition and immediate cash flow generation.

"Because fundamentally, it's my viewpoint that if a business cannot pay $100 or $200 to get someone in the door, they don't have a marketing problem, they have a business problem."

The quote emphasizes that a lack of ability to invest in customer acquisition is indicative of deeper business issues, not just poor marketing.

Four-Step Customer Value Process

  • Speaker A introduces a four-step process for evaluating and increasing the value of a customer.
  • The process applies regardless of the type of offer (free, discounted, or full value) presented to the customer.

"So what I'll do is I want to walk you through the four step process that I look at when I'm looking at a customer that's coming in the door, and that doesn't matter what they're coming in on."

This quote sets the stage for explaining the four-step process used to assess and enhance customer value, independent of the initial offer type.

Product Add-Ons to Service Packages

  • The first step involves adding a product purchase to the initial service package.
  • Speaker A suggests selling high-margin physical products related to the service offered.
  • Examples are provided for various industries, emphasizing the universality of this strategy.

"Is there something that we can add on in this sales choreography when someone comes in the door? So we can immediately add a product purchase to bolt on to an initial service package."

The quote introduces the first step of the process, which is to increase revenue per customer by adding product sales to initial service offerings.

The Importance of Upselling

  • Speaker A discusses the second quadrant, which focuses on getting customers to purchase additional services.
  • Upselling within the core offer is suggested as a method to further increase customer value.
  • The example of a gym facility is used to illustrate how upselling can work in practice.

"But if you still want to really beat and dominate everyone in the market, you go to the second quadrant, which is how can I get them to add on additional services."

This quote introduces the second quadrant of the process, highlighting the strategy of upselling as a means to outperform competitors and increase customer value.

Key Theme: Enhancing Customer Lifetime Value in the Gym Space

  • Add-ons such as accountability, nutrition, coaching, and semi-private training can increase the average lifetime value of a new customer.
  • These additional offerings allow a gym to earn more money by providing more value to the customer.

"All of those things would be add ons to the initial core offer. All of those will increase the average lifetime value and investment of the new customer that's coming in, which allows you to make more money, all right?"

This quote emphasizes the importance of add-ons in increasing the value and investment of a new gym customer, thereby boosting the gym's revenue.

Key Theme: Cross-Selling in Med Spa Settings

  • Cross-selling techniques such as the "menu close" can be used to introduce clients to additional services.
  • Services like cool sculpting, filler, microdermabrasion, and skin tightening can be offered to increase customer value.

"We have cool sculpting, we have filler, we have microdermabrasion, we have skin tightening, we have whatever, right?"

This quote lists examples of additional services that can be offered to med spa customers to enhance their value to the business.

Key Theme: Cash Flow Quadrants for Business

Quadrant 1: Product Cash Flow

  • The first quadrant focuses on the cash flow generated from the core product offering.

Quadrant 2: Add-On Services

  • The second quadrant involves offering additional services to increase revenue per customer.

Quadrant 3: Prepaid Services and Financing

  • This quadrant is for businesses with capital constraints who want to increase upfront customer spending.
  • Financing options like Care Credit can be used to finance larger purchases.
  • Offering a 10% discount for prepayment can help bring revenue upfront and reduce acquisition costs.

"And so if you're in a really established industry, you can get financing companies to do this for you. Care credit is massive in the healthcare industry."

This quote explains how established industries can utilize financing companies to encourage customers to finance their purchases, increasing upfront revenue for the business.

"You don't say paid in full, you offer someone to prepay."

This quote highlights the strategic language used to encourage customers to pay upfront, which can positively impact cash flow.

Quadrant 4: Continuity

  • The final quadrant considers how to integrate continuity into the customer acquisition process.

"So is there a way that we can also tie continuity into this acquisition process?"

This quote raises the question of how to create ongoing transactions with customers, ensuring a steady revenue stream.

Key Theme: Application of Cash Flow Quadrants to Med Spas

  • Discounted services like Botox can attract customers and cover initial acquisition costs.
  • Selling take-home products such as serums and masks can immediately increase revenue.
  • Cross-selling additional services like microdermabrasion and cool sculpting can be part of a prescribed package.
  • The concept of "downselling the upsell" can be used to create a continuity plan for customers.

"So someone comes in for a discount Botox, right? First thing there, they might not make the surgeon or the med spa center might not make a lot of money in that first transaction."

This quote illustrates how initial discounted services can serve as a gateway to introduce customers to a business and its offerings.

"Then we're going to prescribe a package that's going to be their total beauty package, which might take six months or whatever to get them to where they want to be."

This quote suggests creating a long-term plan for customers, which can lead to a more significant commitment and higher revenue over time.

"And then the continuity that we're going to tie into this is a process that I like to call downselling the upsell."

This quote introduces the strategy of offering continuity through a process that encourages ongoing purchases, potentially leading to a subscription model or repeat service plan.

Customer Acquisition and Monetization Strategy

  • Discusses the importance of charging customers more initially to cover acquisition and onboarding costs.
  • Emphasizes the benefit of converting initial customers to recurring ones at a discount.
  • Highlights the impact on customer lifetime value and regular cash flow for the business.

"And so what that is is typically you'll want to have people pay more in the beginning because it costs more to acquire a customer and it costs more to onboard a customer than it does to maintain a customer."

This quote explains the rationale behind charging customers more at the start, which is to offset the higher costs associated with acquiring and onboarding them.

"But then you can simply offer them the same thing that they've been getting, but just on a recurring basis and do it at a pretty decent discount. And most people will jump at that offer."

This quote suggests a strategy for transitioning customers to a recurring payment model by offering a discount, which is appealing to customers and beneficial for the business's cash flow.

Engagement with the Audience

  • Speaker B takes a moment to engage with the audience, encouraging connections on LinkedIn.
  • The purpose is to strengthen community ties and increase audience interaction.

"Hey, mozanation, quick break. Just to let you know that we've been starting to post on LinkedIn and want to connect with you."

This quote is an interjection from Speaker B, aiming to engage with the listeners and build a community on LinkedIn.

Sales Process and Competition

  • Outlines the importance of implementing strategies in the sales process to outspend competitors.
  • Stresses the significance of having a high cash per show to afford various acquisition channels.
  • Identifies that businesses often mistake marketing problems for monetization issues.

"So that I can outspend my competition? So that I can spend $500 per person who walks in the door, $1,000 per person who walks in the door."

This quote emphasizes the goal of being able to spend more on customer acquisition than competitors, which allows for growth and diversification of marketing channels.

"And that is what unlocks the huge amounts of growth that are available for a business owner."

This quote implies that the ability to spend more on acquisition channels is key to unlocking business growth.

Cash Flow and Business Growth

  • Discusses the importance of understanding cash flow in the first 30-60 days and the lifetime value of a customer.
  • Explains how these values determine the revenue and potential growth of a business.
  • Provides a mathematical example to illustrate how to calculate potential business earnings.

"The cash value for the first 30 to 60 days is going to be important for how you spend money to get them in the door."

This quote highlights the significance of the initial cash value from customers in determining the budget for customer acquisition.

"The lifetime value on the back end is going to be how much money you're going to be able to extrapolate and how much revenue you make per month based on your sales volume."

This quote explains that the lifetime value of a customer is crucial for understanding long-term revenue and business scalability.

Business Model and Reverse Engineering

  • Introduces the concept of reverse engineering a business model based on the cost per acquisition.
  • Suggests creating an attractive front-end offer to entice customers.
  • Describes a hypothetical scenario to demonstrate the reverse engineering process.

"So let's take a business a that can only pay $100 per show, which means they're not making a lot of money. And then option B is we've got a business that can pay $1,000 a show."

This quote sets up a comparison between two hypothetical businesses with different capabilities for customer acquisition spending.

"Let's see if we can reverse engineer $1,000 per show into a business model. So if someone comes in and let's make it an attractive front end offer, let's make it a $19 new client, special, whatever, right? Evaluation."

This quote proposes a method for working backward from a desired acquisition cost to create a business model that supports it, starting with an appealing introductory offer.

Minimum Purchase and Lifetime Value Calculation

  • The conversation begins with a discussion on establishing a minimum purchase amount to qualify for a product.
  • The minimum is set at $500, and this is the basis for not closing 100% of potential sales but rather half.
  • The lifetime value of a customer is calculated by taking into account the initial transaction and subsequent sales.
  • A formula is presented: half of the package price ($2,000) equals $1,000 in lifetime value from the first transaction.

Let's say that our minimum that we can get down is $500, because that's what we say is minimum in order to buy it. And that's why we're closing half and not 100%.

This quote establishes the minimum purchase requirement and the strategy behind closing only half of the potential sales to ensure a certain profit margin.

Increasing Customer Lifetime Value through Additional Sales

  • The strategy involves selling each customer an additional $200 product.
  • This increases the lifetime value to $1,200 per customer.
  • Further, if two out of five customers purchase an additional $1,000 worth of services, this adds $400 to the customer lifetime value, totaling $1,600.
  • The conversation emphasizes the incremental increase in value per customer through additional sales.

Now, of all those people that say yes, now let's say we sell each of those people $200 for the product.

This quote explains the process of upselling additional products to customers who have already made a purchase, thereby increasing their lifetime value.

Continuity Programs and Churn Rates

  • The discussion moves to the concept of continuity programs, where customers pay a recurring fee for ongoing services.
  • A churn rate of 10% is factored into the calculation, indicating that some customers will discontinue the service.
  • The example provided suggests that two out of every five customers might sign up for a continuity program at $200 a month, which could add another $800 to the lifetime value per customer, resulting in $2,400 per person.

And then again on the back of that, we say, hey, we know that from every of the five that we have, we can get, let's say another two to sign on to continuity at $200 a month, and we churn out at 10%, which tax another $2,000 onto two of those customers, all right?

This quote outlines the potential revenue from a continuity program and accounts for the expected customer loss through churn rate, further contributing to the customer lifetime value.

Execution and Customer Ascension

  • The key to success in the marketplace is consistent execution of the sales process.
  • The process involves a choreographed handoff between different sales and service points.
  • Selling to customers over time is essential for customer retention and revenue expansion.
  • The speaker emphasizes the importance of offering value and maintaining communication with customers.
  • The choreographed process allows for a strong back end, which enables spending more on customer acquisition.

That means every single time you have a choreographed handoff between service a or service one and sale number two. Sale number two. And sale number three. Sale number three. And sale number four.

This quote highlights the importance of a seamless transition between different stages of the sales process to ensure customer retention and maximize revenue.

Cash Flow Quadrant and Market Dominance

  • The speaker attributes the success of Gym Launch to the cash flow quadrant and the meticulous choreography of selling systems.
  • The process has enabled them to remain competitive, despite market saturation and competitors.
  • The focus is on creating value in the marketplace and serving customers effectively.
  • Entrepreneurs and business owners are encouraged to serve their customers to the highest degree and streamline operations to minimize drag.
  • The speaker suggests printing out and reflecting on the cash flow quadrant to improve sales processes and profitability.

And that process, that cash flow quadrant, is the reason that gym launch has been able to stay number one in this industry.

This quote explains how a strategic approach to managing cash flow and customer interactions has been a key factor in the success of the speaker's business.

Consultation and Business Improvement

  • The speaker offers consulting services to business owners, walking them through the process discussed.
  • The outcome of the consultation often results in doubling or tripling the revenue per customer.
  • The closing remarks emphasize the potential for increased earnings and improved customer service by following the process.

When I do my consulting days and I sell consulting hours, this is the process that I walk those business owners through. And nine times out of ten, when we can almost double or triple the amount that they make per customer, simply following that process so hope that was valuable for you.

This quote provides insight into the practical application of the strategies discussed, showcasing the tangible benefits for businesses that adopt the process.

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