Ethics on HighTicket Offers, Marketing Promises, & More... (with Ryan Daniel Moran) Pt.1 July '21 Ep 457

In a dynamic conversation, Alex Hormozi and Ryan Daniel Moran from Capitalism.com dissect the nuances of high-ticket offers, emphasizing the importance of investment correlating to customer success. Hormozi, known for his e-commerce expertise and transformative business strategies, shares insights into enhancing product value through strategic packaging and customer-centric fulfillment. They discuss the ethical considerations of premium pricing, asserting that higher investment leads to greater client commitment and results, creating a virtuous cycle of success. Moran highlights the importance of product conviction and customer focus in marketing, while Hormozi stresses the significance of delivering tangible client outcomes. Additionally, Hormozi provides practical advice for e-commerce entrepreneurs on Amazon, advocating for value addition beyond the core product to differentiate and elevate offerings.

• Alex Hormozi introduces the podcast with Ryan Daniel Moran, discussing marketing promises and high-ticket offers.
• The podcast is beneficial for e-commerce and physical product sellers, but also contains valuable insights for a broader audience.
• The cycle of investment and results in business is explained, emphasizing the importance of reinvestment in client fulfillment.
• The podcast aims to cover customer acquisition, maximizing customer value, retention, and lessons from failures.

Welcome to the game 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 we have learned along the way.

The quote encapsulates the podcast's focus on customer-centric strategies for business growth and learning from past experiences.

• Ryan Daniel Moran expresses his excitement for the conversation with Alex Hormozi.
• Ryan humorously refers to Alex's seemingly effortless success, including his physical fitness, YouTube growth, and book sales.
• Ryan uses hyperbole to describe Alex's influence and achievements.

Dude, you're blowing up for anybody who doesn't know Alex. The thing that is amazing to me about him is he and God have a contract where God is like, look, Alex, whatever you want, just don't hurt me.

The quote humorously exaggerates Alex's success, indicating his significant accomplishments and the admiration Ryan has for him.

• Alex Hormozi emphasizes the importance of creating a quality product, aligning with the message of his book.
• The approach to business involves enhancing the value provided to the end user, possibly through repackaging the value.
• Value enhancement can be achieved through making things faster, easier, or with less sacrifice, as well as changing the customer's perception of the value.

So if I'm looking at a business, the first thing that we'll usually do is look at what is the value that you are providing?

The quote underscores the fundamental approach Alex takes when assessing a business, focusing on the value provided to customers.

• Alex Hormozi explains that perceived value can sometimes be more important than the actual product.
• He uses the example of choosing between two surgeons to illustrate how perception affects value.
• The concept of perceived likelihood of achievement is introduced as a factor that creates value.

Perceived likelihood of achievement is one of the things that creates value in a product.

The quote highlights the idea that customers' perceptions of the potential success or effectiveness of a product can significantly impact its value.

• Ryan shares a metaphor from an old mentor about the magician who effortlessly completes a task versus the mule who works hard but is less valued.
• The metaphor reflects on the customer's desire for results rather than the effort behind them.
• Ryan acknowledges a shift in his own mindset after reading Alex's book, from marketer-centric to customer-centric.

The magician goes, field is plowed, and we overemphasize the effort or the time going into it sometimes when we're the provider, but in the user's eyes, they just want the field plowed.

The quote conveys the idea that customers value the outcome (the plowed field) more than the effort it took to achieve it, emphasizing the importance of focusing on customer satisfaction.

• Alex advocates for marketing the actual product rather than just the promise of what it can do.
• He speaks about tracking client success and using it as a key performance indicator (KPI) to drive business decisions.
• The relationship between making money for clients and the business's own financial success is highlighted.

The more money we make our customers, the more everything else happens.

The quote reflects the principle that the business's success is tied to the financial success it brings to its clients.

• Alex Hormozi talks about the importance of discerning priorities in a world full of information.
• He emphasizes the limited resources of attention for both entrepreneurs and their teams.
• The focus should be on moving a few significant initiatives forward rather than many small ones.

We have such limited resources, like as entrepreneurs, such limited resources, capital, and the biggest one just being attention.

The quote stresses the scarcity of resources, especially attention, and the need for strategic prioritization in entrepreneurial efforts.

• Focusing on a singular goal is crucial for success; attempting to advance multiple projects at once often results in none being completed well.
• Developing software companies can teach valuable lessons about the importance of focus and execution.
• Success in business often comes from doing one thing exceptionally well, which can lead to other positive outcomes.
• A well-chosen focus can result in increased word of mouth for a business, which is essential for growth.

"You can't pick the rock, then you move zero rocks forward. Right. People are like, move nine things forward. It's like, yeah, but you didn't actually get any of them done correctly."

The quote emphasizes the importance of focusing on one task at a time to ensure it is completed effectively, rather than trying to progress multiple tasks simultaneously and failing to complete any properly.

"I think picking that is one of the hardest things. But if you pick well, then a lot of other things kind of take care of themselves."

Choosing the right focus is challenging, but a good choice can lead to a cascade of positive effects that benefit the business overall.

• Word of mouth is a powerful marketing tool that can work for or against a business.
• Marketers often worry about refunds, but a focus on customer satisfaction can lead to reduced refunds and increased word of mouth.
• Providing exceptional value to customers encourages them to share their experiences, which can be more effective than traditional marketing efforts.

"The reason a lot of people cap out is because they have zero word of mouth. If anything, they have negative word of mouth. Like, literally, word of mouth works against them."

This quote highlights the problem of businesses failing to grow due to a lack of positive word of mouth, which is often more influential than traditional marketing.

"Or if you're just really good to your customers, you get a ton of word of mouth and no one refunds anyway."

Treating customers well leads to positive word of mouth, which can reduce the incidence of refunds and enhance the business's reputation.

• Onboarding and activating customers effectively is key to business success.
• Understanding the leading indicators of a successful customer can help businesses reverse engineer and optimize the customer experience.
• Focusing on customer success can drive up lifetime gross profit per customer, making even suboptimal marketing profitable.

"How can we onboard customers the right way? How can we activate them? What are the leading indicators we know that are going to create a successful customer?"

The quote discusses the importance of proper customer onboarding and activation, as well as identifying key success indicators to enhance the customer experience.

"We can drive up our lifetime gross profit per customer so far beyond what anyone else in our space can do."

By focusing on customer success and satisfaction, a business can significantly increase the lifetime value of each customer, outperforming competitors.

• Providing high value to customers can justify high ticket prices.
• Ethical pricing is about delivering results that are worth more than the cost of the service or product.
• Transparency and results-driven services can lead to customers willingly paying high prices for significant value.

"Alex's average client, when they sign up with Alex, his customer makes, on average, $36,000 per year. Alex, what is your least expensive product cost? ... $20,000 is his low end."

This quote reveals the average income of Alex's clients and the cost of his lowest-priced product, demonstrating the high value his services must provide to justify the price.

"That's why they do it, too. And so, for perspective, as much as Ryan talks about the numbers, and a lot of people have talked about our numbers out of context and explained our success without actually being in any way associated with our company."

Alex explains that his clients are willing to pay a high price because they receive value that exceeds the cost, and this value is often misunderstood or taken out of context by outsiders.

• Effective marketing and business strategies are based on delivering value and reducing friction for the customer.
• By focusing on the customer's success and removing barriers, businesses can create a voluntary and enthusiastic customer base.
• Unique approaches to market entry can disrupt existing industries and attract imitation from competitors.

"The entire structure of how Alex thinks is how do we remove all of the barriers for the client, for the customer to get the results that they want?"

Ryan highlights Alex's business philosophy of removing obstacles for customers to ensure their success, which in turn benefits the business.

"And you just came in, totally owned the marketplace, and then a bunch of people copied you."

Alex's innovative approach to the market allowed him to dominate and set a new standard, which led to others trying to replicate his success.

• Specializing in a niche allows for the creation of superior solutions tailored to specific customer needs.
• Niche expertise enables a business to command higher prices due to the specialized value provided.
• Demonstrating consistent results across numerous clients solidifies the reliability and efficacy of the business's offerings.

"We purposely niche down because we understand niche pricing and we know that we can provide a better solution than anyone else can for a specific avatar."

Alex explains the strategic decision to focus on a niche market, which allows for better solutions and justified niche pricing due to their expertise.

"So it's like if you are this specific type of person, you run this specific type of facility and you have this specific problem, we can solve it and we've done it 4000 times."

The quote emphasizes the confidence and track record in solving problems for a specific target demographic, reinforcing the value proposition of niche specialization.

• Alex Hormozi emphasizes the importance of ethics and morality in business.
• He argues that failing to deliver value to customers leads to self-sabotage within a business.
• Conviction in one's product is essential to sell effectively and ethically.
• True conviction comes from putting in maximum effort to improve the product.

"If you don't actually deliver to the vast majority of the customers that you have, you will self sabotage, you will stop selling, you will give yourself reasons, or your sales team will give you reasons, or your customer support team will give you reasons as to why we shouldn't continue this business."

The quote highlights the consequence of not delivering value to customers, which is self-sabotage within the business. It underscores the need for ethical practices and genuine belief in the product being sold.

• Alex Hormozi discusses the ethics of charging high prices for products or services.
• He believes that charging more can be the most loving thing for customers, as it increases their investment and perceived value.
• High-ticket pricing can lead to better customer results and a virtuous cycle of investment and success.

"Charging a lot of money is the most loving thing that you can do for your customer or client."

This quote suggests that high prices can be ethical if they lead to greater customer investment and success. Hormozi argues that higher investment from the customer can lead to better results and a positive feedback loop.

• Hormozi explains the relationship between price and perceived value.
• He provides an example of a blind taste test with wines to illustrate that higher prices can lead to higher perceived quality.
• The concept applies strongly to educational and training products, where higher prices can enhance commitment and results.

"Price provides value to a prospect... And so in a very real way, price provides value to a prospect."

The quote explains that price can influence how customers perceive the value of a product, with higher prices often leading to a perception of higher quality.

• Hormozi introduces the concept of the virtuous cycle of price.
• High prices lead to greater customer investment, which in turn leads to better results and more conviction from the sales team.
• This cycle creates more profit for reinvestment and improves the business owner's conviction and sense of impact.

"The more someone pays, the more invested they are, the better the results they get."

This quote encapsulates the virtuous cycle of price, explaining how higher investment from customers leads to better outcomes and, consequently, a stronger business.

• Hormozi contrasts the virtuous cycle with the vicious cycle of low pricing.
• Low prices can lead to less investment, attracting lower-quality customers and reducing the conviction of the sales team.
• This results in less profit and a diminished ability to improve the product.

"If you cut your prices, all of a sudden you have less money for fulfillment. People are less emotionally invested."

The quote warns against the negative consequences of low pricing, including reduced customer investment and a decline in business performance.

• Ryan Daniel Moran reflects on the importance of conviction and certainty in selling.
• He notes that entrepreneurs often seek systems for making money instead of focusing on selling what they are certain about.
• Hormozi agrees that conviction in the product leads to better sales and business growth.

"When you have conviction, you can look at Donald Trump, you can say words that don't make sense, and people will buy into the conviction that you have for the outcome that you want to create."

The quote highlights the power of conviction in persuading customers, even when the message itself may not be clear or logical.

• Hormozi identifies key business levers that have consistently led to more money: hiring more salespeople, increasing advertising spend, and raising prices.
• These decisions are based on foundational business practices that ensure growth when these levers are pulled.

"Hiring more salespeople in general makes me more money. Spending more dollars on advertising as a whole. When I spend more money on advertising, we make more money."

This quote provides insight into successful business strategies that Hormozi has employed, emphasizing the importance of investing in sales and advertising.

• Hormozi addresses the application of his mindset and methodology to physical products, particularly for Amazon sellers.
• He introduces the concept of the delivery cube, a method for adding value to physical products without incurring costs.
• The goal is to differentiate products and add premiums that appeal to customers.

"There's ways that you can peel apart your product and it's a cube because there's six sides to it."

The quote introduces the delivery cube concept, which is a framework for enhancing the value of physical products.

• Alex Hormozi suggests enhancing a core product by bundling it with complimentary services or products from partners.
• This creates a more valuable package for customers at no additional cost to the business owner.
• Hormozi uses the example of a massage parlor offering memberships bundled with services from chiropractors, orthotics dealers, and others.
• He emphasizes the importance of solving customers' additional needs to make the core product more attractive.

If I were trying to sell that membership, I could go to every chiropractor in the area... and ask each of them to give me one to two free things of services that cost me nothing and put all of those things in my single offer, right?

The quote illustrates the strategy of bundling services to create a more compelling offer for customers, which can increase the perceived value of the core product without incurring extra costs.

• Ryan Daniel Moran expresses enthusiasm for Hormozi's strategy, indicating it's a breakthrough idea for businesses.
• He uses the term "braingasm" to describe the excitement and revelation that business owners might feel when they understand the potential of this strategy.
• Moran suggests that providing exceptional value leads to a strong customer relationship and voluntary engagement with the brand.

Hashtag braingasm. If you just got a business boner, I'm sitting here like, oh my God, this is the greatest thing ever.

This quote captures Moran's excitement about the potential for businesses to revolutionize their offers, which could lead to increased customer loyalty and engagement.

• Alex Hormozi introduces the concept of the Delivery Cube as a mental model to enhance product delivery.
• He advises considering the customer's problems and needs before and after using the product and finding solutions to add value.
• Hormozi gives an example of the supplement space, where additional guides and tools can be offered alongside the core product to enhance its value.

The outcome is what are the other problems that are answering problems that this customer is going to have or experience before or after they use the product?

This quote explains that the focus should be on the customer's journey and the problems they encounter around the use of the product, which can then be addressed to add value.

• Ryan Daniel Moran emphasizes the importance of genuinely helping customers achieve their goals to build a VIP list.
• He criticizes superficial strategies and promotes the idea of creating real value to encourage customers to seek out and engage with the brand on various platforms.
• Moran suggests that this approach can lead to a responsive customer base that repeatedly buys from the brand without the need for manipulative marketing tactics.

That's how you build a vip list. You actually overcome their challenges.

The quote stresses the importance of solving real customer problems to build a loyal and responsive customer base, rather than relying on superficial incentives.

• Alex Hormozi explains how partnerships can be leveraged not just for bundling but also for increasing average order value.
• He mentions that partners can pay for customer referrals, which can directly increase the business's bottom line.
• Hormozi shares that he and his partner Leila make millions in affiliate partnership rebates by enhancing product value and making introductions, demonstrating the effectiveness of this strategy.

So if you're trying to increase your average order value, if those people redeem ten of those things that you just gave them, and those partners that you made a partnership with paid you for free customers, then you're increasing.

This quote highlights the financial benefits of creating partnerships where partners pay for customer referrals, which can significantly increase the business's profits.

• Alex Hormozi presents three fundamental questions to challenge business owners to think differently about their products and services.
• The questions are designed to encourage creative thinking about delivering value, reducing costs, and ensuring customer satisfaction so strong that it leads to referrals.
• Hormozi emphasizes the importance of asking the right questions to get better answers for business growth.

If you were selling your product for $100,000, what would you include to make that product worth $100,000?

This quote is part of the first question Hormozi poses, prompting business owners to consider what they would include in their offer if they were to charge a premium price, thereby pushing them to think about how to significantly enhance the value of their product.

• Alex Hormozi concludes the first part of the podcast by teasing the next half, which will cover the sequence of making money, creating flow, adding friction at the right times, and pairing that with exceptional customer experience and results.
• He encourages listeners to tune in for the next installment for more in-depth discussion on these topics.

Hope you guys enjoyed part one of the podcast with Brian Denn. And we're in from capitalism.com.

This quote serves as a wrap-up for the current session and a teaser for the upcoming content, suggesting that the next podcast will delve deeper into strategies for business growth and customer experience.