Guest Spot on Franchise Secrets

Summary Notes


In this episode of Franchise Secrets, host Eric Van Horn interviews Alex Hormozi, a marketing expert from Gym Launch. Alex discusses the common misconception that businesses need more customers when in reality, they often need better business strategies. He emphasizes the importance of improving a business's profit levers, such as offers, services, upsells, and acquisition systems, rather than seeking cheaper leads. Hormozi shares his journey from owning a chain of gyms, joining Russell Brunson's inner circle, and transitioning from a gym turnaround company to a highly successful business teaching others how to optimize their fitness businesses. He highlights the critical role of understanding acquisition metrics, nurturing leads effectively, and the innovative use of his software, Allan, to enhance lead conversion rates. Hormozi's approach focuses on teaching clients to "fish" rather than doing it for them, ensuring long-term growth and profitability.

Summary Notes

Introduction to Gym Secrets Podcast

  • The podcast focuses on strategies for acquiring customers, increasing customer value, and customer retention.
  • There is an emphasis on learning from failures and lessons in the business journey.

"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 theme, which aims to help businesses grow by acquiring and retaining customers while learning from past mistakes.

Introduction of Alex Hormozi on Franchise Secrets

  • Eric Van Horn introduces Alex Hormozi, who is known for his marketing expertise, particularly in the health and fitness franchise sector.
  • Alex's work extends beyond franchising into helping a wider range of businesses.

"Welcome to franchise Secrets with your host Eric Van Horn. And today's guest is Alex Hormozi. He's with Jim launch. I've seen this guy around for a while, Mark, doing all kinds of cool marketing stuff, helping a lot of health fitness franchises out there and probably even a lot more people that are not in the franchising space."

The quote introduces Alex Hormozi as a guest on the Franchise Secrets podcast, highlighting his marketing expertise and his impact on the fitness industry.

Alex Hormozi's Business Approach

  • Alex rejects the term "agency" for his business, emphasizing education over service provision.
  • The business teaches clients to improve their operations and marketing to increase profitability.
  • The focus is on creating better businesses, not just acquiring more customers.

"So for everyone who's listening, I would just destroy the word agency because it anchors what we do in a totally wrong way."

This quote explains Alex's philosophy that his business should not be considered a typical agency, as they focus on teaching clients rather than simply providing services.

The Three Ways of Growing a Business

  • Alex's business model is based on three growth levers: acquiring more customers, increasing revenue per customer, and enhancing customer retention.
  • The approach starts with crafting compelling offers and upsells, then developing acquisition systems.

"And so everything that we've ever done has been based around the same three ways of growing a business. Getting more customers, making more money per customer, and getting them to stay longer and buy more times within the context of a gym is staying longer."

The quote outlines the three fundamental strategies for business growth that Alex's company focuses on, which are acquiring more customers, increasing revenue per customer, and improving customer retention.

Alex Hormozi's Background and Gym Launch

  • Alex started with a chain of six gyms and joined Russell Brunson's inner circle, gaining exposure to internet marketing.
  • He transitioned from running gyms to helping other gym owners launch their businesses successfully.

"So I had a chain of six gyms of my own. I joined Russell's inner circle."

This quote provides context on Alex's background, mentioning his experience with his own gyms and his involvement with Russell Brunson's inner circle, which influenced his career trajectory.

The Shift from Gym Owner to Business Mentor

  • Alex's presentation at a Russell Brunson event led to gym owners seeking his expertise.
  • Despite having no intention to become a business mentor, demand for his knowledge on launching gyms led him to start assisting others.

"And I have never been and still to this, say, never been more barraged after a presentation. And I wasn't selling anything."

The quote captures the moment Alex realized the high demand for his expertise in launching gyms, even though he had no product to sell at the time.

The Gym Launch Model

  • Initially, Alex's Gym Launch model was a done-for-you service where he took full revenue from upfront sales in exchange for filling gyms to capacity.
  • He would teach gym owners upselling and retention strategies post-launch.

"I'll take your gym from wherever you're at to full capacity in less than a month."

This quote explains the value proposition of Alex's Gym Launch model, where he promised to rapidly increase a gym's customer base.

Challenges and Scaling Gym Launch

  • The business model faced challenges with scaling, as rapid growth caused operational issues for gym owners.
  • Alex experienced setbacks with refunds when gym owners couldn't handle the influx of new customers.

"And their shit broke, and it was ugly and they were not happy."

The quote reflects the difficulties gym owners faced when they could not manage the rapid increase in customers that Alex's model provided.

The Evolution of Gym Launch

  • Alex shifted from a done-for-you model to educating gym owners on marketing and sales.
  • The business scaled by training a sales team and creating a playbook of best practices for profitable gyms.

"And so I ended up picking, like, none of these things that I did were original. I just was able to aggregate all of these best practices into kind of a playbook of, this is how you make a profitable gym."

This quote describes how Alex compiled effective strategies into a comprehensive guide for gym owners, moving away from doing the work for them to teaching them how to succeed on their own.

The Genesis of a Fitness Brand

  • Alex Hormozi and Speaker C discussed the start of a fitness brand with Alex running sales and Speaker C handling marketing.
  • They quickly achieved significant online sales, reaching $1,000 a day within two weeks.
  • This rapid success was a key turning point for Alex, prompting him to sell his gyms and focus on this new model.

"I was like, why don't you be the face? And then I'll run the sales and." "Marketing behind it, and we'll just swing fitness brand and that started to work." "And so we started doing 1000 a day within 14 days online."

These quotes outline the initial strategy that led to the creation of the fitness brand, highlighting the roles each person took on and the early success they found.

Timeline of Events

  • Alex Hormozi joined Russell's program at the end of January, spoke in February, and received a $5,000 deposit in March.
  • He launched his first three gyms in June, July, and August, then sold all his gyms within 90 days from that point.
  • After a brief pause, Alex began with six sales guys in December, scaling up operations and adjusting the business model over the next few months.

"This was one year." "So I joined Russell's thing. End of January, I spoke in February, I got my first 5000 deposit." "In March, I went out and launched." "My first three gyms myself, back to back to back in the same area."

These quotes provide a detailed timeline of Alex's journey from joining Russell's program to launching and eventually selling his gyms, emphasizing the rapid progression and strategic decisions made.

Scaling the Business and Recognizing Issues

  • Alex Hormozi and Speaker C discuss scaling the business to eight gyms a month and the operational challenges that arose.
  • They encountered issues with gym owners who were upset about the influx of customers, leading Alex to reconsider the business model.
  • This led to a pivot where Alex and his team decided to focus on selling a higher-margin product.

"And then the next three months of the next year, four months of the next year is when we're really kind." "Of scaling and doing eight gyms a month or whatever. And then end of March, beginning of April is when I was like, I saw the writing on the wall. I was like, I don't like this model."

This quote captures the moment of realization that the current business model was not sustainable or desirable, prompting a strategic pivot.

Transition to Information Products and Pricing Strategy

  • Alex Hormozi transitioned to selling an information product, initially pricing it at $6,000 and eventually increasing to $16,000.
  • The pricing was based on what the market was willing to pay, and Alex used a humorous approach suggested by Dan Kennedy: "your price is whatever you can say without cracking a smile."
  • The transition to selling information was successful, leading to $10 million in revenue in the first ten months.

"And the next 100 we sold at twelve." "And the next 2900 we sold at 16,000." "Dan Kennedy, your price is whatever you can say without cracking a smile."

These quotes highlight the evolution of their pricing strategy for the information product and the significant financial success it brought.

The Value of Masterminds

  • Alex Hormozi discusses the value of being part of multiple masterminds, both industry-specific and general.
  • Industry-specific masterminds provide immediate, actionable tactics, while general masterminds offer creative input and ideas that can be adapted across industries.
  • Alex emphasizes the importance of continually updating information and providing value to maintain a leading position in the information industry.

"I've been a part of multiple masterminds." "And so if you're in an industry." "Specific mastermind, those almost always pay for themselves." "And so I think you get more creative input, and I come out with." "More ideas from a more general mastermind."

These quotes explain the benefits Alex has experienced from participating in different types of masterminds, which have contributed to his business strategies and success.

Mastermind Dynamics and Business Loneliness

  • Alex Hormozi and Speaker C discuss the breakdown of mastermind groups, with a small percentage being highly motivated and the majority being there for recognition or social reasons.
  • Business owners often join masterminds to find a community where they can share their successes candidly.
  • The conversation also touches on the loneliness of being a business owner and the desire to connect with others who understand their achievements.

"I talked to Russell about this, and he was like, bill Glaser had." "Told him that the way masterminds break down is like, he's got, I think." "I can't remember the exact numbers, but it was like, you've got 10% that just always want more and are just like massive executors and just want to." "Rip as much value out and then just execute."

This quote delves into the social dynamics of mastermind groups and the various reasons why business owners participate in them.

Handling Competition and Protecting Intellectual Property

  • Alex Hormozi is not concerned about others copying his methods, believing that it inherently positions him as a leader.
  • He discusses a proactive strategy of staying on top by incorporating anything valuable from competitors into his own offerings.
  • Alex acknowledges the nature of the information industry, with its high margins and the necessity for constantly updated content to remain valuable.

"If you're learning from me, you're inherently." "Admitting that you're not better than me." "And once you're the industry leader, my strategic best move is to buy everyone's." "Courses who's new, rip out anything that's good, immediately distribute, and then make you irrelevant."

This quote reflects Alex's mindset on competition and intellectual property, emphasizing the importance of continuous innovation and adaptation to stay ahead.

Best Practices in Business Operations

  • Identifying and applying best practices in various aspects of business operations, such as lead generation, nurturing, sales, fulfillment, and ascension.
  • Regularly cycling through content based on what is currently effective in the market.
  • Recognizing the struggles of businesses and providing solutions that are working in real-time.

"So we cycle through what we're releasing, and it keeps our content very fresh." "Struggling with these things? All right, these are the things that are working right now."

These quotes emphasize the importance of staying current with effective strategies and refreshing content to address ongoing business challenges.

Community-Driven Innovation

  • Leveraging a community of paying members to extract and share best practices.
  • Running conceptual tests to try new business strategies and offers.
  • Acknowledging that most tests do not lead to significant improvements but continuing to innovate.

"In terms of, so what I'm hearing. So part of what you have is you have a community of people that are paying you for the stuff that you're providing to them, but out of that community, you're extracting the best stuff that they're learning out there as well." "And so sometimes people just release things because it's new."

The discussion highlights the value of a community in driving innovation and the iterative process of testing and refining business strategies.

Beta Testing and Data Analysis

  • Conducting beta tests with a diverse group of businesses, including both high and low performers, to gather representative data.
  • Ensuring that the delivery of training and testing is scalable and replicable.
  • Using data to identify the most impactful levers in marketing and operations.

"We'll take 20 gyms and we'll take it from representative markets. I'll take winners. I'll also take losers." "Let's track the Stats in 30 Days. Most times, most tests don't make a big difference."

These quotes explain the methodical approach to beta testing, ensuring that the results are applicable across different market segments and acknowledging the frequent lack of significant impact from most tests.

Marketing Acumen for Franchisors

  • Understanding the importance of having a knowledgeable Chief Marketing Officer (CMO) in the digital age.
  • Recognizing the limitations of traditional advertising agencies compared to more specialized firms.
  • The necessity for franchisors to grasp digital marketing, copywriting, and the social media landscape to support their franchisees effectively.

"And so when you get a franchisor that has a really good CMO that understands the current digital world environment, and they work with people like Alex and some of the other guests that I've had on that really understand marketing, that's when you have a very powerful combination."

This quote underscores the critical role of a CMO in navigating the digital marketing world to achieve better results for franchisees.

Franchise Readiness and Market Differentiation

  • Ensuring that the business model is profitable and well-tested before considering franchising.
  • The importance of having a unique business model to stand out in a saturated market.
  • Understanding the execution level of franchisees and creating systems to support their success.

"You have to know the numbers inside and out for your model. You should have already squeezed all of the juice out of your model before trying to put it together." "It has to be unique in a certain way in order for people to buy into it."

These quotes highlight the prerequisites for a successful franchise, including a thorough understanding of the business model and the need for uniqueness in the market.

Data-Driven Decision Making

  • The significance of collecting and analyzing data for making informed business decisions.
  • Recognizing that good decisions come from good data, and the lack of data can lead to poor outcomes.
  • Emphasizing the alignment of values when provided with accurate information.

"People know me, who know me well enough know that we're data whores. All we do is track everything." "Most people values are pretty much aligned. It's just, to what degree are we weighting these metrics?"

These quotes convey the importance of data in decision-making processes and how values can align when decisions are based on accurate data.

Challenges for New Franchisors

  • The necessity for new franchisors to understand key metrics like lifetime value, cost of acquisition, and churn rate.
  • The pitfalls of franchisors focusing solely on acquisition without operational excellence or a unique offering.
  • The requirement for franchisors to innovate continuously and solve problems for their franchisees.

"If you're starting a franchise and you don't know your lifetime value, cost of acquisition, your monthly churn, your different levels of your value ladders, your different upsells, the way that you, there's so many things that if you don't even your page conversion metric, if you don't know these things, if you don't have another way."

This quote emphasizes the critical metrics and operational knowledge a franchisor must possess to support and grow a successful franchise network.

Importance of Systems and Knowing Your Numbers

  • Understanding the systems and metrics of your business is crucial for success, especially in franchising.
  • Franchisees must be able to dial in their systems even if their franchisor doesn't.
  • Proprietary or unique aspects are not as important as having a profitable and functional business model.
  • Franchisors should be prepared to support their franchisees by being a coach and providing answers.

"This is all systems. This is all knowing your numbers."

The quote emphasizes the significance of having a strong grasp on the operational systems and financial metrics of one’s business.

The Role of Franchisors and Franchisees

  • Franchisors should focus on helping others get into franchising and act as mentors.
  • It's important for franchisors to understand their business inside and out before scaling.
  • Franchisors must have solid systems for lead generation and customer acquisition.

"You're now in the business of helping other people franchise, get into franchising, and you're now their coach, you're their cheerleader, and you're the one that should have all the answers."

This highlights the franchisor's responsibility as a guide and resource for their franchisees, ensuring they have the knowledge and systems in place to be successful.

Lead Nurture and Conversion

  • Lead nurturing is essential for converting leads into customers.
  • Alex Hormozi shares his experience of being more effective at getting people into his gym than his employees due to his hustle and work ethic.
  • There are four pillars to lead nurture: volume of outreach, number of times you reach out, personalization, speed of response, and availability.

"It's just hustle. There's no secret to getting Lisa show besides just work and repetition."

Alex Hormozi attributes his success in lead conversion to consistent effort and persistence, which is a key aspect of effective lead nurturing.

Speed and Availability in Lead Nurturing

  • The speed of reaching out to a lead after they opt in is critical.
  • Availability for appointments is a significant predictor of campaign success.
  • Businesses must have ample time slots to meet with prospects to increase show rates.

"Availability is the single greatest predictor for throughput on a campaign."

This quote underscores the importance of being available to meet with potential customers as a primary factor in converting leads into actual business.

The Impact of Lead Nurturing on Business Performance

  • Alex Hormozi emphasizes the difference in performance between the highest and lowest performers in lead nurturing.
  • Improving lead show rates can have a greater impact than improving closing percentages.
  • The use of data science and machine learning can enhance lead nurturing processes.

"I can double someone's close rate going from 30% to 60%. But my lowest performers on a lead nurture side were at 5% of their leads showing up versus my highest guys were at 45 or 50%."

This quote illustrates the significant variance in lead nurturing success rates and the potential to dramatically improve business outcomes by focusing on this area.

The Role of Technology in Lead Nurturing

  • Alex Hormozi discusses the role of his SaaS company in improving lead nurturing through data and technology.
  • The software they developed addresses the bottleneck in customer acquisition for brick-and-mortar businesses.
  • By automating lead nurturing, the software reduces manual labor costs and improves lead show rates.

"It took us two years to put the software together, and we ran, I'm a data guy, lots of data."

Alex Hormozi describes the development process of their lead nurturing software, highlighting the data-driven approach and the time investment required to create an effective solution.

Communication Preferences and Response Rates

  • SMS has significantly higher open and response rates compared to email.
  • The immediacy of text messaging leads to quicker booking and response times.
  • Businesses must comply with regulations when sending pre-recorded phone calls and SMS.

"On a text, it's virtually across the board. Independent of what you're doing, it's 98% plus of text or open."

This quote indicates the effectiveness of text messaging as a communication channel for engaging with leads, with nearly all texts being opened by recipients.

Compliance in Lead Nurturing

  • When using SMS for lead nurturing, businesses must ensure leads opt in for pre-recorded calls and texts.
  • Failing to obtain proper consent can result in significant fines.

"You have to make sure that anyone who's opting in is opting in for pre recorded phone calls and sms. There has to be a disclaimer box and they have to check it before they opt in."

The quote stresses the legal requirement for businesses to secure consent from individuals before sending them automated communications, highlighting the potential financial risks of non-compliance.

Alex Hormozi's Current Endeavors

  • Alex Hormozi's company offers a software solution that fills a gap for brick-and-mortar businesses in lead nurturing.
  • The software automates the process of converting digital opt-ins into scheduled appointments and shows.
  • The company provides a performance-based service that only charges clients for actual customer interactions.

"We just, for the first time ever, basically are doing all demand gen. So we're marketing and working the leads."

This quote describes the comprehensive service offered by Alex Hormozi's company, which manages both marketing and lead nurturing to deliver results for clients.

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