Scarcity, Guarantees & the Cohort Method (with Vince Del Monte) Pt.1 March ‘22 Ep 452

In a detailed conversation with Vince del Monte, the podcast delves into effective business strategies for maximizing customer value and conversions. They discuss segmenting customers to identify the most valuable ones, tactically employing scarcity to drive sales, and crafting compelling guarantees to reverse risk and incentivize purchases. The cohort method, highlighted by del Monte, is praised for creating surges in customer acquisition and operational efficiency. They also explore the ethical implementation of scarcity by setting realistic customer intake limits, and the use of urgency to prompt immediate action. The dialogue further touches on the importance of timing in customer resigns, offering early incentives for renewal, and avoiding price negotiations. Guarantees are dissected into unconditional and conditional types, with an emphasis on crafting guarantees that drive business improvement and customer satisfaction. The episode encapsulates a blend of marketing, sales, and operational tactics aimed at growing a profitable and sustainable business.

• Discusses the importance of identifying valuable customers.
• Focuses on increasing profits by working more efficiently.
• Emphasizes the significance of customer segmentation in business.

"The first was about how to segment."

"For cohorts to figure out which customers."

"Are most valuable to you so you can also make more money by doing less work."

Segmentation is a strategy aimed at identifying which customers are most valuable to a business to increase profitability and efficiency.

• Talks about the tactical use of scarcity in daily sales.
• Explains how scarcity drives conversions and lowers action thresholds.
• Highlights the immediate desire to purchase when an offer is presented.

"Highly recommend how to tactically employ scarcity in a business where you sell customers every single day."

"And some of the tactics that we have seen that really, really drive conversions and decrease action thresholds so that people."

"Want to buy the moment you give them the offer."

Scarcity is a tactic that can be effectively used to drive sales by creating a sense of urgency, leading customers to act quickly and decisively.

• Describes how to structure guarantees to reverse the risk for the customer.
• Emphasizes making offers irresistible by removing customer hesitation.
• Suggests that a well-crafted guarantee can make it illogical for customers to refuse the offer.

"And how to deck guarantees in a."

"Way that reverses all the risks such that they would be stupid to say niet to your offer."

Risk reversal guarantees are designed to make it a no-brainer for customers to accept an offer by ensuring they feel they have nothing to lose.

• Vince del Monte shares the effectiveness of the cohort method.
• Describes the process of opening and closing enrollment to create surges in customer acquisition.
• Suggests applying the cohort method to manage the number of members based on operational capacity.

"I'd love for you just to kind of touch on the cohort method. I found that to be one of our most effective strategies."

The cohort method is a strategic approach to customer acquisition that involves timed enrollment periods to generate high demand and manage capacity effectively.

• Discusses creating high-value deliverables to solve customer problems.
• Stresses the importance of providing more value by solving additional problems.
• Emphasizes that entrepreneurs should focus on making processes seamless and effortless for customers.

"So for everyone, after you create the ultimate high value deliverable."

"The point is that if we solve more problems, we will provide more value."

High-value deliverables are central to a business's offerings, and solving a series of related problems adds value and enhances customer satisfaction.

• Talks about using bonuses and guarantees to enhance the desirability of the core offer.
• Highlights the need to make product iterations shorter and more valuable over time.
• Explains that time is a precious commodity and the goal is to provide shortcuts to desired outcomes.

"So once we have the ultimate, the core offer, the valuable deliverable, the other things that we're doing are used to enhance the desirability of that core offer."

Enhancements to the core offer, such as bonuses and guarantees, are used to increase its appeal and address potential obstacles in the sales process.

• Differentiates between scarcity (quantity) and urgency (time).
• Provides methods for implementing scarcity and urgency without appearing unethical.
• Discusses the importance of setting realistic customer intake limits based on operational capacity.

"The third is scarcity, which is a function of quantity."

"And then urgency is a function of time."

Scarcity and urgency are two distinct concepts that, when applied correctly, can significantly boost sales by compelling customers to act promptly due to limited availability or time constraints.

• Outlines three scarcity strategies: total business cap, growth rate cap, and limited editions.
• Explains how these strategies can drive customer retention, increase lifetime value, and lower purchase thresholds.
• Emphasizes the power of fear of missing out (FOMO) over the desire for gain.

"So the three that I like to use here is, number one, you can have a total business cap, and this works really well for high ticket, right?"

Implementing scarcity strategies, such as capping the total number of customers or growth rate, can create a sense of exclusivity and urgency, encouraging customers to commit to a purchase.

• Discusses the concept of limiting intake to create scarcity without capping the total business.
• Introduces the idea of capping the number of clients per week/month as a form of scarcity.
• Suggests cohorts as a method to streamline operations and create scarcity.
• Points out that scarcity can drive sales as deadlines approach.

"So this is a cap on rate. It's a cap on speed, which is what I was referencing earlier, which is instead of having a cap on the total business, we have a cap on how many we can take per week or per month or per whatever."

This quote introduces the concept of a cap on rate as a method to create scarcity in a business model. It emphasizes controlling the intake speed rather than the total number of clients.

"That's the second way you can add in the scarcity. The third way that you can add the scarcity in is having cohorts in and of themselves."

The speaker outlines cohorts as a third method to introduce scarcity, which also simplifies the operational process by having a group start at the same time.

• Vince del Monte discusses the use of authentic marketing by sharing the business journey openly.
• The concept of transparency in marketing is highlighted—sharing the actual capacity to take on new clients.
• The idea that honesty in marketing can lead to increased accountability and success.

"Alex, we just launched a new YouTube show called road to 275, and it's our journey to 275 members in the seven figure mastermind."

Vince del Monte shares his experience with authentic marketing by documenting the business's growth journey, which he believes adds accountability and can lead to greater success.

"We can literally bring on 25 a month. That is our capacity. So each week we are literally saying, this is how many spots we have, or you do have to get on the waiting list for next week."

Vince del Monte explains how his business communicates its capacity transparently to its audience, which adds a layer of scarcity and urgency to the offer.

• Discusses creating urgency by starting new clients on a set day of the week.
• Highlights the psychological impact of not wanting to wait and the desire to start immediately.
• Emphasizes the effectiveness of this approach in encouraging immediate action.

"Which is we always start people on Mondays. And so if you sign up today, you can start in the next group, but if you don't, then you have to wait until the next one."

The speaker explains how cohort-based rolling urgency works by setting a specific start day for new clients, creating a natural urgency to sign up sooner rather than later.

• Vince del Monte contemplates how to streamline operations and increase the number of members that can be onboarded each month.
• Discusses the importance of having a clear structure for operations and the benefits of systematizing the onboarding process.

"So I'm like, all right, so right now our capacity is 25 members a month. But if we can continue to tighten up our delivery, we can onboard 40 members a month."

Vince del Monte shares his thoughts on how improving delivery could increase the monthly onboarding capacity, leading to more streamlined operations.

• Introduces the concept of rolling seasonal urgency, particularly in the fitness space.
• Suggests using promotions tied to seasons or events to create urgency.
• Describes how promotions with arbitrary end dates can drive sales and decisions.

"So you can run a promotion of some sort, right. It could be New Year's, it could be Valentine's Day, it could be sexy by springs. That's the first three months of the year."

The speaker explains how seasonal events can be leveraged to create promotions that induce urgency and encourage clients to make decisions based on time-limited offers.

• Advises against waiting until the end of a contract to discuss renewals.
• Suggests discussing renewals halfway to two-thirds through the current contract.
• Highlights the use of bonuses and special offers to incentivize early renewals.

"So first things first. You never want to resign people at the end of their contract. That's like 101. You resign people halfway to two thirds of the way through."

The speaker provides a strategic tip for renewing contracts, emphasizing the importance of timing and maintaining client engagement before the current contract ends.

• Discusses adding scarcity to bonuses and creating urgency around early sign-ups.
• Suggests using the popularity of a coach as a scarcity tactic.
• Shares the idea that clients always want more of what is offered, and this desire can be leveraged.

"And then you add bonuses. Scarcity urgency. And you can add scarcity to the bonuses. You can add urgency to the bonuses to get them to resign."

The speaker outlines how adding scarcity and urgency to bonuses can be an effective strategy for encouraging clients to renew or upgrade their services.

"If I'm with coach Vince and Vince is booked up, I'd be like, Vince is a waiting list. If you don't resign now, I can't guarantee you'll get Vince at the end of your contract."

This tactical approach uses the popularity of a specific coach as leverage, creating a sense of scarcity and urgency for clients to renew their contracts to ensure they continue working with their preferred coach.

• Discusses the concept of initiating renewals earlier in the process to capitalize on customer momentum.
• Offers and discounts are predetermined and not negotiable, but incentives for early signing are provided.
• The strategy involves creating an environment where customers feel they are getting a better deal by acting early.

ht of doing renewals way earlier in the process. That's genius. But it makes sense because it's when they're in motion and, yeah, that's just beautiful. And then we can make them all sorts of offers.

This quote highlights the strategic advantage of offering renewals while customers are actively engaged and the potential to make various offers during this time.

Very hardcore about my pricing. Pricing is not negotiable. The pricing is decided upon ahead of time. But if I'm going to give a discount, it has already been predetermined. There's a difference.

The speaker emphasizes a firm stance on pricing, indicating that discounts are planned in advance and not a result of negotiation.

• The growth of the podcast is attributed to word-of-mouth recommendations.
• The host does not run ads or sponsorships and asks listeners to share the podcast as a form of support.

Real quick, guys, if you can think about how you found this podcast. Somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth.

The speaker is acknowledging the importance of word-of-mouth in discovering the podcast and its role in the podcast's growth.

And so I don't run ads, I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast, that you do the exact same thing.

Here, the host explains that the podcast's expansion relies solely on listeners sharing it with others since there are no ads or sponsorships.

• Discusses the concept of creating urgency and offering incentives for early commitment, such as pricing discounts and additional contract benefits.
• The incentives are contingent on the customer fulfilling their end of the agreement, such as making payments on time.

So it's like you sign up today, right? We have this exclusive thing that we only give to people who do early bird, right? You're going to get this urgency based pricing discount, right? And on top of that I'm going to credit you an extra two months on the back end of your contract for free for taking the promotion, which is how I give you your 20% off.

The speaker outlines a strategy for incentivizing early sign-ups with exclusive offers and additional benefits.

The bonus is gone. I love it.

The speaker expresses approval of the strategy where the bonus is forfeited if the customer does not meet the agreement terms.

• Discusses methods for moving customers to higher levels of service and creating a culture that encourages ascension.
• Introduces the "kick in the ass reward" as an incentive for customers who graduate to a higher-tier program.
• Explains the concept of "Downsell the Upsell" which involves offering a higher-priced, longer-term contract that appears more affordable on a per-time basis.

That's brilliant. We have different levels. Other coaches here have different levels, too. What are some techniques for ascending people to the next level and creating a culture of ascension?

Vince del Monte is asking about strategies for promoting customers to higher service levels and fostering a culture that values progression.

So it's called Downsell the upsell, because. And this goes for any kind of contracts you guys are selling. So if you're selling term, human beings in general understand priced decently well, don't understand shit about terms, right.

The speaker introduces the "Downsell the Upsell" strategy, emphasizing that customers generally understand pricing but are less savvy about contract terms.

• Discusses the delicate balance of offering guarantees without attracting low-quality leads or getting into problematic situations.
• Guarantees should be carefully structured to offer a compelling value proposition without exposing the business to excessive risk.

Let's touch on guarantees. So I want to make sure we've tried this in the past. Sometimes you can get into some muddy waters here. So maybe just like your best practices on guarantees, especially when you're offering a two x guarantee on selling the coaches, you're making money.

Vince del Monte is seeking advice on best practices for offering guarantees while avoiding complications and attracting the right quality of leads.

So from the top, if I were to say you're going to lose 100 pounds, right? You're going to lose 100 pounds. And I guarantee that you do that, or I'll give you all your money back. It doesn't matter how long it takes us to get there.

The speaker is illustrating the concept of a strong guarantee, where the provider commits to delivering the promised result or offers a refund, emphasizing the importance of customer success.

You probably have no problem. And the other side is, pay me and we'll see what happens. There is a space between these two extremes that you can pick. It's just that most people are here. So it's like, well, let's take a handful of steps or start here, and then just peel back as few pieces as we can to stay as close to this total risk reversal as possible.

The speaker suggests finding a middle ground between a full guarantee and no guarantee at all to create a compelling offer while managing risk.

• Discusses the impact of guarantees on pricing and sales volume.
• Emphasizes that a strong guarantee can raise prices and increase the number of buyers.
• Guarantees can serve as a force multiplier for revenue.

"One, we can raise the price. Number two, we're going to have way more people to buy, so we're going to have more buyers at higher prices."

This quote highlights the strategy of using guarantees to justify higher prices and attract more customers, resulting in increased revenue.

• Describes the unconditional guarantee as a no-questions-asked money-back policy.
• Suggests attaching a term to the unconditional guarantee, such as a 30-day period on a six-month program.
• Encourages customers to try the program with the assurance of a refund if unsatisfied.

"The first type of guarantee is an unconditional guarantee. It's good old fashioned, what I just said, which is no questions asked. You ask for your money back, it's yours."

This quote defines the unconditional guarantee, which assures customers they can get their money back without any conditions if they are not satisfied.

• Explains conditional guarantees as promises tied to specific outcomes or actions.
• Argues that conditional guarantees should be "grandiose" and have "teeth" to be compelling.
• The strength of a guarantee is proportionate to the risk it reverses for the customer.

"Type of guarantee number two is a conditional guarantee, which is... So the or I will is the thing that gives guaranteed teeth, right. Most people don't have good guarantees, like no teeth on the guarantees."

This quote discusses the importance of conditional guarantees having significant consequences ("teeth") to be effective and truly reverse the risk for customers.

• Advises on designing guarantees based on the behaviors of successful customers.
• Recommends building conditions around actions that correlate with customer success.
• Suggests using guarantees as a tool to improve business models and service quality.

"So it is my opinion that you should guarantee that scares you more than the customers. And then figure out what's wrong with your business model and your fulfillment that makes you scared."

This quote suggests that the guarantee should challenge the business itself, prompting it to address any weaknesses in its model or service delivery to meet the guarantee's promise.

• Discusses the possibility of stacking unconditional and conditional guarantees.
• Introduces the concept of multiple conditional guarantees for different milestones.
• Highlights alternative forms of compensation such as credit or extended time instead of money refunds.

"You can also have multiple conditional guarantees. You can say, I'm going to guarantee that you'll hit ten pounds by 60 days, and I guarantee you'll hit 20 pounds by 90 days or that first period is free."

This quote illustrates how businesses can offer multiple, layered guarantees targeting different outcomes and providing various forms of compensation to encourage customer commitment.

• Links the discussion of guarantees to broader topics such as scarcity, investments, and team scaling.
• Frames guarantees as a tool for reducing perceived risk and increasing revenue.
• Teases future discussions on business growth strategies.

"Hope you guys enjoyed us going deep on cohorts, adding scarcity tactically into an everyday business, and adding guarantees so that people buy without feeling risk so you ultimately make more monies."

This quote summarizes the conversation's focus on using guarantees to mitigate customer risk and enhance business profitability, while also hinting at additional strategies to be covered in a subsequent part of the podcast.