Secrets to making money without a lot of clients Ep 298

Summary Notes


Alex Ramosi from Gym Lodge and Prestige Allen shares insights on growing a business by focusing on two fundamental strategies: acquiring more customers and increasing customer value. He redefines lifetime value as lifetime gross profit (LTGP) and presents six methods to enhance LTGP: raising prices, reducing costs, increasing purchase frequency, upselling, cross-selling, and offering downsells. Ramosi emphasizes the power of pricing, arguing that many businesses underutilize this lever, and encourages looking to successful, mature businesses for pricing models. He concludes by urging entrepreneurs to apply these strategies to their client journeys to increase value without additional work.

Summary Notes

Fundamental Ways to Grow a Business

  • There are two fundamental ways to grow a business: acquiring more customers and increasing the value of those customers.
  • Business owners should focus on both aspects to maximize growth.
  • The discussion is geared towards understanding how to achieve these two objectives.

"So there's two ways to grow a business from, from a fundamental standpoint. Number one is you get more customers. Number two, you make those customers worth more."

This quote establishes the foundational strategies for business growth, emphasizing the importance of both customer acquisition and customer value enhancement.

Defining Lifetime Value

  • Lifetime value (LTV) is often loosely defined, with various interpretations found online.
  • Alex Hormozi redefines it as Lifetime Gross Profit (LTGP) to focus on the profitability aspect.
  • LTGP is preferred over LTV because it considers the cost of delivering a service or product, not just the revenue generated.
  • Gross profit is the focus here, not net profit, which includes all other expenses.

"Now, when I say make them worth more, lifetime value is a very loosely defined term. You can look on the Internet, there's lots of different definitions for it. And what I'm going to do is redefine this as lifetime gross profit, all right?"

Alex Hormozi clarifies the concept of lifetime value by redefining it as lifetime gross profit, highlighting the significance of focusing on the profitability rather than just revenue.

Six Ways to Increase Lifetime Value

1. Increase the Price

  • Raising the price of a product can make it more appealing and create a perception of higher value.
  • Higher prices can position a product in a premium category, leading customers to perceive it as superior.

"The first one is increase the price. Sounds crazy, but believe it or not, price in and of itself is something that can actually draw alert to your products."

This quote explains that increasing the price of a product can positively affect its perception in the market, potentially increasing its allure and perceived value.

2. Decrease the Cost

  • Decreasing the cost of goods sold can increase the gross profit margin.
  • Investing in technology or improving processes can lead to cost reductions.

"Number two is that you can decrease the cost."

Alex Hormozi suggests that reducing the cost associated with delivering a product or service can effectively increase the lifetime gross profit of a customer.

Increasing Gross Profit by Reducing Costs

  • Alex Hormozi discusses the concept of increasing gross profit by finding ways to deliver products or services for less cost.
  • By reducing the cost of production, businesses can significantly increase the lifetime gross profit of their products without changing anything else about the product or service.
  • An example given is reducing the cost of producing a meal from $9 to $2 through an automated robotic process.

"In outsourcing, all these different ways that I can deliver the same thing for less, I increase my gross profit."

This quote emphasizes the strategy of reducing production costs to increase gross profit margins, which is a fundamental business practice to improve profitability.

Increasing Purchase Frequency

  • The strategy involves encouraging customers to buy products or services more frequently.
  • Alex Hormozi points out that a customer who visits a restaurant repeatedly over time is more valuable than a one-time visitor.
  • Increasing the number of times all customers purchase can have a substantial impact on the lifetime gross profit per customer.

"So what this is, is getting people to buy again and again and again."

This quote highlights the importance of customer retention and the impact of repeat purchases on the overall profitability of a business.


  • Upselling is defined as selling a more valuable version of the same product or service.
  • Examples include upgrading from a smaller to a larger soda or from a standard car to a luxury model.
  • Upselling focuses on enhancing the value of the purchase by offering a superior or larger quantity of the product.

"Now, upsells very important here. I'm going to define this for you is selling the same thing, but a more valuable version."

This quote defines upselling and stresses its importance in increasing the value of a customer's purchase, which can lead to higher profits.


  • Cross-selling involves offering customers related products or services that complement their initial purchase.
  • It targets the next natural need of the customer following their first buying decision.
  • Cross-selling can be more profitable than the initial sale, especially when using loss leaders to attract customers.

"A cross sell is an adjacent need that I am solving."

The quote defines cross-selling as addressing additional customer needs related to their original purchase, which can lead to increased sales and profits.

Word of Mouth Promotion

  • Alex Hormozi emphasizes the importance of word of mouth in growing the podcast's audience.
  • The podcast does not use traditional advertising methods like ads or sponsorships, relying instead on listeners to share and recommend it to others.

"The only way this grows is through word of mouth."

This quote underlines the reliance on organic growth through personal recommendations, which can be a powerful marketing tool for businesses and content creators.

Importance of Customer Downsells

  • Downsells offer alternative products or services to customers who may not fit the primary category.
  • They are useful for businesses with higher-priced services.
  • Utilizing traffic effectively by offering downsells can convert otherwise lost opportunities.
  • Downsells can lead to affiliate or referral commissions when partnering with other businesses.
  • Creating lower-tier services or products can serve as effective downsells.
  • Downsells help to monetize customers who would otherwise not spend money.

"So a lot of businesses that I'll talk to or that I'll consult with, they don't have any downsells."

This quote emphasizes the lack of downsells in many businesses Alex Hormozi consults with, indicating a missed opportunity for additional revenue.

"There's always a business that can do something with some of the kind of the sawdust, the excess capacity that we have that exists within our business."

Alex Hormozi uses the metaphor of 'sawdust' to describe unused business potential that can be monetized through downsells.

"You can either downsell to someone else's product and get affiliate commissions, get referral partner commissions for sending business their way or."

Alex Hormozi suggests partnering with other businesses to downsell their products for commissions, presenting a win-win scenario for all parties involved.

"If someone walks into a facility for personal training and they can't afford personal training, obviously there's groups and things like that they could do that would be a natural downsell."

This example illustrates a practical application of downsells in a personal training business, showcasing how to cater to customers with different budget levels.

Six Ways to Increase Lifetime Value of a Customer

  • Increasing the price of products/services can immediately raise profits.
  • Decreasing fulfillment costs can increase profit margins.
  • Encouraging customers to buy more frequently boosts lifetime value.
  • Structured upsells allow customers to purchase more or better versions of products.
  • Cross-sells target the subsequent needs of customers after an initial purchase.

"One is you can increase the price and automatically you make more money."

Alex Hormozi points out that raising prices is a straightforward strategy to increase profits per customer.

"Number two is you can decrease how much it costs you to fulfill the thing that you're promising."

By reducing the costs of fulfillment, businesses can improve their profit margins without increasing prices.

"Number three is you can increase purchase frequency or getting the amount of time someone buys from you, get them to buy more, right, over time."

Alex Hormozi highlights the importance of encouraging repeat purchases to increase a customer's lifetime value.

"Number four is upselling them. That means having structured upsells where they can buy more of the same stuff or better versions of the same stuff."

Upselling is defined as offering customers additional or upgraded products related to their initial purchase.

"Cross sells is selling the next adjacent needs. So you have to think to yourself, someone buys my service, what's the next thing they're normally going to need?"

Cross-selling involves anticipating and offering products that customers are likely to need after their initial purchase.

Six Ways to Increase Lifetime Gross Profit

  • Alex Hormozi outlines six strategies for increasing lifetime gross profit of a business.
  • The strategies focus on enhancing customer value and maximizing profits without extra work.
  • Emphasis is placed on leveraging existing business operations and customer base.

And then finally, what can I do with the sawdust? What are all these people who are coming to my business who can't necessarily afford my main thing? And how can I create something that's still going to solve their need, but doesn't cost me that much so I can still make a good margin on this stuff, or how can I refer the business out to someone else and still get a kickback from it? And so those are the six ways to increase lifetime gross profit.

  • This quote summarizes the concept of finding additional value in by-products or less expensive alternatives to cater to a wider customer base.
  • It also suggests referral programs as a means to profit from customers who might not afford the main product or service.

The Power of Pricing

  • Alex Hormozi emphasizes that pricing is the most underutilized yet powerful lever in business.
  • Many businesses set prices based on competition rather than potential profitability.
  • Mature companies provide models for effective pricing strategies that have been tested and proven to yield sufficient margins.

Pricing is the most important lever. And I'll give you one quick example on this. If something cost me $10 to fulfill, right, and I charge $20 for it, cool. I'm making 50% gross margin. But if I say, you know what, I'm going to charge $50 for this thing, or you know what? We'll say 30. So I go from $20 to $30, right? I just doubled the lifetime gross profit of my business. Doubled.

  • Alex provides a clear example of how a small increase in price can significantly impact gross profit margins.
  • The relevance of the quote is to illustrate the direct correlation between pricing and profit, highlighting the potential for doubling profits with a strategic price increase.

Modeling Successful Businesses

  • Alex advises against emulating small businesses that think small and stay small.
  • Instead, he recommends looking at the pricing models of large, mature businesses that have sustained growth.
  • He warns against copying market penetration strategies of big businesses without the same resources but suggests studying their established pricing models.

And so don't look at the small guys, don't look at the person who's out of shape and try and model what they're doing. Look for somebody who's got nice teeth. And I'm sure there's genetics there, too. These are horrible examples, but hopefully you get the point, all right, is that pricing is the most important lever.

  • This quote metaphorically advises to model after successful entities rather than those that are not thriving.
  • The relevance is to encourage looking at successful examples for guidance on pricing strategies, using the analogy of physical traits to underline the importance of choosing the right role models.

Business Growth Strategies

  • Alex outlines that there are two main ways to grow a business: acquiring more customers and increasing the value of existing customers.
  • He presents six strategies that focus on the latter, aiming to make clients more valuable without additional work.
  • The emphasis is on smart business growth through strategic customer value enhancement.

There's two ways to grow business. One of them is getting more customers. The other one is increasing how much those customers are worth. And here are six strategies that you can think about within your business of how you can apply these things to your client journey so that you can make those clients worth more without doing any extra work.

  • This quote explains the two primary methods of business growth and introduces strategies for increasing customer value.
  • The relevance lies in the focus on maximizing the worth of customers as a growth strategy, which can be more efficient than increasing the customer base.

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