The DataDriven Entrepreneur Mastering Customer Success (with Dan Henry) Pt.2 June ‘22 Ep 519

Alex Harmozi and Dan engage in a candid discussion about business strategies, personal growth, and the importance of values, humility, and data-driven marketing in entrepreneurship. Alex emphasizes the necessity of narrowing down core values for decision-making, as he and Leila believe in triangulating thinking with three values for clarity and direction. He shares a paradigm-shifting moment with Dan, illustrating the impact of product pricing on ROI and the insignificance of technical details without a good product and creative marketing. Alex also highlights the importance of customer experience, emotional wins, and activation points in driving word of mouth for businesses. He discusses his criteria for investing in companies, focusing on character, candor, and competitive greatness. Furthermore, Alex shares personal insights on building successful relationships, aligning with a partner on mission, values, and interests, and the parallels between forming personal connections and branding. Throughout the conversation, the importance of humility, coachability, and leveraging data for substantiating marketing claims is reiterated as essential for entrepreneurial success and growth.

• Leila and Speaker A believe in having three core values for easier decision-making.
• Triangulation of thinking helps in mapping values against decisions.
• More values can complicate the decision-making process.

"Leila and I spent a really long time trying to narrow it down because we believe in three values rather than five or ten or whatever. Because you can triangulate thinking."

This quote emphasizes the importance of having a limited number of core values (three in this case) to simplify the decision-making process by allowing for triangulation of thinking.

• Speaker B recalls a conversation with Speaker A that changed his perspective on business.
• Speaker A's high return on investment (ROI) on Facebook ads was due to selling high-ticket items.
• Realizing the importance of product quality, creative marketing, and margins over technical details in the dashboard.

"And when you said that, my entire world changed... I fundamentally changed my business model, and I went all in on high ticket."

Speaker B's quote reflects the pivotal moment when he understood the significance of high-ticket items in business, leading to a fundamental change in his business model.

• Speaker A considered repurposing his book "Jim Lawn's secrets" for a broader audience.
• Gyms are essentially coaching businesses, which allowed for quick scaling of the licensing business.
• The book is a playbook for building any coaching business, not just gyms.

"Because gyms are coaching businesses... I think that's why we were able to actually build our licensing business with gym launch so quickly."

Speaker A's quote indicates the realization that gyms function as coaching businesses, which facilitated the rapid development of their licensing business.

• Speaker A discusses two components of word of mouth: linear and engineered customer experiences.
• Linear word of mouth involves direct referrals from satisfied customers.
• Engineered experiences aim to provide rapid emotional wins to customers.

"There's two kind of components to this. So the first one is, there is what I would consider a linear way of doing word of mouth... And so in terms of engineering, the customer experience for us, the thing that gives you the quadratic returns."

Speaker A's quote delineates the two aspects of word of mouth marketing: the straightforward, linear approach and the more complex engineering of customer experiences for exponential returns.

• Speaker B shares a tactic called the "ethical shrill" to boost word of mouth ethically during webinars.
• Speaker A suggests using the "hinge method" to connect customers with their friends and the business.
• The focus is on driving time to value and stringing along emotional victories for customers.

"We call it the hinge method, where it's like, you, the person that is your customer, and then their friend, and you, a three way message."

Speaker A's quote introduces the "hinge method," a tactical approach to connect customers with potential new clients through a personal and direct communication strategy.

• Speaker A talks about identifying nontraditional key performance indicators (KPIs) to drive business growth.
• The process involves analyzing the experiences of the best customers to find common successful actions.
• Identifying activation points that lead to increased customer retention and engagement.

"It's, what are these nontraditional KPIs, we call them metrics that matter, right? Mtms that we can drive, that are activity based."

Speaker A's quote explains the concept of "metrics that matter" (MTMs), which are nontraditional KPIs based on customer activities that correlate with increased business success.

• A high ticket sale early in the customer relationship can significantly extend the customer's lifetime value.
• Engineering specific events or achievements can help solidify the customer's commitment.
• In a B2C context, outcomes don't have to be monetary, they can be based on other forms of value like personal achievements.
• Mapping the customer journey and identifying "magical moments" can be used to engineer experiences that increase lifetime value.
• Exceptional product experiences drive word of mouth.

"First seven days, we massively extend the lifetime value of the customer."

This quote explains the importance of making a strong impact in the early stages of the customer relationship to enhance their lifetime value.

"If we can get them to collect $20,000 in their first month with us, that they're in, they're in for a year."

The quote suggests a correlation between early financial success for the customer and their long-term commitment to the service.

"What are these micro events?"

Speaker A is discussing the creation of small, significant events that customers can achieve, which contribute to their satisfaction and perception of value.

• Interviewing top clients to discover meaningful experiences can inform how to enhance the customer journey.
• Not all experiences can be engineered, but identifying which ones can be is crucial for improving the customer experience.
• Building engineered experiences into the customer journey can drive word of mouth and increase lifetime value.

"You map their customer journey, and a lot of times you can do qualitatively, too."

Speaker A emphasizes the importance of understanding and mapping the customer journey to improve it, which can be done through qualitative methods like interviews.

"What drives word of mouth? Exceptional product."

This quote identifies exceptional product experience as the key driver for word-of-mouth marketing.

• Funnel hacking oneself is important to understand personal audience and experiences.
• Different spokespeople can attract diverse demographics, helping to reach new customers.
• Personal brand businesses can become a bottleneck if they rely too heavily on the individual.

"The only person you should funnel hack is yourself."

Speaker B suggests that businesses should focus on understanding and improving their own sales funnels rather than copying others, due to unique customer experiences and demographics.

"We have to attract different."

Speaker A acknowledges the need for diversity in representation to appeal to a broader customer base.

• Transitioning from marketing one's face to marketing customer results can help build brand equity.
• Database marketing can be a powerful tool, but it is underutilized because many businesses do not collect or have favorable data.
• Substantiated claims with data can improve marketing and compliance, and help define guarantees based on key activities that lead to success.

"It's easier to transition to customer facing first."

Speaker A suggests a strategy for personal brand businesses to start marketing customer results rather than the individual's face to reduce reliance on the personal brand.

"The reason most people don't market with data is because a, they don't collect it, right?"

Speaker C points out a common issue where businesses fail to collect data, which is necessary for effective database marketing.

• Data-driven marketing involves using substantiated claims to persuade customers logically.
• Logical reasoning becomes more important in high ticket sales.
• Using data to define guarantees and marketing messages can align client experience with expectations, creating a virtuous cycle of improvement.

"The higher the ticket price, the more I think logical reasoning you have to employ to get the."

Speaker A discusses the necessity of logical reasoning in marketing for high-value sales, as these customers require strong justification for their decisions.

"Client outcomes improve even more."

Speaker A explains how aligning marketing with data-driven guarantees and client experiences can lead to better outcomes for clients, reinforcing the effectiveness of the service.

• Consistency between what is offered and what is delivered is crucial for business improvement.
• Inconsistencies can lead to a disconnect between customer expectations and the actual product.
• Being consistent can increase the value of a business significantly.
• Repeated consistency creates a virtuous cycle that benefits the business.

"And so you can improve a business just by being consistent. This is what you said, this is what you saw, this is what you get, right?"

The quote emphasizes the value of consistency in business practices, highlighting that delivering on promises can improve a business.

• Simplifying operations and identifying points of leverage can significantly grow a business.
• The concept of leverage in business can be a pivotal breakthrough for entrepreneurs.
• High-ticket items can reduce the workload while increasing revenue.
• Providing more value can justify higher prices and lead to larger gains.

"And even that one, we grew by just simplifying everything and just saying, what are the points of leverage?"

This quote underlines the strategy of simplifying business operations to pinpoint leverage points that can lead to growth.

• Ego is a major red flag when evaluating entrepreneurs.
• Humility is essential for leadership and the ability to learn and adapt.
• Jim Collins' concept of a level five leader, who is humble and team-focused, is integral for building a successful company.
• The ability to take blame and give away credit is a rare but valuable trait in leaders.

"It's the number one thing that we look for is humility."

The quote highlights humility as a key trait for entrepreneurs, suggesting it's critical for learning, leadership, and success.

• Investment decisions are based not only on business potential but also on the personal characteristics of the entrepreneurs.
• Only a small percentage of companies are accepted into the portfolio, indicating a highly selective process.
• The goal is to invest in companies with the potential to grow significantly in value.

"Now, we accept 0.2% of the companies that apply to become a portfolio company."

This quote reveals the selective nature of the investment process, focusing on high-potential companies.

• The company values are: unimpeachable character, sincere candor, and competitive greatness.
• These values guide personal, employee, and portfolio company evaluations.
• The ability to have difficult conversations and give honest feedback is crucial.
• Competitive drive is necessary for a company's growth and success.

"So it's the same thing that I look for in our personal life, same thing that I look for in employees, and same thing we look for in portfolio companies."

This quote explains that the same core values are applied consistently across all aspects of business and personal life, ensuring integrity and alignment.

• The speaker does not run ads or sell products on the podcast, focusing instead on providing value to entrepreneurs.
• The only request from the audience is to help spread the word to assist more entrepreneurs.
• Audience engagement through ratings, reviews, and sharing the podcast is encouraged to expand its impact.

"The single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb."

This quote is a direct call to action for the audience to engage with the podcast by leaving a review, aiming to broaden its reach and influence.

• Having a supportive significant other is crucial for personal growth.
• Constant exposure to a non-supportive partner can negatively impact you.
• The idea that one's partner should be their greatest ally is highlighted as key to success.

"It's find out if Layla Harmozi has the sister. You told me this, said, you know, basically find a wife or husband that can be your greatest partner and can really help you grow."

This quote emphasizes the advice given to find a life partner who can significantly contribute to one's personal and professional growth.

"Constant exposure always leads to some form of contamination."

This quote from Speaker B's grandfather, a German physicist, suggests that being continuously exposed to a negative influence, such as an unsupportive partner, will inevitably have a detrimental effect.

• Speaker A draws a parallel between branding and finding a life partner.
• Both processes involve identifying and aligning with core values and interests.
• A good marriage, according to Speaker A, is based on three components: aligned mission, similar values, and shared interests.

"I think there's a parallel between branding and finding a mate."

Speaker A introduces the idea that the process of building a brand is similar to the process of finding a suitable life partner, with both involving the alignment of missions, values, and interests.

• Aligned mission: Both partners should want to go to the same place in life.
• Similar values: Partners should ideally make similar decisions when faced with the same information.
• Shared interests: Day-to-day interests should align to ensure more time spent together and similar adaptation to new experiences.

"There are three components that make a good marriage. The first is aligned mission, which is, do we want to go to the same place?"

Speaker A outlines the first component of a strong relationship, emphasizing the need for a shared life direction or goal.

"The second is similar values, or ideally same values, which is we know where we want to go, but how do we want to get there?"

Speaker A discusses the importance of having shared values in a relationship, as it affects decision-making and the approach to achieving mutual goals.

"The third is, I like to say, similar interest or you can say lifestyle."

The third component, according to Speaker A, involves having similar day-to-day interests, which helps partners spend more time together and adapt in compatible ways.

• Physical attraction is considered a basic requirement, not the sole determinant of a successful relationship.
• Speaker A suggests that being attractive should be specific to one's partner rather than universally.

"Being hot is a price of admission. That is not, you know what I mean? Like the end all be all."

Speaker A points out that while physical attraction is necessary, it is merely the starting point and not the defining factor of a relationship's success.

"They should be hot for you rather than, of course, hot for everyone else."

This quote emphasizes the subjective nature of attraction within a relationship, suggesting that it's more important for partners to be attracted to each other than to fit a universal standard of beauty.

• Relationships and brand relationships share common principles.
• Brands, like personal relationships, are built on shared missions, values, and interests with their audience.
• Speaker A suggests that the components of a good marriage could also apply to building a strong brand.

"And I also think it might be able to build a brand because I think brands are really just relationships with a mass audience."

Speaker A concludes that the principles that make for a strong personal relationship could also be applied to building a brand, as both involve forming relationships, whether with an individual or an audience.