How I'd Find the Offer That Gets Qualified Buyers

0:00McKenzie, you are on Hormozi hotline. Okay. Monthly revenue is $100,000. Hello, McKenzie? Hey. McKenzie. Can you hear me? What's up? $100,000 a month. Hey man, how's it going? Rock and roll, good. You got cold outreach, got it. You're doing your custom apparel, okay. Custom apparel. Interesting. Um, offer is apparel for colleges and college organizations, so like

0:34fraternities and stuff? Yep. All right. All right, colleges. Okay. Um, and then the constraint is cold outbound works economically, but too many unqualified leads. Okay. Um, so does that mean that where how are you getting your leads right now? Yes, right thing. So, basically, we're just trying to find contacts for these organizations, primarily through like Instagram, and then we just reach out to

1:07all of them cold. Okay. Um, what's the model? Um as far as like how do we make our money? So, basically, um, we handle the design side for all the apparel, and then we outsource the manufacturing. And so, we're just kind of act as the middleman, and and mark that up. And so, on all of our orders,

1:29we average about 35% gross margins. Yeah. So, is that $100,000 a month, um your slice, or is that That's top line. Okay, got it. So, you got 35-ish of gross margin left over. Yeah. On 100. Okay. And so what's happening when we reach out to these different organizations is basically it's very hard to segment between who we think is going to end up being a big customer with like a high lifetime value. We have some customers who are going to spend, you know, $20,000 a year with us versus others that are going to spend $1,500 a year. And And it's just really hard for us to identify like

2:08what are the markers that make a customer in which group, you know? Yeah. So. Yeah. And you've And you Is there a reason that I mean, you focus on colleges just cuz they were easy to reach out to decision makers? Yeah, so that that was kind of that was going to be the second part. Uh basically, what I found so far is like we're reaching out to colleges we've got the process really dialed in. So, we

2:35have like a pretty good conversion rate. Like it it's easy for us to acquire customers, but what I actually notice is that's what we focus our outbound on, but the AOV for the colleges is maybe like 12, 1,500 bucks. We have other customer segments that are spending way more per order and per year. But, we just haven't really figured out the

2:53acquisition as much. Okay, so what are those segments? Um construction uh is a big one and also summer camps. But, the thing with those I kind of run into the same issue because, you know, I I might reach out to two construction companies. One of them they don't order like any apparel and then another one

3:12orders like, you know, $50,000 a year. So, Yeah. I'm still just trying to figure out how how to know want to reframe it a little bit for you. So, if you know that like, okay, well, construction seems like on average they're worth like 25 times more or something like that. That's close to right?

3:26Yeah. Okay. So, if you have some like duds and some good ones, but they're worth 25 times more, then I'd rather just do the duds and good ones play with in general people that are worth 25 times more. Yeah, but I mean I'm running into the same issue either way. So, it's just basically targeting higher value

3:46customers. Yeah. But, I mean I think like I'll say it differently like this is a feature not a bug. Like, this is just part of what what you have to do with outreach and like list segmentation and list list enrichment is like part of what makes outreach effective. Yeah, so do you think like basically on the last live stream, you know, I kind of went through the five ends and I realized it is data that's holding us back from being able to scale. So, I've already started, you know, having my devs like build out different stuff to

4:20help us track this data better. Right. And I'm kind of wondering like should I be focusing a ton of my time on trying to figure out like and identify the segments, you know, more specifically like what makes this construction company spend more money and and or or should I be focusing on volume? No.

4:38Get the data right. Like, if you take a longer perspective on the business, right? You knowing who your customer is is going to be data that you absolutely have to have, no matter what. And so, why would we delay something that's going to give us so much leverage on our messaging, our offer, our channels, like I like picking the customer is the first and most important thing that you can do in a business. And then your offer comes from the customer. Like, the one regret that I have in the Offers Book is that I would have added in uh your first customer, which is uh one

5:08I think the first chapter in Lost Chapters. Um I would have added that as the first chapter of the Offers Book. Because so many people just like you have to start with the customer and then from the customer we reverse engineer the offer. Yeah, and and that's like one of the reasons why we target uh like fraternities and sororities is because on a per unit basis, like they spend more per shirt, but that the you know, they order like 50 shirts at a

5:35time versus 5,000. Yeah. So, all we have to look at like we just have to look at absolute profit per order and then I would just like that's that should be like North Star. So, what is it So, if we have, you know, 50 shirts with, you know, 50% margins versus 5,000 shirts with 20% margins, we'd still rather have 5,000 shirts cuz

5:53you're a middleman anyways. Yeah, it doesn't take any more work. Right. So, like right. So, like let's go sell the bigger people and expect that we're going to have some that are smaller, but if we're shooting for 5,000 orders, your your small ones all of a sudden are going to be 500 orders instead of 50.

6:12Yeah. Yeah, that makes sense. And I you know, honestly, like even though we don't have the data yet, that's kind of after the last couple of calls, like I realized that is the direction we need to go in and I'm trying to figure out how we should make that transition because, you know, it's like you always say like more than better than different. And I feel like I'm just I could be doing more and better, but I'm choosing to do different because it's

6:35just a better model. Yeah. Well, you're I mean, you're reaching out to me. So, I mean, I I I make these rules, I can break them. Um [laughter] So, uh you're in an instance where like it's you you should unless unless you had aware that it was like I'll say it differently. Like you could for sure double outreach and the business would probably double. And it's just like I think there's just so much more meat in these other industries cuz like I think you'll I don't want to say you'll cap this out cuz like you could for sure become like like I'll maybe I'll maybe I'll think

7:05about it like this. These are the conditions under which I would stick with what you're currently doing. Right? I would stick with what you're currently doing if you knew that those college customers would become lifetime customers. If you knew that every single one of those college organizations would just always order, you know, $1,500 a year worth of gross profit and you just knew that you were keeping 80 to 90% per year, then this business would just continue to stack and then over time you build this kind of like monopoly within the colleges of like the default t-shirt guy, right? That would be the condition under which I would I would continue to

7:36pursue the colleges. And maybe you could just say like, okay, well, how do we retain revenue better? How do we get these people to reorder? Can we reach out to them more regularly so that they're buying four times a year instead of two, etc. etc. Like that would be that path. Um but you're I would say that we're kind of in that situation. I mean we've been doing this for a few years now. We don't have like really any turn. Like our turn level is like extremely low. Um and we're very proactive like you said trying to get people to order more. Like we're trying to bring up the order frequency, bring

8:06up the AOV. But at the end of the day it's like I could I could probably just leave this running. Like leave my operator just continuing that side of the business and then maybe shift my time towards focusing on these other uh you know, targets. Yeah. Building up that acquisition system. I hear you. I I I I'm going I would do the other thing that's

8:27bigger. I'll be honest. I would I would do that. And that's normally not the advice that I would give because like the for sure bet like if I had to say how do I guarantee that you go from 100k a month to you know, 200k a month, I would say do just triple what you're currently doing. That would be for sure my bet cuz you're keeping the customers, you have pro you know, gross profit that's there and it'll just continue to stack. That would be my

8:50like if we had to bet. But if you're like I want to get to you know, 20 million a year or something like that. I don't know what your What are your goals? I should have asked that earlier. What are your goals? That's my goal. I'm trying to get to like 10, 20. Yeah, then I think you just need you're going to have you just want to get you

9:04want to make get paid more per. And it's the same number. It's the same level. yeah. Yeah. I mean you like you could do more but then we'd be asking the question, okay, how do we go from your current outreach level volume to like how do we truly, and I mean this truly, like how do we actually do 10 to 50 times the

9:19outreach? Like you could do that and that would be still probably less risk. feasible with this target market. Okay. Well then if that's that, then if we go metrics and then market which is the next M, right? Then then I would rather go construction that's bigger whales if that's the market that you feel better with. I don't normally say that but I think

9:37that it's probably what makes sense. And here's here's the great part. If you do it and you just fall flat on your face and you find out something that's like actually makes construction suck, you could always just go back to the college and then just and then say, "Okay, well, my my for sure path of of of growing this business is like I will

9:5510x my outreach." That is your for sure path. You can always go back and do that. But if you have an opportunity where you can get literally you're talking about 50 shirt orders versus 5,000, it's a 100x the leverage, then I'm like, "I really want to look at something like that." Yeah, that makes sense.

10:12Cool. I and I guess like I just need to treat it as like a test. Like I don't need to like shut down my business and start doing construction. No. God, no. You know, start building out another channel. Yeah. I don't normally say this, but when you when I see a 100x difference and you're at the size you're at, I'd rather you

10:32I'd rather you look there. Yeah. Yeah, bro. That's That's like That's what I'm thinking. Like I've I've been thinking the same thing you're saying, but I'm like, "Oh, this goes against all the advice." No, I know. No, I mean, that's why you called. That's what we're here for. Cool. Feel all right? Yeah. All right, sweet. Yeah, that's

10:47what I'm going to do then. Just don't burn down the existing business. Have your operators still run it. Make sure it's still good. The things that you want to make sure that you like what are the things you want to validate for the new market is you want to make sure as fast as possible that

10:55they reorder. As long as you have that, then you're going to have revenue retention, you're good to go. Yeah, that makes sense. I mean, okay, let me ask you this. This is I I when I view this business, like the reason that we're able to penetrate the college market so well is because, you know, we target all of our marketing around that. Like if you go to our website, that that's the avatar we're

11:18trying to serve. we're I've considered basically building out maybe have like different websites for different niches. So, like I just replicate everything we did for college, but in the construction um and kind of serve a whole 'nother avatar. I don't know if that makes sense, but like build a customer journey around them. And I just I don't know if that's a maybe like a not the smartest way to scale is doing like more No, I don't want you to do like many different verticals. I definitely No, no, I want you to commit to one of these things. And so we're like this is a potential 100x in terms of leverage for

11:52this type of avatar, which is the only like if you were like there were three times as much, I'd be like screw it, dude. Just do more of the college thing. When you said 50,000 in order versus 1,500, like that is a very big difference. And it's the same level of work for you. So at that point, that's why I'm like I'm like it is only because of the

12:08unique characteristics of that thing. The only other thing that we'd want to make sure is that you have revenue retention there. Once you have that, there's more than enough construction furnace for you to 20 million a year. No question. Yeah, 100%. Okay. Yeah, that makes sense. All right, rock and roll. don't don't spread it out. Like focus my efforts on one I don't want you to have like 100

12:26verticals. That's not the point here. You would like you knew colleges like every one of these ones you have different nuances, different acquisition things, different sales product like you have to learn all that stuff again. But like I'm I'm only kind of like signing off on this because of the crazy difference in value and the virtually no difference in operational effort. So it's like you don't have to relearn how to how to be a middleman for shirt ordering. Right? It's like it's same thing. We're just targeting a different person. And then we only have to figure out one thing, which is how to acquire that customer versus the other. And once

12:54we have that, the rest of the business works the same. We make, you know, 20, 30, 40 times more. That's why I'm saying I think it makes sense. Yeah, that's exactly right. That is the only difference. All right, cool man. That's perfect. That's your game plan. All right, rock and roll. Appreciate you, man. If you're not getting as many leads as you want and your business is demand constrained, [music] meaning you could service more customers than you currently have, then this is for you. So marketing is changing and I think ACQ tends to be on the bleeding edge of this stuff. We certainly spend the money

13:20to do it, but we also build custom software and we pay amazing vendors and very expensive people to figure out the system that we have right now and I want to share it with you, kind of open kimono style. If you're not getting as many leads as you want, boy, do I have the thing for you. Click below, book call, and uh

13:33hopefully I'll see you in Vegas.