Alex Hormozi is a self-confessed “Gym Bro” with biceps as big as your head. However, appearances can be deceptive and underneath lies a methodical and first-rate business brain. We listened to the free audiobook version of $100m Offers and once you get used to his in-your-face, aggressive delivery style, there are a number of nuggets in there for building a successful sales and marketing offer.
Unsurprisingly, given the title, this book is all about how to position your product or service so that it is such a good deal that “people feel stupid saying no.”
Grand Slam Offers
As a big American baseball fan, the book is littered with baseball analogies. Alex advises us if we really want to make money that we need to “swing for the fences.” To do that we need to make offers that are so good that “people feel stupid saying no”. He calls these GRAND SLAM offers. A grand slam offer doesn’t mean an immediate single hit, it means a continuous long-tail distribution. The grand slam offer provides more value to the customer than they can get anywhere else and solves all of their problems and more. Grand slam offers can therefore be charged at a premium price.
The four key elements to building a grand slam offer are:
Pricing
Value
Guarantee
Naming Strategy
By building a grand slam offer, Hormozi has seen an 8-year average 36:1 return on his advertising dollars.
Alex’s background was owning six gyms where he hit upon a marketing offer that he perfected over the years. At some point he decided to sell his business and move into consultancy, helping others to put his methodology into practice. However, as he was doing this his business partner stole the money from the gyms so he had to start his consultancy business absolutely broke with nothing but credit cards.
By the end of the first year he had built his business to an average monthly revenue of £1.5million; by the end of the second year that was £4.4million per month. He now has multiple businesses doing £1.6million a week.
Sales is a value exchange. You offer value, the customer buys that value, that path to becoming a better version of yourself and money exchanges in return.
Hormozi says that to begin on this process, you have to first analyse where you are now. He uses a quote from a Professor at Stanford University called David Bergerman: “Better to understand why you failed than be ignorant to your success”
The two biggest problems in almost every case is not enough customers and not enough cash. However, it isn’t as easy as fixing one of these without focussing on the other. Turn one up and it affects the other. If you slash price, you get more customers but cash becomes a problem then with regard to profitability. You could increase cash by taking venture capital but if you do that you aren’t a “proper business”, you are an investment.
“Grow or Die”
“Grow or Die” is Hormozi’s business motto. You don’t just maintain. The stock market moves at an average over 20 years of 7% a year so if you grow by less you are falling behind.
He details three key growth areas:
1) More customers
2) Increase average spend
3) Get them to buy more often
A grand slam offer is one you make that cannot be compared directly to others on the market In terms of value. In other words, it is not commoditised. You still sell the same product, but you don’t sell the same value. After all, why sell a commodity when you can sell a grand slam!
He quotes his agency business that used to have a commodity price-based offer. He charged £1000 up front and £1000 per month. It was a traditional growth marketing agency. In his words, a race time to the bottom. His win was switching to a grand slam offer…. Pay one time, then pay on results as a percentage of your results. If he didn’t get 20 leads, then the next month will be free. At the same time you get access to all of his content. He went from taking three months for one of his clients to break even on his customer acquisition cost to making 12 times acquisition spend each month.
He uses a fantastic analogy of a hot dog stand. A MBA professor asks their students, “If you ran a hot dog stand, and you could have one competitive advantage, what would it be?”
Some students said price
Some students said the best hot dog
Some Students said location
All are good answers.
The best answer and the one she was looking for…. “a starving customer”. The best competitive advantage is a starving crowd. If you think back, it was the same with toilet paper at the start of Covid.
“The pain is the pitch”
Picking the right market is key. You have to target the right people and you want a growing market. He used an example of a friend who started a business a decade ago selling to print newspapers. It didn’t work out and looking back the signs were there that print newspaper industry was dying.
He talks about the order of importance in choosing a market. A starving crowd is more important than offer strength, which is more important than persuasion skills.
His biggest advice on a market sector is to commit to a niche. Further to that, it takes time to nail a niche! The more niche that you go generally the higher price you could charge. For example, a course on sales you might only be able to charge $99. The course for an outbound marketing specialist you might be able to charge $299. The key step to start making crazy money is charging crazy prices.
There is no strategic value in being the second cheapest in the market but there is strategic value in being the most expensive in the market. Who wants to be the cheapest? Who wants to be in that race to the bottom?
The Value Equation
If there is one thing above all else you should take out of this book, it is Hormozi’s value equation.
You aim to increase those on top of the equation and decrease those on the bottom of the equation. The hardest part is the bottom part.
The reason he’s made this a division rather than multiplication is because he wants you to try and get the bottom figure to zero. Divide anything by zero and you’re golden.
When selling, you present a logical solution and/or a psychological solution. The hardest are the second ones.
Examples:
Logical – make the elevator faster. Psychological – make floor-to-ceiling mirrors to distract passengers.
Logical – make trains faster. Psychological – serve better wine and food or more attractive serving staff, which makes them want the journey to last longer.
Having said this, Hormozi is clear that on the psychological solutions, you can’t create the dream for your prospect; you just channel an existing desire. Improving status is a key one. He suggests trying to give some quick wins to customers. Some immediate benefits even if you have a more long-term product.
A good saying he has is “Fast beats free”. If you’re in the market where you are against a free competitor, then prioritise being fast.
Revisiting his four value drivers from his equation:
• Sell the dream outcome. eg. them arriving at their destination
• List their problems. When they use your service, what is their next problem? Pre-think questions in insane detail. List these against the four value drivers. The more problems you think of, the more problems you can solve.
• Turning problems into solutions. Create a list of solutions to the problem.
• How. How to do it without breaking the bank?
The offer has to make the cost of change seem far less than the improvement will be.
Persuasion Tools
Hormozi then goes on to look at the key persuasion tools to get you high prices for your offer.
These are: scarcity, urgency, bonuses, and guarantees.
With regards to scarcity and urgency he talks about the “zero fucks given” vibe. The person who needs it less has the strongest hand and making yourself that person is key.
He lists out some of his favourite tactics to create scarcity and urgency:
That you can Never get it again. Fear of loss is stronger than desire for gain
Limited supply of seats. Always sell out. Only accept X clients per week. Sell limited supply of a package- 1:1 sessions etc. CTO club, white glove service. Create seasonal urgency.
Pricing or bonus-based urgency. Clean your pipeline with every price change. Arbitrage opportunity. Trading is a key example here. Add extra bonuses like the old US infomercials eg. “and that’s not all, you’ll also get a free steak knife.” Add value by anchoring the price. Make value to price discrepancy so much. Add bonuses rather than discount.
Something to show it will be good for them without the need for imaginary interpretation.
Generate a vivid picture of life with the product (or service).
The most interesting element of his key persuasion tools for me was guarantee. It is clear he thinks this is the most powerful tool.
Guarantee
There are four types of guarantee:
Unconditional – strongest but most risky.
Conditional – such as terms and conditions.
Anti-guarantee – explicitly say all sales are final. Show a massive reason why. It makes sense.
Implied – a performance-based offer. Revenue share, performance share etc. If I don’t perform, I don’t get paid but if I do a great job will be $$$.
Having said this, the guarantee is NOT the main driver, it is there to get the customer over the line. People who buy solely on the guarantee are often a shitty customer.
Naming the Offer
The final element he comes to is one of the most important – the naming of offer. Naming it properly is key. Whilst you may have some fantastic elements to your offer and fully meet the value equation of a grand slam offer, make sure to come up with a phrase that quickly and easily sums up your offer. If you can’t, your offer probably isn’t as grand slam as you think and you might be out at first base.
I hope you have enjoyed this summary of “$100 Offers”. We heartily recommend this book and we are going to jump straight on his others such as “$100m Leads”.